Jeff Lewis, chairman of Generation Mortgage told Origination News that new changes to the Home Equity Conversion Mortgage program are really positive and should lead to a successful future.
For the HECM program to be successful, the product needs to be self sufficient, so the increase in the mortgage insurance premium is “a necessary evil,” he said.
“It is very important for the long-term viability of the program that it be self-sufficient and that it is perceived to be not a problem for the government, but an opportunity,” he explained.
Part of those changes included the introduction of a new product, the HECM Saver. This new product will make a HECM more affordable for “a lot of our floating-rate customers who were already using the program,” as well as bring in customers who might be younger and in a better financial situation than the typical borrower, he said.
The drop in the floor in the standard program will allow lenders to provide more proceeds to the borrower. When combined with the change in MIP, “for the consumer that is using the standard product, who is very much proceeds oriented, I think they are willing to make that trade-off.
“So when you combine these three changes, I think there is something for everybody,” Lewis said. Consumers end up with more choice and thus the industry can appeal to a broader array of potential borrowers.