Magazine article American Banker

Lender Lead Gives Brokers Margin Flexibility on Reverses

Magazine article American Banker

Lender Lead Gives Brokers Margin Flexibility on Reverses

Article excerpt

Lender Lead Solutions, a unit of Vertical Lend Inc., has added a wrinkle to reverse mortgage pricing.

The Melville, N.Y., lender said Tuesday that it has started letting brokers raise or cut its margin on government-insured reverse mortgages by increments of 25 basis points, depending on whether the interest rate or up-front closing costs are more important to the borrower.

Until recently all home equity conversion mortgages were priced to yield 1.5 percentage points more than the one-year Treasury note.

Last month Bank of New York Co. Inc.'s BNY Mortgage Co. cut its margin 50 basis points, and several other reverse lenders followed suit.

(The largest lender in the market, IndyMac Bancorp Inc.'s Financial Freedom Senior Funding Corp., did not. The unit's chairman, James Mahoney, told American Banker this month that it would begin offering "a range of value propositions" that "will certainly be competitive from an ultimate cost standpoint.")

Lender Lead's newly flexible margin is capped at 2% and has a floor of 1%. Chris Mullins, its vice president of national operations, said in an interview Tuesday that the unit is letting brokers structure loans so borrowers can reduce up-front fees, in exchange for a higher margin, if they plan to live in their home for only a short period.

"Some folks see the closing costs as an inhibitor to a reverse mortgage, while for others, the maximum loan amount is the most important thing," Mr. …

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