The slow in home equity lines of credit is causing a rise in inquiries for reverse mortgages, according to a new report. However, many borrowers interested in HELOCs are unable to qualify for them due to changes in credit markets.
"Just months ago when credit was easily had and rates were low, it was still easy to compare the merits of a HECM to a HELOC. Now, the tables have turned, but conditions have simply made the comparison that much more favorable, and the discussion that much easier," said Laurie MacNaughton, a reverse mortgage consultant with Atlantic Coast Mortgage, according to the Reverse Mortgage Daily report
Lenders like JPMorgan Chase Bank and Wells Fargo stopped accepting new HELOC applications as a result of the COVID-19 pandemic, while other lenders may have increased the standards necessary to acquire a HELOC. Now, reverse mortgages are becoming easier to market as the report states that "a lender cannot freeze or cancel the reverse mortgage as is possible with a HELOC," a major selling point for some.
"I just spoke to a financial advisor about this," says Christine Jensen, branch manager, Fairway Independent Mortgage Corp. in Arvada, Colo., according to the report
. "He’s concerned that his client could lose access to her line of credit when she needs it the most. He told me that it’s never been more urgent for his clients to have access to this product."