Key facts
- Peter Morris of Revolution Mortgage said he hosted a continuing education class with more Realtors than any he had taught before.
- Agi Glukhovskiy of Rate said her team has closed reverse purchase loans in seven to 10 days, with an average of 20 to 25 days.
- Angel Booth of Premier Reverse Closings said a 10- to 15-day process is attainable once a loan is clear to close.
- Borrower counseling by an independent third party is required on all HECM for Purchase deals insured by the FHA.
- Reverse deals use a Good Faith Estimate and HUD-1 form rather than the Loan Estimate and Closing Disclosure used in forward mortgages.
- Neil Sweren of Atlantic Coast Mortgage said he recalled a reverse purchase deal that closed in seven calendar days.
Reverse mortgage for purchase loans let senior homeowners use the federally insured Home Equity Conversion Mortgage program or proprietary programs to buy their next primary residence. Panelists at the National Reverse Mortgage Lenders Association's Annual Convention & Expo in San Antonio said the main obstacle is that real estate agents, financial advisers and loan officers often do not understand how the loans work.
Peter Morris, an Arizona-based senior vice president at Revolution Mortgage, said the ideal prospects are seniors who want to upsize, downsize or relocate, and borrowers who do not qualify for traditional 30-year loans or home equity products because of debt-to-income or credit constraints. He said he recently hosted a continuing education course with more Realtors than any he had taught before.
Typical down payments range from 45% to 65%, depending on the appraised value, interest rate and age of the borrower, with older borrowers facing smaller requirements. Morris described an agent partner in North Carolina with five listings between $400,000 and $800,000, saying a reverse for purchase borrower with $400,000 might afford each of them while an all-cash buyer with the same amount could afford only some.
Shain Urwin, national reverse mortgage director for C2 Financial Corp., and Agi Glukhovskiy, SVP of business support and operations for Rate, described differences from traditional deals. Borrower counseling through an independent third party is required on all HECM for Purchase deals insured by the Federal Housing Administration and for most proprietary reverse mortgages. Reverse transactions use a Good Faith Estimate and HUD-1 form rather than the Loan Estimate and Closing Disclosure forms common in forward mortgages.