Finance of America Unveils Expanded HomeSafe Second Mortgage For Seniors
Reverse mortgage offering allows homeowners 55+ to tap into home equity without added monthly costs or altering primary rates.
Finance of America Companies Inc. announced the expansion of its HomeSafe Second product. This second lien option enables homeowners aged 55 and over to harness their home equity without incurring fresh monthly payments or altering their primary mortgage's existing rate.
The company's buildout of this second-lien reverse mortgage product will span its direct-to-consumer and wholesale branches, to reach more homeowners and loan originators.
FoA's announcement comes in the midst of the company's strategic shift to being a "retirement solutions company." The company's transformation was kickstarted in October 2022 when it announced the ending of its forward mortgage originations. Fitch Rating agency just downgraded its outlook for the company due to operating losses.
The rise in home prices has bolstered housing wealth for numerous U.S. homeowners. While this has spiked interest in home equity lines of credit (HELOCs) and similar products, numerous homeowners have found accessing these gains elusive. Complications arise from various factors such as the escalating costs of buying or renting, deterring homeowners from downsizing, and the unappealing nature of refinancing due to surging interest rates.
Furthermore, a significant 46% of applicants don't meet the qualifications for a HELOC. The challenges intensify for older homeowners, with a staggering third of all senior refinancing applications being rejected based on income criteria.
The HomeSafe Second product is designed precisely to tackle these obstructions, specifically catering to homeowners aged 55 and older in the present-day market scenario. Given that older cohorts hold more than $12 trillion in home equity, extending the product through AAG is a strategic step to unlocking more of this market.
Starting in November, Finance of America's direct-to-consumer branch, AAG, which reaches over 20 million consumers annually, will introduce HomeSafe Second. With older age groups holding over $12 trillion in home equity, this move is seen as a strategic endeavor to tap into this vast market. Last December, Finance of America acquired AAG.
Additionally, HomeSafe Second will be accessible to wholesale partners via the Reverse Vision loan initiation system, a platform used by reverse mortgage professionals nationwide.
The lender said that consumers will be able to opt for this product starting next month in California, Colorado, Connecticut, Florida, South Carolina, and Texas.
“If you’re 55 or older and considering a home equity loan or home equity line of credit, I absolutely recommend you work with a trusted advisor to do the math and consider HomeSafe Second instead,” said Paul Fiore, chief retail sales officer at Finance of America Reverse. “As high interest rates continue to make refinancing and other second-lien options unattractive for would-be borrowers, HomeSafe Second fills the gap by providing access to their housing wealth without affecting the favorable rates they may have on a primary mortgage. While similar to a home equity loan or home equity line of credit, HomeSafe Second brings the added benefit of stable financing with no extra monthly mortgage payments required.”
FoA says it's the sole second-lien reverse mortgage allowing eligible homeowners aged 55 and older to unlock their home equity via a second mortgage without incurring new monthly payments. While it doesn't affect the first-lien mortgage in any way, homeowners are still obligated to keep up with their primary mortgage payments, including property taxes and insurance.