All Reverse Mortgage Rolls Out New Comparison Tool

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.

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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

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  • It would be interesting to see how “ARLO” differs from the standard Reverse Mortgage Comparison used by all lenders, which also permits side-by-side comparison of the different loan parameters mentioned in the article.

  • “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….”

    If the interest rate is accruing less interest on the money borrower then how will they “…also have more cash available to them via their initial line of credit under the new loan parameters?”

    How can that be when principal limit factors are by and large lower? It is doubtful if a lower interest rate will produce more principal limit than the former PLFs table would at a slightly higher rate.

    Can someone explain or provide the example that proves the quotation?

      • Cliff,

        Are you comparing just the impact of the PLF table that took effect on 10/2/2017 to itself? How is that different than any other PLF table? You mean there were no savvy senior homeowners in the past when many of them saw the same thing for decades? I am lost as to how this is new as of October 2, 2017.

      • We all understand the that the floor no longer exists and that lower margins drive higher PL’s but ARLO is not one dimentional. It’s a smart pricing engine that shows a customer both low and high margins and corresponding closing costs sets allowing a user in real-time to compare amortization schedules side-by-side and offers recommendations at which point one particular loan offer produces a lower loan balance and/or larger LOC in future years. It’s built around utilization pricing and has already become a supercharged lead machine for our online traffic and inside sales agents. Our next release will also incorporates RI and soft credit approval. Stay tuned and if you’d like to give ARLO a try or discuss any other opportunities please reach out.

      • Cliff,

        The floor is now 3.06%. All I am asking is how have the rules changed so that a lower accrual rate will also end up with more initial line of credit?

        You may want to talk about it pragmatically but why emphasize today? That is the way it has always been except as you imply when the comparison of both rates had the highest expected interest rate at or below the floor which was 5.06% just before 10/2/2017.

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