Reverse mortgage lenders are slashing origination points, eliminating servicing fees and offering the lowest rates in two decades.
A joint initiative between Pentagon Federal Credit Union and Sun West Mortgage Co. makes home-equity conversion mortgages available to the Alexandria, Va.-based credit union’s members in Washington, D.C., Maryland and Virginia, a March 18 press release said. The program eliminates the upfront 2 percent origination fee and monthly $35 servicing fee, while the rate is lower “than is offered by most other financial institutions.”
Generation Mortgage Co. introduced in a news release last week a fixed-rate reverse mortgage product with no origination or servicing fees. The program is now available through its retail channel and was made available through its broker and correspondent channels on April 1.
The no-fee program is an HECM insured by the Federal Housing Administration. Up-front proceeds are increased by “up to $10,000 or more, depending on the equity in their home.”
A day earlier, Financial Freedom announced that it now offers a fixed-rate reverse mortgage with no origination or servicing fees. Borrowers are expected to save between $3,500 and $10,000 in a typical transaction.
Financial Freedom also said it reduced the interest rate margin on its LIBOR-based reverse mortgages to 175 basis points from 250 BPS.
And a month ago, MLS Reverse Mortgage said it would offer its 5.56 percent fixed rate reverse mortgage with no monthly service fees. The fee was traditionally between $25 and $30.
A news release last month from iReverse Home Loans called the recent elimination of monthly servicing fees by two national reverse mortgage lenders a welcomed development. Most loans officers and counselors can’t even grasp the fee — let along explain it. iReverse said the elimination of the fee will lower the cash-to-close on a purchase transaction by $5,250.
A 4.99 percent fixed-rate HECM announced by Live Well Financial Inc. is the “lowest fixed rate in the 20 year history of the HECM program,” according to an April 5 statement. The program, available to correspondent partners of the Richmond, Va.-based company, will reportedly save a typical 70-year-old borrower with a $300,000 property around $67,000 in interest costs over 20 years when compared to today’s fixed-rate HECMs.