Jan/Feb 2022 RMM

ALTHOUGH LOW INTEREST rates fueled strong mortgage closings in 2021, higher rates this year are expected to dampen some activity, leaving lenders in search of new sources of growth. And private-label reverse mortgages could be among the options, according to lenders in the field. They see products with features that can attract homeowners with higher-value properties, borrowers who are below the age threshold for a Home Equity Conversion Mortgage (HECM) and people in scenarios where the government-backed reverse mortgage is not a good fit. “The HECM is a great product, and it serves many customers really well,” says Jonathan Scarpati, vice president of wholesale lending for Finance of America Reverse (FAR), which has been offering proprietary products since 2014. “But lending is not one-size-fits-all. Every borrower is in a different situation.” It’s that recognition—as well as a desire for growth— that is spurring innovation in private-label reverse mortgages. “FAR sees private-label reverse mortgages as the future of the industry,” Scarpati says. Co-Existence Private-label reverse mortgages have long co-existed alongside the HECM. They take up a smaller share of the overall market for reverse mortgages. But free from the regulatory constraints of the government-backed product, they have been fertile ground for innovation. Private-label products include HomeSafe from FAR and AAG; Equity Elite from Reverse Mortgage Funding; EquityIQ from Liberty Reverse Mortgage; Platinum from Longbridge Financial; EquityPower from Nationwide Equities; Premier from 1st Nations Reverse Mortgage; and Reverse Jumbo from Plaza Home Mortgage. The most obvious difference is in the amount of home equity that borrowers can withdraw. HECM borrowers were capped at $822,375 in 2021, while private-label borrowers can take out millions. (Note: FHA increased the HECM lending limit to $970,800 on January 1.) Private-label reverse mortgages also are easier for condo owners to access, lenders say. InMassachusetts, for example, roughly eight percent of condo projects are approved by the Federal Housing Administration (FHA), which is required for a HECM, says George Downey, CRMP, founder of Harbor Mortgage Solutions in Braintree, MA. As a result, private-label reverse mortgages may open the door for the 92 percent not approved by FHA. “The new single-unit approval rules for HECMs make it a bit easier to qualify a limited number of units in an Private-Label Products Examined Industry Experts Explain Support for HECM Alternatives By Joel Berg Jonathan Scarpati George Downey 18 REVERSE MORTGAGE / JANUARY-FEBRUARY 2022