Jan/Feb 2022 RMM

unapproved condo project,” Downey says. “But with a private-label reverse mortgage, FHA approval is not a requirement, so that makes it possible for condo owners who have never had access to the reverse mortgage program before.” Age is another factor. The HECM is limited to borrowers 62 and older and can be complicated for situations where a spouse is younger than 62. The younger borrower would not be able to be named on the loan. In September, however, Reverse Mortgage Funding (RMF) lowered the eligibility limit on its Equity Elite product to 55. The limit was 60. The move allows RMF to market to more borrowers, says David Peskin, RMF’s president. It is still early, he adds, but the product seems to appeal particularly to borrowers in their early 60s with spouses in their mid-50s. (Note: FAR and Nationwide Equities also lowered the minimum age requirement for their products to 55 in 2021.) “You really want both borrowers to have the benefit of the product,” Peskin says. The benefits, of course, include an end to monthly mortgage payments. That has made Equity Elite attractive to people moving into 55-plus communities, Peskin says. Borrowers are taking what they save on monthly payments and putting money into upgrades to their new homes. Other borrowers enjoy the higher lending limits, Peskin says. With Equity Elite, borrowers can take out up to $4 million. That can free up cash flow for high-net-worth homeowners who might otherwise have to draw from their retirement accounts. RMF also has been working to streamline the approval process for Equity Elite loans, Peskin says. Borrowers, for example, can be approved based on their assets alone, freeing them from having to document their income. And unlike HECM borrowers, Equity Elite borrowers can pay down debt to qualify. “That makes a big difference,” Peskin says, noting the easier process appeals to both borrowers and originators. “There are some lenders that stay away from reverse products simply because they seem foreign. The more we can streamline them and make them like the conventional way of doing business, the more it will open up the market to lenders that want to offer the product.” Other innovations in 2021 include FAR’s introduction in April of a product called EquityAvail. Offered as a tool for retirement savings, the product mixes elements of both forward and reverse mortgages, Scarpati says. Borrowers lower their mortgage obligations for the first ten years of the loan, eliminate payments starting in the 11th year and could qualify for an upfront payment on day one. The maximum loan amount is $4 million. “It’s a solution that addresses some gaps in the market,” Scarpati says. In fact, he says, borrowers who do not have enough equity to qualify for a HECM or a HomeSafe loan are the ideal consumer target for EquityAvail, as they stand to benefit most from that product. Such customers would otherwise have nowhere to turn except a 30-year forward mortgage. Many borrowers fail to qualify due to insufficient cash flow. But even if they do, they face monthly payments well into their retirement. “I’ve been in this industry for about 17 years, and EquityAvail is the most innovative product that the industry has seen,” Scarpati says. “We’ve seen a lot of positive feedback. Our customers are reducing their monthly payments by up to 70 percent and creating a better path to retirement.” High Expectations Lenders anticipate growth this year in private-label reverse mortgages. But results could be influenced by several factors, they say. Chief among them is interest rates. Low rates in 2021 led to a surge in refinancings, both in the forward world and reverse mortgages. As rates rise this year—and with home sales cresting— forward originators could struggle to match last year’s growth. That could send them looking for products, like reverse mortgages, Scarpati says. “We see a huge opportunity to get more forward originators thinking about reverse mortgages; reaching out to clients they helped ten years, even five years ago; and, as they age into some of these private-label products, helping them with potentially their last loan to set them up for a successful retirement,” Scarpati says. Higher rates also could persuade more owners to invest in their existing homes rather than buy new ones, Peskin says. Owners could take out private-label reverse mortgages to pay for renovations, pay off existing loans and improve their cash flow at the same time. Private-Label Products continued on page 20 REVERSE MORTGAGE / JANUARY-FEBRUARY 2022 19