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Reverse mortgage with lower upfront costs is now available

Pittsburgh, PA: December 1, 2010
(The following article appeared in the December Issue of Pittsburgh Senior News.)

The US Department of Housing and Urban Development (HUD) and Federal Housing Administration (FHA) recently made available a new reverse mortgage product called the HECM Saver. This new loan is a second option for the Home Equity Conversion Mortgage (HECM) program.

With the HECM Saver, seniors can now save on the upfront costs required for a reverse mortgage since the Mortgage Insurance Premium (MIP) is almost eliminated.

"Because of the high upfront closing costs, a reverse mortgage was simply not an option for some seniors," says Randy Davis, assistant vice president of residential lending for Dollar Bank. "Now that the HECM Saver has been introduced, it's certainly a viable option for seniors to be able to access their home's equity to pay for healthcare costs, home improvements and other expenditures while still living in the comfort of their own home."

On a standard HECM, the initial MIP charged upfront is 2 percent of the property's value; the HECM Saver charges only .01 percent upfront. Both the standard HECM and HECM Saver have an annual MIP of 1.25 percent of the outstanding loan balance.

Seniors can also borrow a smaller amount than what would be available with the standard HECM. There are new principal limit factors in place for the HECM Saver that reduce the amount of loan proceeds made available to the borrower by 10 to 18 percent. This is a good option for borrowers who do not want to have access to the maximum amount. In turn, they'll pay less in upfront costs. There are no additional eligibility requirements for the HECM Saver. Homeowners just need to meet existing HECM program requirements to qualify.

"Our rates on mortgages have dropped, so we wanted to make our Reverse Mortgages more affordable as well," Randy said. For customers applying after October 4, 2010, there is a lower fixed and adjustable rate on the Standard HECM. On the HECM Standard and HECM Saver, they have completely eliminated the origination fee and servicing fees. (Origination fees could range anywhere from $2,500 to a $6,000. The servicing fees would average anywhere from $4,000 to $6,000.) Randy commented, "By eliminating our origination and servicing fees, we are able to provide seniors with more loan proceeds at closing at a lower cost."

An approved lender by HUD and the National Reverse Mortgage Lenders Association (NRMLA), Dollar Bank entered into the reverse mortgage business over the past few years. The bank decided to place these reverse mortgages into its asset portfolio and retain the ownership of its servicing. "This means that customers will be able to reach a local representative if they have any questions," Randy explains.

For more information on a Dollar Bank Reverse Mortgage Standard HECM or HECM Saver, visit or contact Randy Davis at 1-800-344-LOAN (5626) or via e-mail at

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