After teasing a new private reverse mortgage offering in the spring, Longbridge Financial on Monday formally announced its Platinum mortgage program, marking the latest in a string of new proprietary products hitting the market this year.
With the Platinum, the Mahwah, N.J.-based Longbridge seeks to tap into a wider range of potential borrowers than the government-backed Home Equity Conversion Mortgage currently serves, including condo owners and seniors with high-value homes. Borrowers can access up to $4 million in upfront cash, with additional options for homeowners who want to minimize origination costs.
“We’re trying to meet clients’ needs, but recognizing first and foremost that this is going to provide more cash at a comparable interest rate [for most borrowers] than alternative products in the market,” Longbridge CEO Chris Mayer told RMD.
The Platinum — a single-draw, fixed-rate reverse mortgage — is currently available through retail and wholesale channels to seniors aged 62 and older in California only. Longbridge plans to expand the program to Arizona, Colorado, Pennsylvania, Florida, Utah, and Virginia within the next few weeks, with a goal of having the loans available in at least 20 states by the end of the year.
In addition to owners of higher-priced homes, the Platinum is aimed at seniors who might want to buy a home with a reverse mortgage, but have found the Federal Housing Administration’s HECM for Purchase program too restrictive. For instance, Mayer said his company has a more streamlined income verification process for the Platinum products, and will consider proceeds when determining the ultimate qualification decision.
“Generally speaking, we think the borrowers will have an easier time getting through our process —certainly easier than HECMs,” Mayer said.
On the wholesale side, Longbridge will allow closed loan sellers operating under its principal authorized agent (PAA) program to offer a wider range of options to borrowers, such as adjusting the interest rate in order to help a senior cover closing costs — instead of being restricted to the set options on a price sheet, Mayer said.
Riding the wave
With the move, Longbridge joins a wave of other companies that have introduced private reverse mortgages in the wake of rule changes to the HECM program, which ushered in lower principal limit factors — and a corresponding decline in origination volumes.
So far this year, Reverse Mortgage Funding and One Reverse Mortgage have introduced new proprietary products, while Finance of America Reverse rolled out a ‘Flex’ version of its existing HomeSafe reverse mortgage. FAR also earlier this year announced a partnership with industry leader American Advisors Group to offer the HomeSafe products through AAG’s retail and correspondent channels.
This industry-wide push toward proprietary began in earnest last fall, when AAG CEO Reza Jahangiri urged players to think beyond the Department of Housing and Urban Development’s HECM in a bid to expand the industry and take a more long-term approach to dealing with government rule changes.
For Longbridge, the move into private products represents a way to position home equity conversion loans as a more streamlined, less burdensome alternative to the HECM.
“In general, as we innovate, I think the industry is going to continue to make process improvements that are going to be meaningful additions to the market — not being constrained by the FHA rules,” Mayer said.
Written by Alex Spanko