Leading reverse mortgage lender Finance of America Reverse (FAR) has lowered the minimum qualifying age for its “HomeSafe” suite of proprietary reverse mortgage products to 55 in the majority of the states in which the suite is available, RMD has learned.
While this makes FAR the second major reverse mortgage lender in the nation to lower the minimum age requirement on its proprietary, non-agency products, the new threshold applies across a very prominent brand in the private-label reverse mortgage space. However, the new hybrid forward/reverse mortgage proprietary product that FAR introduced earlier in the year maintains its existing requirements related to the period which requires payments.
A change for HomeSafe
While there are multiple variations of the HomeSafe product available from FAR, the age requirement change is not specific to one such variation, according to people familiar with the change.
There are currently three variations of HomeSafe available to borrowers: HomeSafe Standard is the original HomeSafe proprietary reverse mortgage product introduced by FAR. “HomeSafe for Purchase” is designed for those aiming to use a reverse mortgage to purchase a home with a value of up to $4 million, while “HomeSafe Select” adds a proprietary Home Equity Line of Credit (HELOC) loan to the product suite.
HomeSafe Standard is currently available in 25 states and the District of Columbia, while HomeSafe Select is available in 18 states and D.C. In terms of the full coverage of HomeSafe, six states will not be a part of the lowered minimum qualifying age change: in Massachusetts, New York and Washington state, the minimum age will remain 60. In North Carolina, Texas and Utah, the minimum age will remain 62.
The new minimum age requirement in all other states for HomeSafe products is available for any applications taken on or after October 25, 2021.
EquityAvail not directly affected
The lowering of the minimum age requirement to 55 for HomeSafe will not directly affect the hybrid forward/reverse mortgage offering announced by FAR earlier this year, called “EquityAvail.” As previously described for RMD by FAR President Kristen Sieffert, EquityAvail has a period that requires mortgage payments.
“We’ve deemed it a ‘retirement mortgage,’ that creates a better way for pre-retirees to ease into retirement,” Sieffert told RMD in an interview upon the announcement of the product in March. “Basically, by having the ability to refinance into this new innovative retirement mortgage, a borrower can greatly reduce their existing mortgage payments for 10 years. And then after that point, they’re eliminated automatically altogether.”
That 10-year period which requires mortgage payments under the terms of EquityAvail is unaffected by this new HomeSafe minimum age requirement. Even if EquityAvail were directly affected by the change, the 10-year period of regular payments would still apply regardless of the borrower’s age when an EquityAvail loan was originated, according to people familiar with the change.
An emerging trend
FAR is the second reverse mortgage lender to make its proprietary product offering available to borrowers as young as 55. The first such lender, Reverse Mortgage Funding (RMF), announced its own change to minimum age requirements for its Equity Elite proprietary reverse mortgage product suite in September, which is currently available in 19 states and D.C. The fact that two major reverse mortgage lenders have taken the action of lowering their minimum age requirements potentially allows for members of an entirely new generation of potential borrowers to access a reverse mortgage.
RMD has previously explored the implications of the impending transition the reverse mortgage industry will need to make in the coming years to serve borrowers of a new generation, namely “Generation X,” consisting of people born in the period between the early-to-mid 1960s and the late 1970s or early 1980s. Unlike the current predominant generation served by the reverse mortgage industry, people who grew up as part of Generation X have demonstrably different financial circumstances than their Baby Boomer parents.
A recent Harris Poll conducted for publication Fast Company in 2021 emphasizes that perception. It found that older members of Generation X were the least likely of any age group to believe that wealth is even an achievable goal in the modern United States. The pessimism about financial prospects only seems to get weaker when looking at the succeeding Millennial generation.
Based on Home Equity Conversion Mortgage (HECM) endorsement data compiled by Reverse Market Insight (RMI), FAR is the number three lender in the reverse mortgage industry, with 4,505 loans endorsed over the 12 months ending in September 2021. Proprietary reverse mortgage lenders do not release volume data directly.