Bank of America Rolls Out No Servicing Fee Adjustable Rate HECM for Wholesale

NewImage.jpgBank of America introduced a new adjustable rate Home Equity Conversion Mortgage (HECM) product to wholesale partners on Tuesday.

Starting September 7th, the company is offering a no servicing fee set aside (SFSA) monthly LIBOR HECM with a margin of 225 to brokers and closed loan sellers.

The new option should help brokers compete with MetLife and Wells Fargo, which have been offering a no SFSA adjustable rate product to consumers through their retail channels.

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While brokers have been able to offer the HECM fixed without a SFSA for some time, BofA is the first wholesaler to introduce an adjustable rate product without a SFSA to brokers.  Additionally, BofA began paying 100% of the upfront mortgage insurance premium (MIP) for fixed rate HECMs in May.

According to data from Reverse Market Insight, BofA is the second largest wholesale reverse mortgage lender during 2010.

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  • 2545,rnrnThe discussion you are referring to took place on August 26, 2010. On the following Monday, August 30th, NRMLA published a warning that HUD had just requested that NRMLA tell its members that the discussion which took place 4 days earlier was still preliminary.rnrnWe know the annual rate on the ongoing MIP will be 1.25% on October 4th because HUD released Mortgagee Letter 2010-28 on September 1st saying so. Until HUD makes an official announcement or releases a mortgagee letter with new PLF tables as it did in ML 2009-34 on September 23, 2009, we have no official word. rnrnSome of those who attended the NRMLA Policy Conference earlier this year stated a HUD official did say that if the release of the HECM Saver could be accomplished early in the new fiscal year (as it seems it will), there is a high probability that if the subsidy were recomputed reflecting the expected net revenues from the HECM Saver, the new computation would show no subsidy was needed. rnrnThe original OMB calculations released on February 1, 2010, apparently either did not reflect the HECM Saver or showed minimal impact from its expected net revenues. So it seems there is hope that the PLF change will be a reduction of between 1% and 5% even without any appropriation from Congress but there is no official statement from HUD just yet. rnrnWe will not know much until the Senate returns on the 13th. Even then, Congress may be loath to do anything because of pending elections. Some do not expect any official word on PLFs until late September.rnrnSo what are we to tell our fence sitting prospects between now and October 1st (or October 4th)? That is a question each lender and originator should be addressing right now.

  • Cynic,rnYou also indicate the PFLs are still up in the air? I thought it was set at a 1% – 5% reduction…the 23% – 28% was not a possibility. At least this was indicated in the “FHA to Reduce HECM Proceeds and Raise Premiums in October” article that HUD had already settled on this issue. Do you not believe this to be the case?

  • Cynic,rnI never claimed to be innocent?? Not much can be done at this point we just need to take it and move on. We do need as an industry to stay in Washington and continue to fight the fight so that we don’t again face this next Oct.

  • I’m with you Judgem0811. I never understood why it was seperate to begin with. It’s always been fun (not) trying to explain that cost to borrowers when they never had to pay it on their forward mortgages (or so they thought).

  • 2545,rnrnYou would think you were as innocent as you were last year. YOU are not.rnrnWe are still in a subsidy fight for the fiscal year ending 9/30/2011. PLFs could be 1%-5% lower next month or 23%-28% lower or somewere in between. Who cares about 10/1/2011 RIGHT NOW. We need to brace ourselves for next month.

  • It may continue in Oct but business will take another plunge just like last year did when the Gov reduced funds. Now they are also raising MIP…I wonder what they will do in Oct of 2011? rnJust keeps getting better and better!

  • 2545,rnrnThe discussion you are referring to took place on August 26, 2010. On the following Monday, August 30th, NRMLA published a warning that HUD had just requested that NRMLA tell its members that the discussion which took place 4 days earlier was still preliminary.rnrnWe know the annual rate on the ongoing MIP will be 1.25% on October 4th because HUD released Mortgagee Letter 2010-28 on September 1st saying so. Until HUD makes an official announcement or releases a mortgagee letter with new PLF tables as it did in ML 2009-34 on September 23, 2009, we have no official word. rnrnSome of those who attended the NRMLA Policy Conference earlier this year stated a HUD official did say that if the release of the HECM Saver could be accomplished early in the new fiscal year (as it seems it will), there is a high probability that if the subsidy were recomputed reflecting the expected net revenues from the HECM Saver, the new computation would show no subsidy was needed. rnrnThe original OMB calculations released on February 1, 2010, apparently either did not reflect the HECM Saver or showed minimal impact from its expected net revenues. So it seems there is hope that the PLF change will be a reduction of between 1% and 5% even without any appropriation from Congress but there is no official statement from HUD just yet. rnrnWe will not know much until the Senate returns on the 13th. Even then, Congress may be loath to do anything because of pending elections. Some do not expect any official word on PLFs until late September.rnrnSo what are we to tell our fence sitting prospects between now and October 1st (or October 4th)? That is a question each lender and originator should be addressing right now.

  • Cynic,rnYou also indicate the PFLs are still up in the air? I thought it was set at a 1% – 5% reduction…the 23% – 28% was not a possibility. At least this was indicated in the “FHA to Reduce HECM Proceeds and Raise Premiums in October” article that HUD had already settled on this issue. Do you not believe this to be the case?

  • Cynic,rnI never claimed to be innocent?? Not much can be done at this point we just need to take it and move on. We do need as an industry to stay in Washington and continue to fight the fight so that we don’t again face this next Oct.

  • I’m with you Judgem0811. I never understood why it was seperate to begin with. It’s always been fun (not) trying to explain that cost to borrowers when they never had to pay it on their forward mortgages (or so they thought).

  • 2545,rnrnYou would think you were as innocent as you were last year. YOU are not.rnrnWe are still in a subsidy fight for the fiscal year ending 9/30/2011. PLFs could be 1%-5% lower next month or 23%-28% lower or somewere in between. Who cares about 10/1/2011 RIGHT NOW. We need to brace ourselves for next month.

  • It may continue in Oct but business will take another plunge just like last year did when the Gov reduced funds. Now they are also raising MIP…I wonder what they will do in Oct of 2011? rnJust keeps getting better and better!

  • It may continue in Oct but business will take another plunge just like last year did when the Gov reduced funds. Now they are also raising MIP…I wonder what they will do in Oct of 2011? rnJust keeps getting better and better!

    • 2545,rnrnYou would think you were as innocent as you were last year. YOU are not.rnrnWe are still in a subsidy fight for the fiscal year ending 9/30/2011. PLFs could be 1%-5% lower next month or 23%-28% lower or somewere in between. Who cares about 10/1/2011 RIGHT NOW. We need to brace ourselves for next month.

      • Cynic,rnI never claimed to be innocent?? Not much can be done at this point we just need to take it and move on. We do need as an industry to stay in Washington and continue to fight the fight so that we don’t again face this next Oct.

      • Cynic,rnYou also indicate the PFLs are still up in the air? I thought it was set at a 1% – 5% reduction…the 23% – 28% was not a possibility. At least this was indicated in the “FHA to Reduce HECM Proceeds and Raise Premiums in October” article that HUD had already settled on this issue. Do you not believe this to be the case?

      • 2545,rnrnThe discussion you are referring to took place on August 26, 2010. On the following Monday, August 30th, NRMLA published a warning that HUD had just requested that NRMLA tell its members that the discussion which took place 4 days earlier was still preliminary.rnrnWe know the annual rate on the ongoing MIP will be 1.25% on October 4th because HUD released Mortgagee Letter 2010-28 on September 1st saying so. Until HUD makes an official announcement or releases a mortgagee letter with new PLF tables as it did in ML 2009-34 on September 23, 2009, we have no official word. rnrnSome of those who attended the NRMLA Policy Conference earlier this year stated a HUD official did say that if the release of the HECM Saver could be accomplished early in the new fiscal year (as it seems it will), there is a high probability that if the subsidy were recomputed reflecting the expected net revenues from the HECM Saver, the new computation would show no subsidy was needed. rnrnThe original OMB calculations released on February 1, 2010, apparently either did not reflect the HECM Saver or showed minimal impact from its expected net revenues. So it seems there is hope that the PLF change will be a reduction of between 1% and 5% even without any appropriation from Congress but there is no official statement from HUD just yet. rnrnWe will not know much until the Senate returns on the 13th. Even then, Congress may be loath to do anything because of pending elections. Some do not expect any official word on PLFs until late September.rnrnSo what are we to tell our fence sitting prospects between now and October 1st (or October 4th)? That is a question each lender and originator should be addressing right now.

  • I’m with you Judgem0811. I never understood why it was seperate to begin with. It’s always been fun (not) trying to explain that cost to borrowers when they never had to pay it on their forward mortgages (or so they thought).

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