Two of the biggest names in the reverse mortgage industry are teaming up in an attempt to expand the reach of proprietary products.
American Advisors Group will begin offering Finance of America Reverse’s private HomeSafe loan on a correspondent basis, RMD has learned.
Under the agreement, the Orange, Calif.-based AAG will offer the HomeSafe — a proprietary reverse mortgage with loan values of up to $4 million — through the AAG Advantage name on a retail basis, and the HomeSafe name through its wholesale channel.
FAR will also continue to market HomeSafe under its own brand through both the retail and wholesale channels.
“AAG brings tremendous volume to our relationship, which in turn allows us to remain a consistent issuer for the capital markets,” FAR president Kristen Sieffert said in a statement. “This partnership will ultimately enable us to continue to invest in our business and to quickly develop and bring new products to market for the benefit of our clients and partners.”
After initial product success, the Tulsa, Oklahoma-based FAR rolled out improvements to its HomeSafe product late last year, increasing the loan limit and improving the loan-to-value ratio. In a Home Equity Conversion Mortgage landscape that saw reduced principal limits and higher mortgage insurance premiums introduced late last year, FAR has positioned the HomeSafe as a better option for homeowners with higher home values — specifically above $850,000.
Sieffert and AAG founder and CEO Reza Jahangiri have both spoken in recent months about the importance of expanding beyond the HECM for players in the space; industry leader AAG has already launched a forward lending division and a real estate brokerage in an attempt to become a “product agnostic” company.
“What’s great about this agreement is that by driving volume, we are allowing for more flexibility and product improvements, which ultimately will benefit consumers,” Jahangiri said in a statement. “Product innovation will be instrumental in helping more seniors access home equity to get better retirement outcomes and maintain their standard of living.”
The HomeSafe product does not require a mortgage insurance premium, the two companies noted, and can be used to purchase a new property. The jumbo product also has a non-recourse feature.
“By teaming up, we are combining AAG’s volume with FAR’s product innovation, which allows us to do more together than either one of us can do alone,” Jahangiri said.
Written by Alex Spanko