Pros / Offers some loan products that others in the field do not. Has received high marks for its direct, personable customer service.
Cons / Some of its online tools and marketing information may not seem helpful for getting a full gamut of information about HECMs.
Verdict / High volume of loans served, plus highly rated customer service make Finance of America a leader in the reverse mortgage space.
While it’s the second largest national reverse mortgage lender, Finance of America Reverse operates with a more personal touch than many of its competitors. It is also one of the only banks to offer a proprietary (jumbo) reverse mortgage to serve customers whose home values exceed the limit set by HUD or are not approved by the FHA to receive a Home Equity Conversion Mortgage (HECM).
Formerly known as Urban Financial Group, Finance of America Reverse is part of Finance of America Holdings (mostly owned by the Blackstone Group), which may be why the company has been able to expand its jumbo offerings. Oklahoma-based FAR operates in 43 states, plus Puerto Rico, and is a member of the National Reverse Mortgage Lenders Association (NRMLA), an industry group that has a set code of ethics.
The FAR website is not optimized for straightforward information. Rather, it suggests many reasons for which you might want a reverse mortgage, such as "Easing retirement worries" and "Caring for loved ones." Under those headings, the site suggests even more hypothetical scenarios of financial stress. There's no obvious place from which you can get information about fees and rates. The reverse mortgage calculator will not reveal any information until you first give it your own personal data.
It seems that FAR is more intent on directing potential borrowers to speaking with live humans to get the details about their reverse mortgage products. Many of the company's customer reviews speak highly of FAR's loan originators, often referring to them by name and describing the lengths to which they go to walk their customers through this complicated process. This is part of what has earned FAR high rankings across the board, including an A+ rating from the Better Business Bureau and only 57 complaints on the Consumer Financial Protection Bureau website.
Fixed-rate lump sum disbursement: The interest rate remains the same for the life of the loan (great if it's low when you apply), but you can only receive your loan in one lump sum, which will be determined by your home equity, your age, and the first-year draw limit (60 percent of the loan total).
Adjustable-rate term disbursement: You can receive the amount of your loan in fixed monthly payments for a set number of months, but the interest rate will be variable from year to year or month to month, based on the London Interbank Offer Rate (LIBOR).
Tenured: You can receive a set amount of money from your loan every month for the life of your loan (calculated by assuming you will live to 99), and the rate varies based on the LIBOR.
Line of credit: Instead of receiving your loan payment upfront, you can leave it as a line of credit, and the amount you don't draw down will grow with compound interest each year, based on the LIBOR.
Combination: This adjustable-rate loan can be a combination of all of the above, at the adjustable rate based on LIBOR.
HECM for Purchase: This type of loan allows you to buy a new home directly with a reverse mortgage.
Proprietary Reverse Mortgage
FAR's jumbo mortgage, Homesafe, is the only option if you want a reverse mortgage for certain types of condominiums or for homes that are worth more than $679,650. Homesafe's principal limit just went up from $2.25 million to $4 million (the amount you can borrow depends upon more factors than that, of course). There's no mortgage insurance premium for these loans, but that also comes with a downside, which is that if your home value drops below the amount owed when it becomes due, you (or your heirs) could be responsible for the difference. Homesafe is available in only 16 states plus D.C., so check to see if your area is included.