The New Reverse Mortgage: 4 Things You Should Know

Reader Comments
Back to blog

The HECM Saver program, which offers much lower upfront costs to reverse mortgage borrowers, is growing in appeal among consumers who might not need immediate access to the cash they borrow against their homes. A good site that told me all the truths about reverse mortgages and the information about HECM reverse mortgage program was http://www.reversemortgagelendersdirect.com

Scott Dale of IL 1:06AM December 15, 2011

My elderly mother took out a reverse mortgage, she's got dementia, in Feb 08. Its devastating, now she will lose her home. She did not understand the consequences of the loan of losing her home, she thinks she can pay it off with the investments. Why do they allow these big financial organisations praying on poor elderly pensioners. Its criminal.

cristelle of NY 11:10PM December 26, 2010

Why haven't we heard about how much money HECMs lost during the current home bust?
People have to realize that a reverse mortgage is not a gift, but a loan. And it has to be paid back so that lenders can make money. So to complain about fees is ignorant.
The only fees that seem outrageous are the brokers' fees. This loan requires no underwriting, just paperwork. There should be a standard fee, regardless the size of the loan. Lending $50,000 or $250,000 doesn't take any more work. The age of the borrower, not their credit worthiness seems to be the only factor.

Jimmy of MD 3:29PM October 05, 2010

Regarding the statement: "When the prospective HECM borrower meets with a lender, a Good Faith Estimate or the Truth in Lending Act Disclosure will be provided for the purpose of making a true comparison between Saver and Standard and other costs associated with obtaining the HECM," an FHA spokesman said in a prepared statement provided to U.S. News.
The Good Faith Estimate (GFE) is ONLY provided at the time of application, not "when the prospective HECM borrower meets with a lender." For example, I as an originator meet with my prospective borrowers for an informational session prior to doing an application and provide them calculations and a comparison of program options but not a GFE because that can only be provided with an application according the RESPA rules implemented earlier this year. The Truth in Lending is ALSO provided at the time of application, it is not an either or situation. Both documents are required to be provided to the borrower at the time of application.
Your points to consider are good no matter what type of loan one is seeking even if one is looking at refinancing a conventional mortgage.
An additional consideration in the comparison of HECM products should be if looking at the HECM Saver to keep the fees lower now, at a future date if more funds are needed and they want to refinance the origination fee and third party closing costs will be paid a 2nd time. And depending on the future home value there is a risk that one could not refinance because they wouldn't have enough funds to pay off the current HECM. So in the long run it may not be feasible if one may need more funds at a future date. One needs to look at the big picture not just immediate needs.

Beth Paterson of MN 1:37PM October 02, 2010