American Advisors Group (AAG) today announced the launch of a jumbo reverse mortgage product that will allow borrowers the opportunity to borrow up to $3 million in loan proceeds.
Dubbed AAG Advantage, the new loan will enable qualified borrowers to obtain a reverse mortgage on properties valued at up to $6 million—far greater than the Federal Housing Administration’s loan limit of $625,000 for traditional Home Equity Conversion Mortgages (HECMs).
“With our new AAG Advantage, we’re proud to help extend reverse mortgages to a greater number of seniors and provide borrowers with higher value homes a solution to access more funds,” said AAG Chief Executive Officer Reza Jahangiri in a statement. “The launch of AAG’s jumbo reverse mortgage loan further reinforces our commitment to helping American seniors age in place and gain greater financial freedom.”
The jumbo program is initially being piloted by AAG’s retail division and the company tells RMD that it plans on making the product available to its wholesale partners once it has “perfected the program features and operational success.”
AAG Advantage is available for both homeowners of HECM-eligible property types as well as owners of Ginnie-Mae approved condos. The new product will be made available through AAG’s retail channel in select states, with plans to further rollout the product in other states in subsequent phases.
So far, AAG Advantage is currently available to borrowers in California, Connecticut, Florida, Illinois, Pennsylvania, Texas and Virginia, AAG’s Executive Vice President of Retail Lending Paul Fiore tells RMD.
“Our intent here is to try and help those consumers with home values in excess of $1 million or more who are looking to access additional proceeds above and beyond what is offered by a traditional HECM,” Fiore says.
The arrival of AAG Advantage marks the second jumbo reverse mortgage to launch in the space within the past year, joining Urban Financial of America’s HomeSafe product, which became available to borrowers September 2, 2014.
Urban’s HomeSafe is a fixed-rate reverse mortgage that allows borrowers with high-value homes the opportunity to borrow up to $2.25 million in loan proceeds.
While both the Urban HomeSafe and AAG Advantage aim to serve a higher value clientele with different needs than the average HECM borrower, AAG notes the timing of the long-awaited product as significant, considering the continued improvement in the housing market and the implementation of the Financial Assessment in the reverse mortgage industry.
“The timing is actually quite good,” Fiore says. “The home market has shown a nice recovery over the last few years and the Financial Assessment adds more credibility to the general public with regard to reverse mortgages.”
AAG Advantage first became available to borrowers last week, however, more of the product’s marketing and advertising has commenced this week, Fiore said. And so far, the reception has been encouraging with already a “significant number” of seniors moving forward with the product, he notes.
“The bottom line is AAG Advantage allows us to reach a consumer base that has a demand for reverse mortgages that weren’t being served by a traditional HECM,” Fiore says. “The timing of being able to offer a product to higher home value borrowers who might use a reverse mortgage differently than other consumers for us is exciting.”
Written by Jason Oliva