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Don’t blame the HECM sandwich!


Stop blaming the HECM sandwich!

Dan Hultquist explains why lawmakers, the media, and others should stop blaming the HECM ‘sandwich’…

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Editor in Chief:
As a prominent commentator and Editor in Chief at, Shannon Hicks has played a pivotal role in reshaping the conversation around reverse mortgages. His unique perspectives and deep understanding of the industry have not only educated countless readers but has also contributed to introducing practical strategies utilizing housing wealth with a reverse mortgage.
Shannon’s journey into the world of reverse mortgages began in 2002 as an originator and his prior work in the financial services industry. Shannon has been covering reverse mortgage news stories since 2008 when he launched the podcast HECMWorld Weekly. Later, in 2010 he began producing the weekly video series The Industry Leader Update and Friday’s Food for Thought.
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  1. As a fact checker, do HECM Savers always have the lowest PLF? The answer is no. The HECM Saver in the following case actually has a higher PLF than today’s HECM Standard.

    For a 63 year old with a 5% expected rate,

    the PLF for a Saver on 9/1/2012 was 0.526
    the PLF for a Standard on 9/1/2012 was 0.625 and
    the PLF for a Standard on 9/1/2023 is 0,416

    So while most think that the Saver has the lowest PLF rate, in this case the truth is that the current HECM Standard has the lowest PLF rate.

    Rules of Thumb are very useful until they are NOT (i.e., wrong).

    • Agreed, PR. The HECM Saver PLFs of 2013 would be attractive by 2023 standards. But of course, the Saver no longer exists. If it did, one would logically assume PLFs would’ve been cut in 2014 and 2017 and the floor rate reduced. This would mean a Saver borrower today (age 63) would qualify for approximately 0.20-0.25 (20% to 25% of the home’s value. Could we sell a HECM JR. Sandwich? Probably, but only to patrons looking for a cheap late-night snack.

      • Dan

        All valid points to which I wholeheartedly agree.

        I wonder if FHA would even offer a Saver today with today-s much riskier ongoing MIP of just 0;5% compared to the Saver+s ongoing MIP of 1.25%? The ongoing MIP of 1.25% along with along with its significantly lower PLFs when compared to the Standards of the Saver era greatly reduced the risk of a 0.01% initial MIP (almost no initial MIP at all).

  2. Shannon and Dan, this was excellent and loved the analogies. Dan, you are right on, much more attention needs to be placed on backend education but that’s the difference between a call center and an LO that gives personal education and attention to their customers.

  3. You guys are the best, I have been a fan of Dan’s for a long time and I have become a fan of yours recently. I learn something new every time.

    Thank you so much!

  4. Love this analogy.. Thanks Dan and Shannon for all the info you pump into the Reverse space!!

  5. great show today !

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