California Reverse Mortgages by your Sacramento Reverse Mortgage Provider

Fannie Mae Raises Margins on Reverse Mortgages

by Riley Bangerter
April 01, 2009

Fannie Mae announced some significant pricing changes, just a few days before lenders will make the switch to mandatory delivery for live pricing. 

The change brings higher margins to the reverse mortgage industry with some lenders offering HECMs with margins as high as 3.75%.

According to people who “in the know” Fannie Mae doesn’t want to be the only investor for reverse mortgages. 

The significant change in pricing could signal that Fannie Mae is looking to attract other secondary market investors.

Our industry has relied almost entirely on Fannie Mae for the past 12 months and having one investor to sell loans to may not be a smart strategy. 

So will the higher margins attract interest from other investors?  People in the industry are confident it will. 

“Long term, the changes are better for the industry,” said David Peskin, CEO of the Senior Lending Network. 

He added, “By having more than one take out there is less risk for lenders and competition from other investors will help drive margins down for borrowers in the long run”.

Here at WSB Mortgage Services, Inc. we still like the idea of having eight or nine reverse mortgage lenders to pick from so we can find the most competitive reverse mortgage product for our customers; we shop the lenders so you know you have the best program.

One last point, don’t wait! 

I had one of clients just today that wanted to wait until he was closer to his next birthday so he could qualify to get more money, because of the rate increase by Fannie Mae he is now getting $30,000 less. 

I have never seen a situation that improves because the borrower waited to get their reverse mortgage, if you are thinking about it, take action now!