Finance of America Reverse this week introduced HomeSafe® Second, the first-ever second lien reverse mortgage and the latest addition to its proprietary HomeSafe suite of products.
In an interview with Weekly Report newsletter, Scott Norman, vice president, Field Retail and Government Relations at FAR, said HomeSafe Second achieves two things. First, it opens up an entirely new reverse mortgage conversation for people who have not been exposed to the multiple benefits of the product. Additionally, it can be used by people who are still carrying mortgage debt and would rather continue making payments at a lower interest rate than what the traditional HomeSafe loan offers.
“Rates have been so low over the last decade – with many homeowners paying interest in the low 3’s – that they may not want to pay off that loan when they can continue to make payments on the first mortgage, conserve equity, but use a HomeSafe Second to access needed cash without making a monthly payment.”
HomeSafe Second loans are underwritten to the same standards as a HECM or a traditional HomeSafe. However, “borrowers may not fail financial assessment or have a required or voluntary LESA,” said Norman. “The first mortgage will not be paid off, so it will not be removed from the Residual Income test.”
Additional features of HomeSafe Second include:
- Availability for properties valued up to $10 million
- Loan proceeds up to $4 million
- Ability to leverage loan proceeds to repay other debt (excluding the first mortgage)
- No monthly or annual mortgage insurance premium
- No pre-payment penalties
- No FHA approval required for condos valued over $500,000
HomeSafe Second is available through FAR’s retail and wholesale channels to borrowers in California, Florida and Texas, with additional states being added in the coming months.
Because products change all the time, so will this chart. As new changes are announced, we will update the chart and distribute in future issues of Weekly Report.