The Reverse Mortgage Wholesale Market: The Money Behind Your Reverse Mortgage
By Wade Robins
If you are interested in exploring a reverse mortgage as a way to help fund your retirement years, you might benefit from knowing what reverse mortgage wholesale loans are and how they will affect your ability to get a reverse mortgage.

Reverse mortgage wholesale products are what reverse mortgage lenders purchase at a discounted interest rate, and then offer to borrowers like you after raising the interest. You, as an individual, are not eligible for a reverse mortgage wholesale loan.

Who Offers Reverse Mortgage Wholesale Products?

Reverse mortgage wholesale loans are only available through three sources. The Federal Housing Authority, or FHA, the Financial Freedom Cash Account, and Fannie Mae will all provide them. The FHA and Fannie Mae reverse mortgage wholesale products are both backed by federal guarantees. The Financial Freedom Cash Account is offered by Shearson Lehman and privately guaranteed.

While many people think that Fannie Mae, which was started in the administration of Franklin D. Roosevelt, is a government run program, but is it actually shareholder owned. It does, however, have a federal charter and is authorized to operate in the reverse mortgage wholesale market to make sure that mortgage lenders have funds available to offer affordable mortgages to the home buying public.

Because Fannie Mae does such a high volume of reverse mortgage wholesale business, its operations are strictly regulated, and the guarantee backing their loans is as solid as the one backing the reverse mortgage wholesale loans at the FHA and HUD. Fannie Mae has a guaranteed Homekeeper reverse mortgage wholesale loan which will allow the borrower to receive as much as $417,000. The Fannie Mae program is unique because it will let borrowers use the loans on their current homes to cheaper ones.

The HECM From The FHA

The reverse mortgage wholesale product from the FHA is known as the HECM, or Home Equity Conversion Mortgage. The HECM has a borrowing limit of $360,000 but the maximum allowed to a particular individual will depend on the area in which his or her home is located. The HECM is far and away the most widely available reverse mortgage wholesale product, and backs nine out of every ten reverse mortgages in the US.

The HECM is guaranteed not only by the FHA, but by HUD, the US Department of Housing and Urban Development. This guarantee means that you as a borrower, will be sure to receive the full amount of money promised to you by your reverse mortgage lender, and that your lender, in turn, will be sure to get back the full amount of the money they loan you, as well as the full amount of accumulated interest, should your home eventually be sold for less than the amount of the reverse mortgage. Both the Fannie Mae and FHA reverse mortgages are available to borrowers in every state.

The Financial Freedom Cash Account

The Shearson Lehman Financial Freedom Cash Account, however, is available only in twenty-four states, and is aimed towards homeowners who wish to take out reverse mortgages on homes worth half a million dollars and up. There is no maximum placed on the size of a Financial Freedom Cash account reverse mortgage, which is backed by a private guarantee.