Loan Programs

First American Unveils Reverse Mortgage Score

By James Comtois

SANTA ANA, CA - The First American Corp. has developed a new reverse mortgage score to help servicers identify candidates for a Federal Housing Administration-insured Home Equity Conversion Mortgage who might otherwise face foreclosure. The new score was launched at the National Reverse Mortgage Lenders Association's annual meeting in Los Angeles.

The new loan-level score examines a broad range of homeowner and property data obtained from First American's extensive data repository.

For example, it takes into account the number of borrowers on the loan and their ages. Specific property information analyzed to determine the score includes: eligible residences (reverse mortgages are not permitted on second homes and investment properties), property types, appraised values, outstanding mortgages and liens and the new HECM national loan limit of $417,000.

The weighted value score generated predicts the likelihood of the loan being eligible for an HECM reverse mortgage.

"Last year, 648,000 Americans age 50 and older fell behind on their mortgage payments, and nearly 50,000 went into foreclosure, according to the American Association of Retired People," said Randy Gilster of First American's outsourcing and technology solutions business line. "Homeowners who are 62 years or older and who have equity in their homes can often qualify for a federally insured reverse mortgage, without regard to their credit score."

Mr. Gilster added that First American's new score has been designed to help lenders identify the best candidates for these loans and give default managers new options to help senior homeowners.

The evaluation also considers factors that tend to complicate reverse mortgages, such as living trusts, bankruptcy filings and powers of attorney. The servicer receives a report that includes an estimated principal limit after paying off current liens, servicing fees, originations fees, mortgage insurance and estimated closing costs.

Using the score, the servicer can then determine whether to offer a HECM loan as one of its loss mitigation workout options. The score considers all HECM loan options and provides alterative choices to traditional loan modification.