Ocwen affiliate introduces new proprietary reverse mortgage product

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Liberty Home Equity, a subsidiary of Ocwen Financial, is offering a new private-market alternative to Federal Housing Administration-insured reverse mortgages.

The new loan, EquityIQ, is currently available in California through the company's retail and wholesale channels, and could be offered in additional states in the future, according to a company press release.

Liberty is offering EquityIQ to homeowners age 62 and up as a fixed-rate, single-draw loan through which they can withdraw up to $4 million in cash from their home's equity.

Consumer counseling through an approved agency is a mandatory prerequisite for the new reverse mortgage, which was designed to have fewer fees and more flexible terms for home purchases and condominiums than other programs in the market.

"With EquityIQ, borrowers can access more of their home equity with lower average origination costs than a HECM," Mike Kent, president of Liberty, said in the press release. "In addition, loan originators can reach new customer segments and help rebuild growth in the reverse industry."

Proprietary reverse mortgages have been gaining momentum in the wake of volume declines in the HECM market.

HECM volume has gotten lower as the FHA has tightened underwriting standards with the aim of improving loan performance.

HECM mortgage-backed securities issued in the first half of 2019 totaled $3.6 billion and were down more than 36% from the same period a year ago, according to Ginnie Mae.

Ginnie Mae and the FHA are both government agencies. The FHA insures certain home loans, and Ginnie Mae insures securitizations of FHA loans and other government mortgages.

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