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Reverse Mortgage Product Landscape Comes With Caveats

Navi Persaud
May 08, 2020
Assorted homes in San Francisco

The modern reverse mortgage landscape has evolved and expanded with a number of available products that may or may not be sponsored by the federal government. As more proprietary products enter the market, counseling becomes more difficult, as the sheer number of products can be overwhelming and confusing for borrowers. A recent report from Reverse Mortgage Daily explores why there is confusion with the increase of products and what originators can do to help alleviate some it.
"The counselors can sometimes ask borrowers ‘what type of counseling’ they need, even to FHA borrowers, and it can get them pretty confused," said Christina Harmes Hika, originator at the C2 Reverse Division of C2 Financial Corp in San Diego, Calif. “In December, I had three clients call saying the counselor needed to know ‘what type of counseling’ when it was just an FHA HECM–which used to be the default unless a particular type of counseling was requested.”
Hika has developed her way of making sure her client knows what type of product they will be using. She uses the product name or type after the client has chosen what loan they want to move forward with, according to the report. She also ensures that her clients know the access code to ask for their specific portfolio product name or the FHA HECM type of counseling session they need.
"If the lender helps to prepare and educate the client, the counseling experience can be empowering rather than confusing or daunting," said Kathy Conley, stakeholder engagement specialist at GreenPath Financial Wellness in Farmington Hills, Mich., according to RMD. "It would be helpful if the client understood which specific product the borrower is seeking and why; fixed rate or ARM (if ARM, monthly and annual adjusting rate, advantages and disadvantages); closing costs and adjustments; and timing of draws (all at closing or partial draw at closing and how the rest of the funds will be drawn including LOC)."
Click here to read more about how originators can help with the evolving reverse mortgage product landscape.

May 08, 2020
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