Inman: Americans Eye Low Cost Reverse Mortgages

NewImage.jpgThe media continues its coverage of the Federal Housing Administration’s HECM Saver, a low cost reverse mortgage that was released in October 2010.

The latest comes from Inman News, where Tom Kelly writes “the buzz among reverse mortgage professionals at the recent National Reverse Mortgage Lenders Association annual convention was that the new HECM Saver could soon be dubbed the HECM Savior.”

The bottom line was that the FHA had to sharpen its pencil to produce what it thought would be a sustainable reverse mortgage program, given the need to raise mortgage insurance.


The Office of Management and Budget concluded that since many homes had dropped in value, the industry needed to charge more to cover the risk of people outliving the value of their homes. Mortgage insurance premiums were raised on most federally insured programs, including “forward” mortgages.

The result was to retain one program (HECM Standard) where owners could take out more funds with a higher upfront fee, plus introduce a cheaper program where homeowners would pay less upfront yet have lower maximum borrowing limits.

FHA Commissioner David H. Stevens told conference attendees that while he was bullish on both the HECM Saver and HECM Standard, he indicated that the HECM Saver was critical to the overall success of federally insured reverse mortgages.

Seniors eye low-cost reverse mortgage

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  • Tom Kelly has always been a good friend of the program. While the Saver is not the Savior of anything, it certainly has the potential to be a game changer and a source of stability for the MMI fund. Right now it is the secondary market which is holding back the expansion of the program through the Saver.

    If the secondary market determines that the differences between the actual life of the average Saver and the average Standard are not so significant as to require a higher interest rate for the Saver, it could very well be that the last impediment to the expansion of the program despite the weak housing economy has been achieved. It is this product which should allow all HECMs to be accepted in more affluent rungs of the senior community; it could even help accelerate the return of proprietary reverse mortgages but I do not want my reason to get overly taken away by the hopes of where this product could lead although it certainly has that potential.

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