Mortgage Prof. Rolls Out Reverse Mortgage Calculator, Seeks Lender Exchange

The “Mortgage Professor,” a.k.a. Jack Guttentag is continuing a foray into the reverse mortgage market through the launch of a new reverse mortgage calculator he says rivals all others on the market. 

The calculator considers not only recent program changes and regulatory rules that apply to all reverse mortgage borrowers, but also what the Professor deems a consumer-friendly explanation of how the loan works and continues to work in the future. 

The Mortgage Professor is making the calculator available to lenders free of charge, in exchange for an agreement the Mortgage Professor can post the lenders’ prices. 

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“We will make the calculator available free of charge to any HECM lender to place on their web site,” the Professor writes in a recent article. “The only proviso is that the lender also posts its prices with us so that borrowers can compare the prices with those of other lenders.”

Previously, Guttentag has written extensively about reverse mortgages and previously launched a tool for borrowers to compare rates across reverse mortgage lenders. 

Guttentag also plans to begin offering reverse mortgage information to potential borrowers on a pro bono basis. This pre-lender consultation will help borrowers obtain more information than they may be able to gain during reverse mortgage counseling, but yet is not provided by a lender so does not violate Department of Housing and Urban Development rules. 

“Under current law, before executing a HECM contract, a senior must be counseled by an independent party unconnected to the lender,” Guttentag writes. “While seniors can seek such counsel before contacting a lender, in practice they almost always contact a lender first and the lender provides them with a list of counselors. In good part, this defeats the purpose of the rule.”

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Written by Elizabeth Ecker

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  • Inaccurate calculator. Today (1/22/2014) it shows adjustable HECM note rate is 2.423%. This implies a margin of 2.25%. But it shows PL at maximum (Expected Rate of 5.06% or lower). That means the 10-year swap rate must be 2.81% or lower. That hasn’t been the case since early December 2013. And it assumes the loan is closing today when calculating age. The better calculators assume that the closing is 60 days from today. Skip it.

  • “Guttentag also plans to begin offering reverse mortgage information to potential borrowers on a pro bono basis. This pre-lender consultation will help borrowers obtain more information than they may be able to gain during reverse mortgage counseling, but yet is not provided by a
    lender so does not violate Department of Housing and Urban Development rules. ”

    “Under current law, before executing a HECM contract, a senior must be counseled by an independent party unconnected to the lender,” Guttentag writes. “While seniors can seek such counsel before contacting a lender, in practice they almost always contact a lender first and the lender provides them with a list of counselors. In good part, this defeats the purpose of the rule.”

    Please tell me and the rest of the industry:.

    1. how we are breaking the rules of HUD when we speak with a potential borrower to provide information before they speak with a HUD approved counselor.

    2. The industry has been providing “Pro-Bono” reverse information to potential borrowers for years. What is Mr Guttentag offering that is different?

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