Finance of America Reverse Sees Success with Jumbo Product

SAN FRANCISCO — Amid the changes currently roiling the federally backed reverse mortgage market, one lender sees a future in proprietary jumbo loans — and hinted at future innovation to come.

Finance of America Reverse successfully sold its first proprietary loan on the secondary market earlier this year, and the solid performance so far enabled the company to make key improvements to its offering.

Starting Monday, the maximum principal limit increased from $2.25 million to $4 million, with the interest rate for the current loan-to-value structure lowered to 5.99% from 7.75%. In addition, FAR updated the adjusted value calculation to allow borrowers with homes worth more than $5 million to receive more proceeds.

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FAR also rolled out a new proprietary LTV structure with a 6.5% interest rate, which provides an 8% higher LTV on the high end and 3% on the low, president Kristen Sieffert told RMD.

Speaking on a panel at the National Reverse Mortgage Lenders Association’s annual meeting in San Francisco, Sieffert also teased another new product FAR plans to introduce sometime in 2018 — one that will allow the company to “expand the conversation” to a wider audience.

Sieffert didn’t want to get into specifics, but the product might help fill the gap created by the lower principal limit factors introduced earlier this year, she said, and could also appeal to the financial planning community.

Long-term payoff

Back in the earlier part of the decade, when Sieffert and FAR first explored the idea of getting into the proprietary space, investor interest was decidedly muted.

“To say the least, we were met with reluctance,” Sieffert said of her first overtures toward ratings agencies.

But Sieffert and FAR plowed ahead anyway, knowing that the process would be a “long haul.” It took the company three years from the initial roll-out in 2014 to enter the secondary market, and even that represented something of an expedited timeline.

“All the stars really aligned,” she told RMD.

Sieffert also positioned the jumbo push as vital to the expansion for both her company and the industry as a whole.

“It’s very capital-intensive,” she said. “We had to have a pretty strong stomach for carrying that on our balance sheets. [But] the more we can do outside of HECM, the more the market gets interested in the product, so it helps fulfill itself over time.” 

Written by Alex Spanko

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  • Who would not like to see the jumbo market return? It is surprising to see the extent that FAR has been able to move forward. My wife who works at one of the TPOs has been noting the changes offered to TPOs through FAR as she has detected them.

    Let’s hope others join in and bring their own proprietary products to market.

  • Good move on the part of FAR and Sherry Apanay’s team. There is a market for the Jumbo reverse and this latest change by Far will help. to stir up business!

    I agree with my friend Jim Veale, it would be great to see others come into the market with their own proprietary program.

    However, in order to come into the market with those products, one has to have the investors covering the creative and innovative products in the secondary, FAR has accomplished that!

    John A. Smaldone
    http://www.hanover-financial.com

  • >>the maximum principal limit increased from $2.25 million to $4 million

    I ran several scenarios yesterday and the maximum principle limit is still 2.25M … I’m not seeing 4M. Has the increase been implemented in Reverse Vision properly? I see the new rates, but not the new Principle Limit.

      • Quote from the article:
        “Sieffert didn’t want to get into specifics, but the product might help fill the gap created by the lower principal limit factors introduced earlier this year,…”

        What is the typical/average loan to value percentage of cash-available for the jumbo loan (ballpark)? That’s the most important aspect. At least as far as the borrower is concerned; and how borrowers’ concerns are addressed will presumably make or break the product.

        If you’re confident in the viability of the product, how could you not want to be specific about this most important feature (Principal Limit Factor)?

  • I’ve noticed the HomeSafe program doesn’t match FAR’s HomeSafe bulletin from November 13. Three of the interest rates are incorrect, but more importantly, the Origination Fee’s are incorrect.

    The Origination Fee is suppose to change with the interest rate, but they don’t. It’s always 1%, regardless of the interest rate. It’s suppose to be .5, 1.0, 1.5 and 2.0 percent.

    Either RV implemented the changes incorrectly, or the Bulletin is incorrect.

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