RMF’s HECM Choice Here to Stay, Despite Ginnie Mae Ruling

Despite Ginnie Mae’s recent ruling prohibiting lenders’ ability to securitize variations of fixed-rate Home Equity Conversion Mortgages (HECM), Reverse Mortgage Funding’s HECM Choice reverse mortgage looks like it’s here to stay, albeit with several changes.

Changes to RMF’s HECM Choice product include requirements for the minimum amount principal limit a borrower can draw at closing for the first year, as well as a minimum set aside to meet mandatory obligations, as defined by the Federal Housing Administration, according to a Lender Alert issued by RMF for correspondents and principal agents Friday.

The updated HECM Choice now requires a minimum draw of 60% of the initial principal limit and at least 50% in FHA-defined mandatory obligations and the balance taken under any of the HECM payment options, including tenure, term, modified tenure, modified term or line of credit.


RMF rolled out the HECM Choice in mid-December, billing it as offering the “best of both worlds” to borrowers. The loan offers borrowers to obtain a fixed-rate reverse mortgage that allows access to some of the proceeds upfront, and additional proceeds following the first year of loan closing.

The HECM Choice was just one of the myriad fixed-rate HECM variations springing up, with others like Live Well Financial offering other new products.

On April 1, Ginnie Mae issued its rule prohibiting the inclusion of fixed-rate HECM loans where borrowers can opt for a payment plan that allows future loan advances against the principal limit. The federal guaranteer also noted that HECM-backed securities issued on or after June 1, 2014 will not be allowed to include these types of loans. 

As for the HECM Choice, RMF’s Lender Alert states that all loans in the pipeline that do not have mandatory obligations, as defined by FHA, of at least 50% must be submitted to the RMF Fulfillment Center by April 25 and be purchased no later than April 30, 2014.

The revised guidelines for the HECM Choice are effective for all loans that are purchased after April 30, 2014.

Written by Jason Oliva

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  • The real issue is whether Ginnie Mae will accept this version or RMF has some other outlet for this product.

    This action does not make RMF look like an industry leader but more like someone who is licking his wounds. This is but another disappointing reaction rather than being responsibly proactive.

  • Interesting, I guess it is still a fixed rate loan and NOT a one year adjustable like Live Well’s program.

    The question is what are they going to do with the product? My guess would be they are going to shelve it until such time that they can find a market for it?
    RMF may also have a plan B as well as a plan A for their reason to maintain a fixed rate product with all the payment options available on the balance of the principle limit?

    A lot of questions can be derived from this publication. However, it has to be a plus for our industry!

    John A. Smaldone

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