I posted last week about how closing costs will rise for many Reverse Mortgage borrowers when the new housing bill gets figured out by HUD and put into place. Specifically, this was for borrowers who didn't need the additional funds they will be allowed to get, but will pay more for their 2% fee to HUD than they will save on the reduced origination fee.
Now it is looking like the credit crunch is costing the major players a lot in the secondary market and the margins used to calculate Reverse Mortgage rates look like they will be going up. Financial Freedom eliminated its 150 product (the margin 1.5% above the index) and will now start their margins at 1.75% I am guessing that a few of the other major lenders may follow suit, but only time will tell.
I spoke to a mid-level RM lender in California, who had been expressing to me that they were not getting as much for their pools of RM loans as they had thought, when they were selling them in the secondary market. I am guessing that they will want higher margins on their loans so that they can get more for them in the future.
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