Longbridge Introduces New Private ‘Platinum’ Reverse Mortgage

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.

Advertisement

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

Join the Conversation (7)

see all

This is a professional community. Please use discretion when posting a comment.

  • Mayer is right when he talks about “not being constrained by FHA rules” when it comes to proprietary reverse mortgages. One of the biggest sources of HECM constraints comes from HECM financial assessment. It is noticeable that lenders are apparently not embracing that form of financial assessment when given a choice.

    • How do you know whether these proprietary reverse mortgages will be even more restrictive than the HECM? Because they say so?

      Try waiting at least until a game has been played before being their cheerleader.

      • McSherry,

        What are you talking about?

        Mayer who runs a lender was speaking about lender constraints, not borrower contraints, as was I by referencing Chris and financial assessment. As a lender Chris can design anything that falls within the description for a reverse mortgage as found at 15 USC 1602 (bb).

        But you have found out my secret. I love more product that helps more seniors, even those who seem wealthy or that own condos, etc.

      • Ed,

        I was selling jumbo proprietary reverse mortgages (“jumbos”) long before you got your HECM. The people I sold jumbo proprietary reverse mortgages had average home values of $1.5 million. The lending limit for HECMs back then was just $362,790. Jumbos were an answer in helping seniors with higher value homes generally in the same way as HECMs for people with lower value homes, like you.

        Mayer is not only the head of Longbridge but he is also a Real Estate professor at Columbia. I have sold proprietary reverse mortgages and found them a much easier presentation than today’s HECM. I believe he knows this product better than me or you.

        Perhaps there is a chance you are right but for now and for the long run my money is on the conclusions of Mayer.

  • I agree with George Owens. however, I feel the largest impact that has effected the HECM market and psychological attitudes of originators was the ruling of October 2, 2017.

    The PLF adjustments through everyone in a tizzy and the effect is still lingering. I don’t feel it is as bad as it was when it first hit, but it is there!

    The proprietary products coming to the market this year by as many lenders that have come up to the plate is good for the industry as a whole.

    FA is part of the proprietary programs, we have no choice but to embrace it and grasp the reasoning behind it!

    Another thing I noticed is that some of the lenders coming out with a proprietary program are utilizing and selling to the large innovators in this market, not all but some. I am not saying that is a bad thing, I am just making mention of it.

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

    • John,

      What do you mean by? “Another thing I noticed is that some of the lenders coming out with a proprietary program are utilizing and selling to the large innovators in this market.”

      • George,

        Some lenders of records are using propitiatory products from seller servicers such as FAR and RMF. AAG is a good example of what I am referring to!

        John

string(104) "https://reversemortgagedaily.com/2018/08/12/longbridge-introduces-new-private-platinum-reverse-mortgage/"

Share your opinion