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.
Written by Cassandra Dowell