inroads. “It was a great opportunity for me to see it in action,” Calamia says. When she returned to originating reverse loans, she was glad to offer the HECM for Purchase as an option for her clients. “When we do have people who decide to downsize or relocate closer to family or a better neighborhood, the HECM for Purchase is a great, great product,” says Calamia, who is now a CRMP and assistant vice president for America’s Mortgage Resource Inc., a direct lender based in Metairie, LA. And the product is getting even better, according to Calamia and other reverse mortgage executives. In the fall of 2023, the Federal Housing Administration (FHA) unveiled new regulations designed to align the HECM for Purchase more closely with forward mortgages, essentially by allowing greater financial flexibility. In short, buyers using a HECM for Purchase can now take greater advantage of seller concessions designed to reduce closing costs. “The industry has been advocating since the product’s inception for changes that would make the HECM for Purchase more like a traditional purchase transaction,” says Elly Johnson, president of consulting firm All Reverse Pro LLC. “Now that the guidelines are more closely aligned with the forward side of the business, I hope that more realtors, builders and sellers will become better educated on the use of this product, and we will see more HECM for Purchase loans originated this year.” Spreading the Word The HECM for Purchase has made up a small slice of the reverse market over the past 15 years. Nationally, the product has never accounted for more than ten percent of all HECM transactions, and it made up about five percent of the total in fiscal year 2023, according to FHA’s annual report to Congress. But even before the HECM for Purchase was introduced, borrowers were approximating its look through regular HECMs, Calamia says. Homeowners, for example, would take a cash-out reverse mortgage on their home, buy a new house and then sell the house on which they had the reverse. “There were just so many transactions,” she says, noting that the flurry of transactions drove up the cost. Today, Calamia estimates that about two percent of her HECM loans are for purchases, a share that has held steady for years. “We don’t have a lot of people that leave their homes,” she says. America’s Mortgage Resource does forward and reverse loans, and Calamia says she often wondered why the HECM for Purchase carried restrictions that forward loans did not. “It just never made sense to me,” she says. Now that the rules are coming into better alignment, Calamia is optimistic about the potential for the HECM for Purchase. “I do see a huge opportunity there,” she says. Proposed in 2023, the changes allow borrowers to accept up to six percent of a property’s sales price from an interested party, such as a seller, builder, developer or real estate agent. The six percent contribution can be a payment that goes toward a buyer’s origination fees and related closing costs. It is the first time FHA has allowed the use of incentives in the HECM program to reduce closing costs for buyers, according to NRMLA. Calamia plans to reach out to her contacts in real estate and financial planning to alert them to the changes. “The realtors are going to see the buyer first in most cases, not me,” she says. “The realtors are in a position to identify seniors who are looking to buy a house and ask, ‘Have you thought about it? Here’s an opportunity.’” She also sees referrals coming from financial planners, who can help explain the advantages of the product. “The greatest thing about the HECM for Purchase is showing HECM for Purchase continued from page 17 “When we do have people who decide to downsize or relocate closer to family or a better neighborhood, the HECM for Purchase is a great, great product,” —Alison Calamia, CRMP, and assistant vice president at America’s Mortgage Resource Inc. Elly Johnson 18 REVERSE MORTGAGE / MAY-JUNE 2024
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