Mortgage Professor: These 6 Reverse Mortgage Lenders Permit Comparability Purchasing On-line
The general complexities of the Federal Housing Administration (FHA) sponsored Home Equity Conversion Mortgage (HECM) is one of the most complex financial instruments an American consumer can entertain, but the actual practice of shopping is difficult and cumbersome, especially when a prospective borrower wants compare the options available from different institutions.
This is what Dr. Jack Guttentag, also known as the “Mortgage Professor,” in a new column published by Forbes. He concluded, based on an analysis he had done on over 20 websites for various reverse mortgage lenders, that the process of “shopping” was far too unintuitive and tedious for a HECM.
“Buying HECMs on lenders’ websites is a pointless exercise because lenders do not provide information that would allow users to compare one lender’s offers with those of another,” Guttentag writes. “I recently researched the websites of 24 HECM lenders, including all of the largest, to see what information they provided about the 4 HECM draw 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. “
Instead, the main objective of the websites he visits seems to all be focused on getting a prospective borrower’s contact information before a more in-depth conversation about possible reverse mortgage borrowing inevitably moves on to a more direct conversation with a loan officer or broker.
“HECM loan decisions are not based on price, but on recommendations, advertisements, third-party recommendations and the persuasiveness of loan officers,” says Guttentag.
However, he called on six specific lenders to allow comparison purchases and named the “Dare to Compare (DTC)” cohort of reverse mortgage lenders. The lenders he has found that offer comparison options are All Reverse Mortgage, Goodlife Home Loans, Longbridge Financial, Mid America Mortgage, Mutual of Omaha Mortgage, and Signet Mortgage, respectively, says Guttentag.
“The information [the ‘DTC lenders’] Making it available to potential borrowers is in stark contrast to industry practice, ”he explains.
There are three reasons for this: buyers do not have to identify themselves until they make a selection from among the lenders who allow a comparison purchase; all so-called “DTC lenders” provide rates, points and amounts for all available drawing options; and the potential borrower can find the lender “who offers the best terms for the special features of an HECM that best suits their needs,” explains Guttentag.
Read the Forbes column.