On the same day Reverse Mortgage Funding announced its new proprietary Equity Edge Reverse Mortgage, two more companies affirmed their commitment to building the private home equity conversion loan space.
Longbridge Financial will introduce multiple private reverse mortgage products this year, CEO Chris Mayer announced Monday* at the National Reverse Mortgage Lenders Association’s eastern meeting in New York City.
“The idea that nearly our entire industry relies on the federal government for what it does, in addition to all of the state rules .. it’s really hard to run a business that’s so heavily dependent on Washington,” Mayer said, according to a statement released by NRMLA. “It is important to offer non-FHA reverse mortgages so the industry is insulated from policy changes and can serve a wider variety of customers.”
The Mahwah, N.J.-based Longbridge plans to start with a wholesale fixed-rate loan targeted at borrowers interested in low upfront costs, NRMLA noted.
Finance of America Reverse, which last year announced upgrades to its existing HomeSafe jumbo mortgage, also revealed the coming summer introduction of a “Flex” version, a fixed-rate loan that can provide borrowers up to 40% of their loan proceeds over a five-year term. The HomeSafe product currently only has a lump-sum draw feature, targeting homeowners interested in principal limits of up to $4 million.
RMF started the wave Monday with the introduction of the Equity Edge, aimed at prospective borrowers with homes valued at $700,000 or more. Rolling out to five states starting June 1, the proprietary loan represents a reaction to the October 2 principal limit factor reductions — which accelerated the Bloomfield, N.J.-based company’s plans to enter the private market.
“We were always going to introduce our own proprietary product, but it kind of had us shift gears a little bit faster than we thought we would,” RMF president David Peskin told RMD.
Observers had predicted a potential uptick in private reverse mortgage options under the Department of Housing and Urban Development’s new principal limit and insurance premium structures, and there were hints as early as last fall. Speaking at NRMLA’s annual conference in San Francisco last November, American Advisors Group founder and CEO Reza Jahangiri praised FAR president Kristen Sieffert and her company’s push toward proprietary.
“I think what Kristen’s doing, and what we’re working on, is critical,” said Jahangiri, whose AAG has added forward mortgages and real estate brokerage services to its product lineup in the past year. “This forces our hand to accelerate the business.”
AAG formally teamed up with FAR in March to distribute the HomeSafe loan on a correspondent basis, using the “AAG Advantage” name through retail channels and “HomeSafe” through wholesale.
“Product innovation will be instrumental in helping more seniors access home equity to get better retirement outcomes and maintain their standard of living,” Jahangiri said in a statement announcing that partnership.
For its part, FAR appears to view the entrance of competition into the market as a positive for the industry.
“It’s exciting to hear that two new competitors are coming into the market with proprietary products,” FAR vice president of wholesale lending Jonathan Scarpati said, according to NRMLA. “It will lead to innovation and, most importantly, provide more options to borrowers.”
Editor’s note: A previous version of this story stated that FAR and Longbridge’s announcements occurred Tuesday; that event actually happened on Monday. RMD regrets the error.
Written by Alex Spanko