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Reverse Mortgage Calculators Playing The Bait & Switch Game?

image Today a friend from California sent me an email with questions about his mother getting a reverse mortgage and attached was a printout from Sun West showing a comparison of the different products.  Looked normal, a LIBOR and CMT based HECM along with the HECM fixed.

I was about to respond to the email saying that everything looked ok but then I noticed something… LIBOR was calculated  with a 2.250% margin and the CMT based product had a margin of 2.500%.  Now, all of us know that Fannie Mae raised margins drastically a few weeks ago so why are they continuing to offer these type of rates on their websites?

I thought maybe they had some unbelievable pricing that no one else was offering so I took a look at their rate sheet they send to brokers and saw the following:

Margin CMT 15 Days 25 Days
2.5 1.444 1.537
     
Margin LIBOR 15 Days 25 Days
2.25 0.725 0.85

Now call me crazy but is Sun West really willing to eat that much YSP on loans to beat the competition?  In all fairness, it’s probably an honest mistake but it can have some big issues for its wholesale clients since many use their branded calculators. 

You can see the one they made for RMD here, or you can use their retail calculator to get a great deal on a reverse mortgage.  Can you say Bait & Switch?

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