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How Do Recently Introduced Products Impact Borrower Choice?

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There is a new race in our industry. In the last three months we have seen four new fixed rate HECM product variants introduced. Innovation can be a positive force in our industry but it does come with its risks. Confusion and cash burn. First let’s address confusion.

HUD shrunk our product offerings from the Saver and Standard fixed and adjustable to one adjustable rate HECM with two tiered upfront insurance pricing. While not welcome changes to those who appreciated the Saver and Standard Fixed products it did inadvertently reduce consumer confusion. Whenever a plethora of product choices are presented their lies the risk of the paralysis of choice; or better said the paralysis of analysis. Simply stated if…

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  1. I believe in choice. Why train borrowers to not think for themselves? Why presume to make choices for borrowers? The best we can do for borrowers is to make sure we provide all of the information clearly and listen to what their concerns are. After all they are adults!

  2. The Live Well choices are ridiculous. There are three distinct choices and yet the Fixed Freedom does all that the other two new HECM products do (which they offer). What is not clear is if there are distinct differences in origination fees and interest rates. Apparently all three are open end mortgages. A good financial planner who has no monetary interests in how proceeds are spent (including assets under management) can do a lot with the Live Well Freedom.

    The Reverse Mortgage Funding Choice is still a closed end mortgage. It seems to have a substantially higher interest rate when the line of credit is 40% or more.

    Originators working for a broker offering five different fixed rate products must make for confusing meetings with prospects. Now add to that the consumer protection of counseling from a counselor who is only marginally familiar with these products and suddenly we have a consumer who is far less informed and not making the informed decision that the industry strives for.

  3. this mentions 4 new products recently available.
    WHAT are the products. Lookikng for info
    on the annual fixed and then adjustable with
    cap about 7% and or monthly adjustable cap
    of approx 7% HECM REVERSE
    Describe the NEW products in detail. or
    at lease name them so we can look them up.
    Thank you

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