Fairway Reverse Mortgage Background:
For a period of years, Fairway has been originating reverse mortgage loans under the Broker/Principal Agent program. This means we were originating reverse mortgages specifically for certain reverse mortgage purchasers/investors. This process works like a broker program.
Fairway does not perform HMDA reporting, PCV audit, Government Insuring, subsequent investor purchase or servicing transfer. Fairway is never the named servicer or interim servicer in any activities or loan documents. This reverse origination channel has been fully transparent (behind the scenes) to all down-stream departments including Servicing.
The broker/Principal Agent origination channel will stay in place and continue to be transparent to all downstream departments including Servicing.
Implementation of Reverse Mortgage Closed Loan Purchases:
In September 2021, Fairway introduced a new origination channel for Reverse Mortgages.
With this new origination channel, Reverse Mortgage loans will be closed and subject to all normal downstream closed-loan processes including:
- PCV Audit
- Interim Servicing (via Subservicer)
- Government Insuring/Endorsement
- Investor Bid/Purchase
- MERS/Image delivery to subservicer and purchaser
- Servicing Transfers
Initially, this origination channel will be comprised of whole loan sales only – this means the purchaser will purchase both the loan and the servicing rights. There will be no sale to Ginnie Mae or Fannie Mae.
HECM Reverse Mortgages - The reverse mortgage product at implementation is a HUD HECM – Home Equity Conversion Mortgages for Seniors.
The Home Equity Conversion Mortgage (HECM) is Federal Housing Administration's (FHA) reverse mortgage program which enables the senior to withdraw some of the equity in their home.
The senior may choose how to withdraw their funds, whether in a fixed monthly amount or a line of credit or a combination of both. The senior may also use a HECM to purchase a primary residence if they are able to use cash on hand to pay the difference between the HECM proceeds and the sales price plus closing costs for the property they are purchasing.
Qualifying Seniors must:
- Be 62 years of age or older
- Own the property outright or have a small mortgage balance
- Occupy the property as their principal residence
- Not be delinquent on any federal debt
- Participate in a consumer information session given by an approved HECM counselor
The following eligible property types must meet all FHA property standards and flood requirements:
- Single family home or 1-4 unit home with one unit occupied by the borrower
- U.S. Department of Housing and Urban Development (HUD) approved condominium
- Manufactured home that meets FHA requirements