REVERSE MORTGAGE AND THE 4506-T

5 Jan

We wonder how many of our Reverse Mortgage partners are transplants from the forward/traditional mortgage world?  Do you say ten-oh-three when you really mean ten-oh-nine?  Or were you born into the mortgage industry as a reverse originator?

Yesterday, RMD asked “Is Forward Experience Becoming More Valuable to Reverse Mortgage Lenders?”

Reverse mortgages have traditionally required different skills to originate, but changes made to the program are making them increasingly similar to forward mortgage products.

One change comes in the form of the use of a financial assessment by MetLife that works to prevent tax and insurance defaults by examining a borrower’s credit history and income.

With other lenders and the Department of Housing and Urban Development expected to release their own guidelines, originators will need more experience in compiling documents and verifying income and credit history. The loan process is beginning to mirror that of a conventional 30-year fixed refinance.

“Underwriting certainly becomes more like forward because of financial capacity underwriting,” says John Lunde, president and co-founder of Reverse Market Insight, referring to the recent implementation of a borrower financial assessment by MetLife. “But the biggest difference is the client and all the differences that brings up.”.

The origination of reverse mortgages has also shifted with the decline of retail giants, Helm says.

“It used to be the majority of the [reverse] loans were generated through retail establishments, and that’s changed,” he says. “Now it’s more knocking on doors, just like the forward business has been all along.”

But the similarities and experience may be more important to some parts of the process than others, and what differentiates the forward business from the reverse business at the end of the day will always be the borrower, Lunde says.

“There are a lot more differences than similarities because of whom we’re dealing with,” he says.

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