Reverse Mortgages, Bank or a Broker?

After 31+ years Mortgage Banking experience working for large banks and Mortgage Bankers, we decided it was time to start serving our senior clients as mortgage brokers. When asked why we chose to do this rather than accepting positions with large banks, we tell people it was an easy decision to make, we love what we do, and we believe in servicing our senior borrowers with nothing but the best. As mortgage brokers, we deliver the best for our customers in both products and service.

Allow me to show you how.

The vast majority of all the Reverse Mortgages funded today are the HUD Home Equity Conversion Mortgages (HECM or a Heck-um). This loan is government insured and the Federal Housing Administration steps in and makes certain that all borrowers receive their payments in a timely manner so it doesn't make any difference from which lender a borrower gets their HECM mortgage, they have insurance for which the borrower pays that guarantees they will always receive their money in a timely manner.

Yet, some big banks (not all, but we see the disclosures that borrowers bring to us to compare against) continue to quote maximum origination fees, higher margins and then try to scare borrowers by telling them that they HAVE to go through them to have their loan serviced by a bank who will be there in the future to continue to make the payments to the borrowers!

That's just wrong but it still happen! They did not tell the borrower the HUD Mortgage Insurance that they pay with this loan insures that they will always receive their money. Or that they might be able to get a better deal, choosing instead to frighten the borrower into believing that if they chose to go through another source they might not always receive their Reverse Mortgage payments.

This can result in the borrowers paying more fees, a higher margin, or receiving less money and that's just not right! Then there is the case of the proprietary or jumbo Reverse Mortgages. Only one or two of the large banks have their own jumbo Reverse Mortgage products. These programs are not insured by HUD and are subject to change as the market changes.

Many of the other banks offering Reverse Mortgage loans either only offer the HUD HECM product or they broker the proprietary product out to these few sources themselves. So what does all this mean?

As brokers, we can keep track on the entire market and work with all the providers of HUD HECM loans and when there are still lenders out there offering the 1.50% margin, we can utilize a lender with a forward commitment who still offers a lower margin, giving the borrower more money on their Reverse Mortgage than a large bank who may only be offering a 1.75% margin.

Also, if we can do a loan with lower origination fees, we can save the borrower money up front which can add up to thousands of dollars over the life of the loan. We have access to several proprietary programs instead of just one, which means we can offer the product which is best for the borrower, not just the one program we have available.

And when a program is eliminated or suspended, we have the ability to switch to another lender seamlessly so that the borrowers always have an avenue for their needs. The lender who has only one program or one source may not have this availability.

So don't be fooled into thinking that one HUD HECM loan is better than another. What may make the loan better is what it costs you to get the loan; how much money you qualify for based on the parameters such as the margin, etc; and how good the company is at getting your loan closed! We have the experts available and can close HECM loans typically in less than 30 days with borrower cooperation.

For some borrowers, that can really mean all the difference. Try getting service like that from your big bank and remember, the HECM loan is the same loan everywhere and they're government insured so why pay more for worse service!