Seattle Savings Bank Makes S&P's Reverse Servicer List
As people live longer and retiree benefits are cut in corporate reshuffles, reverse mortgages are gaining attention. Standard & Poor's Rating Services added Seattle Savings Bank and its subsidiaries to its October list of select servicers as the first company listed as a servicer of reverse mortgage loans.
Reverse mortgage loans, which allow seniors age 62 and up to cash out home equity, are increasing in popularity as people live longer and maintain a higher quality of life, allowing them to care for themselves and their homes as they age. Seattle Mortgage Co. is boasting about its listing and a 60% increase in reverse mortgage loan originations over the past year. The company uses a variety of lenders across 27 states to provide the loans, making the company one of the nation's top servicer of reverse mortgages.
An increase in lenders who offer the reverse loan products could help seniors who experience company cost cutting or live in economically challenged areas of the country increase cash flow to pay bills and living expenses.
Senior borrowers in Detroit could find the loans beneficial since the automakers and their suppliers have made changes to retiree health benefits here and nationwide. According to AARP, prescription drug costs for Americans over 50 have risen about 6.1% over the last year. AARP said that figure is increasing at twice the rate of inflation.
The Detroit area population includes a large base of retired autoworkers and white-collar executives from General Motors, DaimlerChrysler and Ford Motor Co. In the retail industry, JC Penney, which operates several Detroit area stores, said it would be eliminating its health care for retirees age 65 and over in 2006, while making cuts to benefits for younger retirees.
The new category added to Standard & Poor's Servicer Evaluations program follows Seattle Savings Bank request to one of the credit ratings companies to be listed as a residential reverse mortgage servicer. After reviewing the company's operations, Standard & Poor's honored the company's request and plans to issue a formal ranking for the bank during the fourth quarter. Seattle Savings Bank has assets of approximately $263 million.
Reverse mortgages have been available to consumers for the past 16 years, but has seen popularity increase in the last few years. Seattle Mortgage Co. has been offering the loans for about 10 years. It has a booming business in areas with large populations such as California, New York and Florida. All of these states have large retiree communities. Nationwide, there are about 70 correspondent lenders that offer the company's reverse mortgage product.
Reverse mortgages are home-equity conversion mortgage loans where seniors can draw money out in cash, set up a line of credit or a tenure option monthly check for as long as they live at the property. The property must be paid off at the time of the mortgage or a very small balance remains on the existing mortgage. The money cashed out in the home is usually tax-free for seniors.
"Reverse mortgages are an idea way to tap into their homes equity and draw some money out to enhance or maintain their quality of life," said Sarah Hulbert, senior vice president and national director for Seattle Mortgage Co.
Ms. Hulbert has helped close more than 500 reverse mortgage loans for the company.
"I had a client who used the funds to care for his wife. We also have seniors who tap into their equity to buy a new sports car, help their kids buy their first home and pay for their grandchildren's education expenses," she said. "This is a life-changing product. Our goal is to get the word out to consumers that this is a viable option available to them."
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