Finance of America Reverse on Tuesday formally introduced updated features for its proprietary HomeSafe reverse mortgage, joining the growing wave of new private product options hitting the marketplace this year.
The HomeSafe Flex option will allow interested borrowers to draw 60% of the loan proceeds upfront, then receive the remaining 40% in the form of monthly term payments spread out over a period of up to five years. The Flex also comes with a fixed rate that applies to the entire loan balance.
“We developed this new feature on the heels of feedback from the financial advisor community and clients who are using HomeSafe as a wealth management tool to leverage home equity in retirement,” FAR president Kristen Sieffert said in a statement announcing the new product. “Overwhelmingly, we heard that advisors and clients wanted more flexibility in how they drew their payments without sacrificing the fixed-rate feature.”
The Tulsa, Okla.-based FAR originally rolled out the HomeSafe in 2014 — back when the lender was still known as Urban Financial of America — to provide a jumbo option for borrowers with high-value homes. At the time, borrowers could access up to $2.25 million in proceeds, a figure that FAR raised to $4 million late last year; the lender also last fall announced the sale of the first HomeSafe loan on the secondary market.
FAR then teamed up with industry leader American Advisors Group to offer the HomeSafe on a correspondent basis in March, with AAG branding the products as “AAG Advantage” through its retail channel.
The HomeSafe Flex mortgage will initially be available through the retail, wholesale, and correspondent channels to consumers in California, Florida, and Texas. Additional states will join the lineup over the next several weeks, according to a FAR spokesperson.
“Our mission at FAR is to continuously innovate so that our partners and reverse mortgage specialists have access to a broad product suite to meet the varying needs of the clients we serve over the course of their retirement years,” Sieffert said. “The introduction of the Flex option is one step further toward that goal, and we anticipate introducing additional products into the market later this year.”
FAR’s jumbo expansion represents just one example of proprietary reverse mortgage growth in 2018: Reverse Mortgage Funding introduced its private Equity Edge loan, designed for borrowers with homes valued at $700,000 or more, last month, and Longbridge Financial indicated that it plans to offer multiple new proprietary products this year.
The Department of Housing and Urban Development’s recent changes to the federally backed reverse mortgage program have played a role in this new landscape, with RMF president David Peskin telling RMD that the lower principal limit factors introduced last fall accelerated the company’s existing plans to enter the proprietary space.
Written by Alex Spanko