Choose Your Reverse Mortgage Lender From These Who “Dare To Evaluate”
Comparable HECM lenders provide useful information to retirees
The HECM reverse mortgage is by far the most complex financial instrument that homeowners will encounter in their lives, and they will have to grapple with it after many have passed their intellectual prime. Shopping for HECMs on lenders’ websites is pointless because lenders do not provide information that would allow users to compare one lender’s offers to another.
Homeowners seeking a HECM can obtain funding in four different ways, depending on their particular needs. You can withdraw cash in advance, a monthly payment that lasts for as long as you live in your apartment (“tenure payment”), a monthly payment for a certain period of time (“term payment”) and a credit line that you can use at any time draw. To shop effectively, homeowners need to be able to compare the amounts on offer for the draw option they need.
I recently researched the websites of 24 HECM lenders, including all of the largest, to see what information they provided about the 4 HECM drawing options. I found 5 of the 24 lenders who gave details of cash withdrawal amounts, 3 who gave details of credit lines, and none who gave details of monthly payment options.
The main goal of all lender websites is to obtain identifying information about the buyer that enables a loan officer to contact them and initiate a sales process. HECM loan decisions are not based on price, but rather on referrals, advertisements, third party referrals and the persuasiveness of loan officers.
However, there is one exception which consists of 6 lenders who dare to compare their terms with those of others. To distinguish them from other HECM lenders, I will call them “DTC lenders”. They are all the other way around, Goodlife Home Loans, Longbridge Financial, Mid America Mortgage, Mutual of Omaha Mortgage, and Signet Mortgage.
DTC lenders report their loan terms on my two websites (www.mtgprofessor.com and www.kosher-reverse-mortgage.com). The information they provide to potential borrowers is in stark contrast to industry practice:
- Buyers do not need to identify themselves until they have made a selection from the 6 lenders.
- All 6 lenders offer rate / points / amounts on all available draw options.
- The bottom line is that the buyer can find the one DTC lender who offers the best terms on the unique features of an HECM that best suits their needs.
Disclosure: DTC lenders pay me a small fixed holding fee that doesn’t depend on whether or not a loan comes through. Free help is provided directly to potential borrowers.