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Is the new HECM program a better fit for financial planning clients?
Better Match? The New HECM and Partnering with Financial Planners. For those of you watching who have been originating for five years or more you are very familiar with the needs based reverse mortgage borrower. Those looking for maximum cash proceeds, unconcerned for the most part about financed closing costs and wanting an immediate solution to their financial problems. An unfortunate side effect of the HECM’s historic appealing to this demographic was the program being characterized as a loan of last resort. HUD’s recent reinvention of the Home Equity Conversion Mortgage Program may help change this perception.
If we look at the primary source of technical defaults which spurred HUDs Principal Limit cuts and distribution limits it was the needs based borrower. Those with little additional assets and restricted cash flow. That brings us to today. Several needs based borrowers may no longer qualify under the upcoming Financial Assessment guidelines and could choose to forgo a reverse mortgage due to a lack of proceeds. Which leads us to the question, “where is our potential market?”. Michael Kitces, director of research for Pinnacle Advisory group …