When a senior is considering a reverse mortgage, one concern that many have is whether the reverse mortgage will eliminate their kids/estates inheritance that would come from the home. To address this issue, we have seen an equity protection feature from a few lenders offering reverse mortgages, but recently we saw a new type of protection feature become available. At the NRMLA conference Generation Mortgage released their new Equity Guard™ feature which allows Generation Plus borrowers to halt interest accrual on their homes depending on real estate market conditions.
“If a borrower’s home value is significantly less than their loan balance, the lender will suspend the interest accruing on the loan,” said Jeffrey M. Lewis, Chairman of the Board of Generation Mortgage. If a future appraisal indicates that the value of the home has risen, the interest rate will resume. With the the housing market in its current volatile state, the Estate Guard feature provides another level of security to borrowers and their estates.
“Estate Guard safeguards the borrower and his heirs, reducing an exposure many have not recognized to be present in non-recourse loans. Of course, any existing Generation Plus borrowers may avail themselves of this option as well,” added Mr. Lewis. According to Joe Morris, CEO of Generation Mortgage, “We are very excited about this creative new feature, never before available to borrowers of jumbo reverse mortgages. Given the cyclical nature of real estate markets, we feel confident Estate Guard will be well-received, safeguarding seniors whose homes could depreciate in value, through no fault of their own.”
To read a copy of the full press release click the link below.