All Reverse Mortgage on Monday announced a new reverse mortgage comparison tool for potential borrowers, becoming one of the first companies to directly respond to the new post-October 2 landscape.
The All Reverse Loan Optimizer, or ARLO, allows prospective Home Equity Conversion Mortgage applicants to preview an array of different loans with a variety of variables, including annual rates, origination fees, and credits. The goal, according to the Orange, Calif.-based lender, is to help borrowers navigate the new mortgage insurance premiums and principal limit factors — and the sudden burst of rate competition that many have predicted will come along with it.
“I believe this is a win for the consumer, while also supporting the needed solvency of the reverse mortgage program,” All Reverse president Cliff Auerswald said in a release announcing the new tool.
The ARLO program provides real-time amortization, interest rate, and closing-cost projections, letting borrowers balance costs against their intended loan goals: For instance, the company noted, potential applicants can weigh whether they want a loan with the highest available amount of cash, or one that mitigates the eventual size of the balance.
The new reverse mortgage math has created a significant change to the way HECMs are marketed: Now that the so-called “rate floor” has almost disappeared, many players in the industry have predicted the rise of interest rate competition.
“Today, savvy homeowners who seek competitive interest rates will not only accrue less interest on the money they borrow through a reverse mortgage, but they will also have more cash available to them via their initial line of credit under the new loan parameters,” the company said in its release.
All Reverse also positioned the comparison tool as a way to meet the Department of Housing and Urban Development’s intended goal of stabilizing the Mutual Mortgage Insurance fund; when announcing the new program regulations, HUD officials said the MMI would require a bailout from Congress if the department and the Federal Housing Administration didn’t act decisively to curb payouts.
“When a consumer secures a reverse mortgage loan with favorable rates, the homeowner will retain a greater equity position over the life of the reverse mortgage loan,” Auerswald said. “This provides additional options for borrowers or their estate/heirs, mitigating additional risk to the FHA MMI fund.”
Written by Alex Spanko