The Chicago Tribune is reporting that while there hasn’t been any official announcement about the HECM Saver, the Federal Housing Administration may be getting ready to lessen the upfront costs of reverse mortgages for some borrowers.
“HUD is looking at options to provide a lower-priced HECM option,” said Lemar Wooley, a spokesman for the U.S. Department of Housing and Urban Development. “We are still working out the details. Our basic plan is to make the product more attractive, while limiting FHA’s exposure to risk.”
During a call with lenders, HUD said the HECM Saver will charge borrowers only a 0.01% upfront mortgage insurance premium (MIP) and have an annual MIP of 1.25%. Offered as both a fixed and adjustable rate, the HECM Saver is expected to have principal limit factors roughly 11-23% lower than the standard product.
According to the Tribune, the National Council of Aging has advocated the development of a more flexible reverse mortgage product for some time, views the coming changes as welcome news that the industry is moving past the one-size-fits-all mentality.
However, the advocacy group also sees potential pitfalls.
“The more flexibility there is, the more chance there is to be talked into (something) that doesn’t make sense,” said Barbara Stucki, vice president of home equity initiatives for the National Council on Aging.