Quicken Loans Launches Pro­pri­etary Re­verse Mort­gage Al­ter­na­tive to HECM

National Mortgage News - - Origination - By Bon­nie Sin­nock

Quicken Loans sub­sidiary One Re­verse Mort­gage is rolling out a pri­vate-la­bel al­ter­na­tive to the Fed­eral Hous­ing Ad­min­is­tra­tion’s Home Eq­uity Con­ver­sion Mort­gage that of­fers higher loan limits and more flex­i­ble un­der­writ­ing terms.

The prod­uct is called the Home Eq­uity Loan Op­ti­mizer and is al­ready avail­able in the lender’s con­sumer-di­rect chan­nel and will soon be avail­able to mort­gage bro­kers. The loan was de­signed to fill the void where the FHA’s prod­uct has fallen short of what some bor­row­ers are look­ing for, said Gregg Smith, pres­i­dent and CEO of One Re­verse Mort­gage.

“We’ve been ex­clu­sively a HECM shop, but we’ve been work­ing on our own ver­sion,” he said in an in­ter­view.

Cus­tomers have been di­vided as to whether they want to dis­cuss loans over the phone or face-to-face, so One Re­verse Mort­gage will be of­fer­ing the prod­uct through both chan­nels to meet the needs of the two dif­fer­ent types of clients, Smith said.

The fixed-rate, closed-end loan gives bor­row­ers more lee­way than the stan­dard prod­uct in some ar­eas, but less in oth­ers. For ex­am­ple, the new loan al­lows for higher loan limits up to $ 4 mil­lion and for debt to be paid off to qual­ify. It also of­fers more flex­i­bil­ity for bor­row­ers to use a re­verse mort­gage to buy a home, as well as when a con­do­minium prop­erty is in­volved. It doesn’t re­quire mort­gage in­sur­ance.

“We built a pro­gram that speaks to a larger au­di­ence.

You can have seller con­ces­sions and you can con­sol­i­date debt,” Smith said.

In ad­di­tion, the pro­gram makes all funds avail­able at clos­ing, and does more to ac­com­mo­date so­lar pan­els, within cer­tain re­stric­tions. The loan lacks a sea­son­ing re­quire­ment for pre­vi­ous cash- out mort­gages.

But the pro­gram also has some un­der­writ­ing re­stric­tions that HECMs don’t. For ex­am­ple, prop­er­ties must be worth at least $ 350,000, and two ap­praisals are re­quired if the value ex­ceeds $ 2 mil­lion. Bor­row­ers must have a min­i­mum credit score of 640, and non­bor­row­ing spouses are pro­hib­ited.

The com­pany plans to se­cu­ri­tize the new prod­uct. It also is con­sid­er­ing of­fer­ing other vari­a­tions on the pri­vate-la­bel re­verse mort­gage in the future, in­clud­ing an ad­justable-rate loan.

More pro­pri­etary re­verse mort­gages are be­ing launched in the mar­ket over­all in re­sponse to a more pes­simistic out­look for HECM vol­ume.

Gregg Smith

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