There has been a sharp increase in interest and business for proprietary “jumbo” loans that are outside the purview of Federal Housing Administration oversight, according to a special report from Reverse Mortgage Daily. The new offerings are seen as a boon to the reverse mortgage industry.
According to the report, originators would like to see more private products emerge in the future, particularly more offerings that can compete directly with the existing Home Equity Conversion Mortgages (HECMs). Brokers say providing additional options to the HECM is productive, and good for the borrowers. However, it has to be a product lenders want to offer, originators want to originate, and borrowers wish to use.
In the report, brokers also questioned if there are enough incentives for potential borrowers to see a private offering as a superior alternative to the government-sponsored product.
Another outstanding question concerning the increasing prevalence of proprietary products, particularly at business levels more closely tied to the HECM, is whether or not there are enough incentives. The private products would have to be more innovative with their lines of credit, one broker suggested.