One Reverse Mortgage Launches HELO, First Private Product

One Reverse Mortgage is rolling out its first private reverse mortgage product, which the company hopes will meet the needs of a larger audience looking to tap home equity during retirement.

The San Diego, Calif.-based reverse mortgage lender, a subsidiary of Quicken Loans, will allow consumers to borrow up to $4 million using the Home Equity Loan Optimizer (HELO) product, according to the company’s website.

There are also fewer property restrictions compared to the Federal Housing Administration’s Home Equity Conversion Mortgage.

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“If you live in a high-value home, condominium, home with solar panels, or any other residence with features that do not qualify for an FHA HECM, you still have the ability to qualify for our new HELO reverse mortgage product,” One Reverse Mortgage said on its website.

The loan also allows borrowers to access 100% of funds at closing, and consolidate debt as part of the mortgage process.

Gregg Smith, CEO of One Reverse Mortgage, told National Mortgage News that the company plans to securitize the HELO, and is considering other variations of the product in the future. At the moment, the product is only available through the retail channel, but the company has plans to eventually expand into the broker channel as well.

Consumers suddenly have multiple different proprietary reverse mortgage options, with several of the largest lenders rolling out their own products over the last year. For an industry that has long been reliant on the FHA-insured reverse mortgage, the wave has been trumpeted as a positive diversification for lenders and originators — as well as the government.

“I don’t think [the HECM] was ever envisioned to be 100% of the market,” FHA Commissioner Brian Montgomery said during a press call recently. “I think folks would like to see that expand; I would like to see the market expand. There are some proprietary products out there, but we pretty much dominate the market right now.”

One Reverse Mortgage had not responded to RMD’s request for comment at press time.

Written by John Yedinak

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  • Good to see more players coming into the market place with their propitiatory reverse mortgage products!

    One Reverse coming out with it’s “Home Equity Loan Optimizer” (HELO) product has characteristics of FAR’s Home Safe product.

    However, there is nothing wrong in that, the more players coming into the market with their own Jumbo propitiatory products will place that much more emphasis on the reverse mortgage as a whole! In fact, this can’t hurt the HECM in the long run!

    Good to see articles like this coming out!

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

  • What percent of potential borrowers will look at the PLF and lack of Line of Credit and decide that selling/downsizing is the obvious choice. The higher the home value, the more acceptable the downsizing option; downsizing from a $2,000,000 home to a $1,000,000 home with a sales profit isn’t too shabby.

    The attraction of the government-insured/regulated HECM is that it really isn’t a “last resort” product, it actually is greatly beneficial under certain, but widespread circumstances.

    So far, the “new” proprietary reverse mortgages proposals are clearly aimed at the “last resort” sector, and it doesn’t seem that the proprietary loans going far beyond the HECM $600,000+ home-value limit is enough; these loans must also meet/”make-up for” the attractive terms of the HECM (PLF, government-backed, non-recourse, Line of Credit, etc. ).

    • Ed,

      I am thankful that so many lenders are offering and continue to work on offering proprietary reverse mortgages. In 2007 I helped many seniors by using these products.

      I live in a world where I try to help seniors like you. Some need more proceeds than what a HECM can provide. While I would love to offer them an adjustable rate proprietary reverse mortgage product, I am not aware of any lender in this industry who has one. Do you? Without government insurance or ridiculous margins, many lenders have learned the lesson that these products contain too much risk to offer them as adjustable rate mortgages or to offer them with higher LTVs.

      Yet all proprietary reverse mortgages currently being offered must be nonrecourse by federal law. If you know of any that are not nonrecourse, please let me or someone else know.

      As to your “etc.,” please elaborate.

      Proprietary reverse mortgages are not currently designed to be competitive to HECMs. They are designed to fill holes HECMs do not and to offer the kinds of proceeds HECMs will not on homes with values exceeding the current lending limit.

      As an originator, I would rather have more products to offer than less. I don’t get your negativity about proprietary reverse mortgages. If you are saying that HECMs should be considered first, we agree but that is not what I am sensing.

      I have a lot of examples where this product has helped immensely. First there is the retired RN who had a multi-million dollar home on one of the nicest canals in all of Southern California. Her cash flow was getting more and more negative the longer she was in retirement and she inherited her lovely home from her well-to-do parents. The proprietary reverse mortgage saved her much grief through the date she had to move due to mobility issues.

      Then there was the home in South Los Angeles with the couple who took in their married child, grandchildren, and one great-grandson. They had tried other lenders but none of them were familiar with proprietary reverse mortgages. The costs of a HECM was prohibitive because they had a high value home for that area and one spouse because of age had to be non-borrowing and they wanted to get a HECM in about 18 months when the disability suit the husband had won would pay off and at that time he would be 62 when they could get a HECM. They were in the midst of going from default to foreclosure on their home. We checked with the lender and a proprietary no upfront cost reverse mortgage did the trick for the 18 months. Because our costs were higher than another lender, they got a HECM 18 months later from another company and everyone was happy except me who did not get his upfront costs low enough to originate the HECM.

      So why don’t like proprietary reverse mortgages? And why aren’t they nonrecourse?

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