Bank of America re-introduced its fixed rate reverse mortgage in Illinois after temporarily suspending it due to uncertainty surrounding the Illinois High Risk Home Loan Act (HRHLA).
HRHLA limits the closing costs an Illinois lender can charge on closed end loans. This means that fixed rate reverse mortgages in Illinois should not charge more than 5% of the gross principal limit qualified for under the loan.
Efforts are underway by the Illinois Association of Mortgage Professionals to exempt FHA HECM reverse mortgages from HRHLA. If successful, this may happen as early as a few weeks from now or it may have to wait until January 2010 to be heard by the Illinois State Legislature.
In the meantime, Bank of America will be adjusting the origination fee as necessary for its fixed rate reverse mortgage clients in Illinois to remain in compliance with HRHLA. Depending on the borrower’s age, home value, and interest rates, this could be a meaningful reduction in upfront closing costs.
The closing costs on a reverse mortgage are the primary objection made by seniors who consider getting one. By reducing these costs on the fixed rate, Bank of America will have a huge advantage over other lenders who are interpreting the language in HRHLA more aggressively and still charging the standard origination fee.
With the security of a fixed rate, more proceeds compared to the adjustable rate option, and now Bank of America’s lower origination fee, you can expect the demand in Illinois for the fixed rate option to increase significantly.
Mark Schmidt has been a reverse mortgage specialist since 2004. In that time, he has guided hundreds of seniors through the reverse mortgage process. He is a veteran in the industry at a time when many others are “jumping on the bandwagon” of reverse mortgages.
A graduate of the University of Illinois, Mark also has an MBA from Loyola University and twelve years as a financial analyst with Merrill Lynch and Bank of America. To understand the needs of his clientele better, he was designated a Certified Senior Advisor in 2007 by completing additional studies of the social, physical, and financial aspects of aging.
Mark is the reverse mortgage expert for www.caregiverlist.com and is the author of “Reverse Mortgages: Facts and FAQs” which was in Amazon.com’s top five list for reverse mortgage books before selling out.
Mark can be reached at 773-504-9633 or firstname.lastname@example.org