The overall complexity of a Federal Housing Administration (FHA) funded mortgage conversion mortgage (HECM) loan is one of the most complex financial instruments an American consumer can use, but the actual practice of buying one is difficult and cumbersome, especially if the prospective borrower wants to compare the options available. in different institutions.
This was announced by Dr. Jack Guttentag, also known as the “professor of mortgage lending,” in a new column published by Forbes. He came to his conclusion based on analysis he conducted on more than 20 websites of various reverse mortgage lenders, describing that the process of finding HECM is too time-consuming and time-consuming.
“Buying HECM from lenders’ websites is useless because lenders do not provide information that allows users to compare offers from one lender to those of another,” Guttentag writes. “I recently reviewed the websites of 24 HECM lenders, including all of the largest, to find out what information they provide on the 4 HECM draw options. I found 5 out of 24 lenders who provided information on the amount of cash received, 3 provided information about lines of credit, and not one who provided information on options for monthly payments. “
Instead, the main purpose of the sites he visited appears to be focused on obtaining the contact information of a potential borrower, before a more detailed conversation about a possible reverse mortgage will inevitably shift to a more direct conversation with a loan officer or broker. …
“HECM’s borrowing decisions are not based on price, but on recommendations, advertising, third party support and credibility of loan officers,” says Guttentag.
However, he named six specific lenders that allow for comparison shopping, calling the cohort “Dare to Compare (DTC)” reverse mortgage lenders. Among the lenders he found that do offer comparison are All Reverse Mortgage, Goodlife Home Loans, Longbridge Financial, Mid America Mortgage, Mutual of Omaha Mortgage, and Signet Mortgage, Guttentag said.
“Information [the ‘DTC lenders’] providing potential borrowers is in stark contrast to industry practice, ”he explains.
This is for three reasons: buyers are not required to identify themselves until they have made a choice among lenders who allow comparison purchases; all so-called “DTC lenders” provide bets, points and amounts for all available draw options; and a potential borrower can find a lender “that offers the best terms on the specific characteristics of the HECM that best suits their needs,” explains Guttentag.
Read column at Forbes.