RMF Suspends HECM Choice Reverse Mortgage

Reverse Mortgage Funding LLC (RMF) announced Monday that is has suspended HECM Choice from its product suite, citing recent guidance published by Ginnie Mae in April of this year as driving the decision.

According to a notice sent to lending partners, RMF says its decision to pull the fixed-rate loan was also influenced by the announcement of reverse mortgage warehouse lenders that HECM Choice loans are no longer eligible collateral on their lines of credit.

A RMF spokeswoman confirmed the news with RMD.


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.

After the Ginnie Mae ruling, RMF issued a Lender Alert saying it had made changes to the product, including 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 (FHA).

The loan offers borrowers the ability 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.

In a Lender Alert issued Monday announcing the product suspension RMF says, “RMF has and will continue to work with Ginnie Mae and FHA to explore and develop refinements to the HECM program that are in the best interests of the borrower, the industry, FHA, and Ginnie Mae.”

“RMF maintains its commitment to developing new and better products for your borrowers as evidenced by the recent introduction of HECM Max5.”

All closed HECM Choice loans in the pipeline must be submitted to the RMF Fulfillment Center by Aug. 22 and be purchased no later than Aug. 31.

RMF rolled out the HECM Choice loan in December of last year, and launched the HECM MAX5 — a monthly adjustable-rate HECM – in early May of this year.

Written by Cassandra Dowell

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  • The MMI Fund and HUD’s recent HECM-payout reforms have Ginnie Mae and enlightened warehouse lenders to thank for putting a stop to the bogus HECM products merry-go-round that was gathering lethal steam until Ginnie’s April 1st APM.

    This is a testament to the capacity of the secondary market to effectively police aberrant behavior in the primary-market for the good of all stakeholders in reverse-mortgage lending. Bravo warehouse lenders and Ginnie Mae!

  • I dont think that their other products are going to be that risky. The problem is that the HECM market is constantly under scrutiny and therefore constantly in flux. A key phrase in this article are “no longer eligible” meaning that they were at one time. I applaud RMF for staying on top of matters and adjusting to the current state of HECMs in order to provide a superior product to the consumers. ***I am NOT affiliated with RMF in any form. Industry professional with Title and Escrow company and HECM experience as a whole.***

  • The value of future draws against a fixed rate will result in a negative gain on sale as rates rise, which would cause significant financial stress to the lender.

  • I hated to see RMF suspend the HECM Choice program. I feel it would have been a good program for the market.

    I have to assume the main problem was with the secondary market. I am sure RMF thought they had outlets lined up to sell the product into and they fell through.

    However, you have to give Joe DeMarkey and the RMF team a lot of credit. They have shown their innovative capabilities by also developing the Max5 and they have been talking about coming out with other products.

    I am confident that RMF will not give up on the HECM Choice or a hybrid of it. If anyone can come back in the market place with the Choice product, RMF will do so!

    John A. Smaldone

  • If HUD does not want HECMs being offered as fixed rate open end reverse mortgages why is it OK in the HECM Handbook? Both FHA and GNMA are divisions within HUD so saying GNMA does not want something for all practical purposes is the same as saying HUD does not want it either. Yes, HUD would be susceptible to interest rate arbitrage during assignment but such loss from arbitrage would most likely be marginal.

    While I understand the GNMA complaint (and it is reasonable), rather than trying to accommodate the new product, GNMA simply refused to fix the problems making it so the new product cannot be offered through Ginnie Mae. It is not complaint which is unreasonable but cutting off the new product from the HMBS channel does not seem like the most reasonable response.

    Neither FHA nor HUD declared at any NRMLA Convention that the HECM Choice (or any derivation of that product) is an excellent product the way they have about the HECM Hybrid (combination of fixed and adjustable). So if the hybrid gets through FHA and HUD, will GNMA block it from being a permitted HMBS product?

    (The opinions expressed in this comment are not necessarily those of RMS or its affiliates.)

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