Earlier this year HomEquity Bank increased its maximum loan-to-value on a reverse mortgage to 55% (in some cases slightly more). It was a change made with little fanfare, but one that will provide necessary cash to thousands more senior homeowners.
Prior to this change, the bank lent up to one-half of a property’s appraised value. Now, qualified seniors can access at least $20,000 more on a $400,000 property, for example. This money can be a lifeline when an elderly homeowner has immediate expenses (e.g., medical costs), but no other source of liquidity and a need to stay in their home.
“We are rather conservative,” said Yvonne Ziomecki, SVP, HomEquity Bank in response to why the bank hasn’t offered this high of an LTV in the past. “Having 29 years of actuarial history on repayments, etc., gave us comfort to move in that direction.”
The company confirms that these higher lending ratios are here to stay. “We wouldn’t have offered it up if we didn’t believe we can continue offering it,” she explains. Note that qualifying for a 55% LTV reverse mortgage requires that a borrower be more than 75 years of age and have a marketable home in a good location.
Sidebar: HomEquity Bank is getting ready to launch its new “Mortgage Broker Direct” service in September. For the first time, mortgage brokers will be able to submit deals directly to the bank via D+H Expert. The company will offer an official designation for approved brokers called the “Certified Reverse Mortgage Specialist.” Brokers will receive continuing education (CE) credits for completing the certification, specialized marketing support and compensation equal to that of selling a regular five-year fixed mortgage.