Proprietary Loan - Jumbo Reverse Mortgage Loan

Jumbo reverse mortgages, also known as proprietary reverse mortgages, are a type of reverse mortgage. Financial institutions such as reverse mortgage lenders create and provide these jumbo reverse loans. These equity loans enable high-value homeowners to access larger amounts of their home equity than government-insured HECM reverse mortgages.

A key advantage of jumbo reverse mortgages over traditional reverse mortgages is the significantly higher borrowing limit. Homeowners can borrow up to $4 million, which opens up more financial possibilities compared to the caps placed on federally insured loans. This makes them particularly attractive for seniors with higher-value properties who want to maximize their available equity.

Moreover, jumbo reverse mortgages offer additional benefits:

• No Mortgage Insurance: Unlike traditional reverse mortgages, borrowers are not required to pay for mortgage insurance, potentially saving thousands in costs.
• Lower Age Requirement: Some jumbo reverse mortgages have lower minimum age requirements, allowing earlier access to these funds.
• Immediate Fund Access: Borrowers have the option to receive all their funds in the first year, providing immediate liquidity which is a substantial benefit over the staggered disbursements typical of traditional reverse mortgages.

These features make jumbo reverse mortgages a compelling choice for eligible seniors seeking to enhance their financial flexibility and access their home equity without the limitations imposed by government-insured products.

In response, some reverse mortgage lenders have developed their versions of the government-backed home equity conversion mortgage (HECM) product in response to the substantial increase in home property values in particular regions of the United States. This is their answer to the federally insured HECM reverse mortgage loan, which can only cover a certain amount of a home's value.

These programs have the same safety provisions as the FHA (federal housing administration) HECM program. Like the FHA loan, this loan is still non-recourse. The title stays in the homeowner’s name, the children still inherit, and so on with non recourse loans.

What is significantly different is that we can use full property values of up to $10 million to make a loan of up to $6 million. There are no monthly payment requirements for these jumbo reverse mortgage loans.

In the current housing market, capital gains taxes are onerous. Many clients own homes and condominiums worth $1 million to $10 million and live on a pittance of social security. 

The client’s children are unable to assist them in making ends meet. They are not qualified for a traditional loan or credit line. The jumbo loan income requirements take into account our clients' entire circumstances.

The traditional HUD (Department of Housing and Urban Development) reverse mortgages don’t adequately utilize the property value to make sense. That is where a proprietary jumbo reverse mortgage with a higher lending limit can be a safe and secure potential reverse mortgage loan solution.

Here are some real solutions to real problems.

Here are some examples of how we have worked with legal and financial professionals to assist their clients with this product. 

• A 91-year-old woman in Venice, CA. lives in a home worth $1.75 million. She got a loan for $1.1 million.
• An 88-year-old retired designer got $2.2 million on his $4.5 million home in Beverly Hills.
• A couple in their early late 60s in Saratoga, CA, got $950,000 on their $2 million home.
• An 89-year-old retired actor and his 73-year-old wife in Malibu, CA, got $1.79 million for their $4.2 million home.
• A couple in their mid-60s have a home in Los Angeles valued at $1.5 million and needed money to pay off bills and build an ADU that will create an additional $30,000 a year of rental income so they can both retire.

An alternative to traditional FHA-insured reverse mortgage
Using the borrowers' ages and the value of their homes the reverse mortgage lender determines the loan funds and loan-to-value ratios. Like a traditional reverse mortgage, a jumbo reverse mortgage loan to value is tied to the youngest borrower’s age. The borrower is usually responsible for property taxes and homeowner insurance. Without a monthly mortgage payment, the borrower is able to take care of these debts. 
While there are no specific age requirements for obtaining a jumbo reverse mortgage. Nevertheless, it's noteworthy that borrowers can be eligible for these loans as early as 55 years old. This opens up opportunities for a broader age group seeking to leverage their home equity. The loan amount itself is generally determined based on several factors, including the borrower's age, the home's value, and the existing equity. By understanding these criteria, potential borrowers can better assess their qualification chances and plan accordingly.

These reverse mortgages do not require private mortgage insurance (PMI) and are not regulated by HUD. These jumbo HECMs are available with fixed or adjustable interest rates and multiple reverse mortgage funding options, like a line of credit or fixed-rate cash-out loans. Using the Constant Maturity Treasury (CMT) as a baseline or benchmark, determines the jumbo reverse mortgage rates.

We use twelve different reverse mortgage companies for HECM loans and seven different companies for proprietary jumbo reverse loans. This allows us to offer many types of reverse mortgages that fit our clients' unique needs. 

Whether you're planning for retirement or settling into those long-awaited "golden years," you've probably had a long list of exciting activities, hobbies, or even travels you can't wait to cross off. How exactly do you intend to pay for them?

What if you, or someone you care about, have millions of dollars in untapped home equity while living on only social security and a small pension? Are you depleting the funds in your IRA or 401k plan? Are you making ends meet with credit cards each month? 

Do traditional reverse mortgages fall short of meeting your goals? Do you think a jumbo reverse mortgage line of credit will help you meet your needs?

Let's recap the features and reasons to consider a proprietary jumbo reverse mortgage.

• More Available Equity to older Adults with high-value homes
• Ability to eliminate larger mortgage balances
• No mortgage insurance premiums
• Robust borrower protections
• Greater flexibility than a HELOC
• You maintain full title and ownership of the home
• No monthly mortgage payment requirements
• Freedom to use reverse mortgage loan proceeds however you wish
• Higher lending limits
• Some of these programs are available starting at the age of 55 

Give us a call, and let us collaboratively design a proprietary jumbo reverse loan that can be a solution. 

Not everyone is eligible for a reverse mortgage. Along with age, there are a few other requirements for taking out a reverse mortgage loan.

• Your home must be your principal residence, meaning it must be where you spend the majority of the year 
• You must either own your home outright or have a low mortgage balance. Owning your home outright means you do not have a mortgage on it anymore.  If you have a mortgage balance, you must be able to pay it off when you close on the reverse mortgage. You can use your own funds or money from the reverse mortgage to pay off your existing mortgage balance  
• You may not be delinquent on any federal debt, such as federal income taxes or federal student loans.  You may, however, use funds from the reverse mortgage to pay off this debt 
• You may be required to set aside a portion of the reverse mortgage funds at your loan closing or have enough of your own money to pay ongoing property charges, including taxes and insurance, as well as maintenance and repair costs
• Your home has to be in good shape. If your house does not meet the required property standards, the lender will tell you what repairs need to be made before you can get a reverse mortgage loan
• You must receive counseling from a HUD-approved reverse mortgage counseling agency  to discuss your eligibility, the financial implications of the loan, and other alternatives

Give us a call or fill out a request to see if you qualify for a Hecm. 
​For eligibility considerations, see our In-Depth Information. 
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Your right to cancel a reverse mortgage:
In the majority of cases involving reverse mortgages, you will have three business days following the closing of the loan to cancel the arrangement without incurring any fees or other consequences. This is referred to as "rescission," which is your legal right.

In order to cancel, you are required to give the lender written notice. Send your letter by certified mail and ask for a return receipt so that you have record of the date you sent the notice of cancellation and the date the lender received it. Always be sure to keep a copy of any correspondence that you have with your lender. If you decide to cancel the reverse mortgage loan, the lender has twenty days to repay any money you've already contributed toward the financing of the loan.

​If you believe that there is a reason to cancel the loan beyond the initial three-day period, you should seek the assistance of a lawyer in order to determine whether or not you have the right to cancel the loan.

Note: This information only applies to Home Equity Conversion Mortgages (HECMs), which are the most common type of reverse mortgage loan.

FAQ's You Need to Know About Jumbo Reverse Mortgage

What should potential borrowers do before investing in a jumbo reverse mortgage?
Before diving into a jumbo reverse mortgage, it's crucial for potential borrowers to consult with a team of processing or loan officers. This step ensures you have a clear understanding of the terms and conditions, and helps you make an informed decision.
Here are the steps to take:

1. Research and Identify: Look up experienced processing or loan officers who specialize in jumbo reverse mortgages.
2. Schedule a Consultation: Set up a meeting to discuss your financial situation and goals.
3. Gather Documentation: Prepare necessary documents, such as income statements and property details, to facilitate the discussion.
4. Ask Questions: Clarify any doubts regarding interest rates, repayment terms, and eligibility requirements.

Taking these steps will help you navigate the complexities of a jumbo reverse mortgage with confidence.

Why Might Senior Homeowners Prefer a Jumbo Reverse Mortgage?
Senior homeowners often see jumbo reverse mortgages as a game-changer, and for good reason. Unlike traditional reverse mortgages, these jumbo options allow you to borrow significantly larger sums—up to $4 million. This means you can fully leverage your home equity to meet substantial financial needs, from healthcare expenses to a bucket-list vacation.
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One major advantage is the flexibility in fund distribution. With a jumbo reverse mortgage, you can receive your funds all in the first year, providing immediate financial relief or investment opportunities. Additionally, this loan type often has lower age limits, making it accessible to a broader range of seniors.

Another key benefit is the absence of mortgage insurance. This reduces the overall cost of the loan, making it a more economical option compared to traditional reverse mortgages. For those looking to turn their home equity into a steady income stream, it functions effectively as a monthly pension, giving you financial peace of mind.
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In summary, senior homeowners might prefer a jumbo reverse mortgage for its high borrowing limits, flexible fund access, lower age restrictions, and cost-effective nature.

Are jumbo reverse mortgages backed by a government agency?
Jumbo reverse mortgages are not backed by any government agency. Unlike some other types of reverse mortgages, which may have federal support, these loans are privately funded. This means that borrowers, even those as young as 55, can access jumbo reverse mortgages without relying on governmental backing.

What is the loan limit set by the FHA for traditional reverse mortgages in 2024?
In 2024, the Federal Housing Administration (FHA) established a new loan limit specifically for traditional reverse mortgages. This limit is set at $1,149,825.

What are the eligibility criteria for a traditional reverse mortgage (HECM)?
To be eligible for a traditional reverse mortgage, also known as a Home Equity Conversion Mortgage (HECM), you must meet several criteria. First, you need to be at least 62 years old. Additionally, you should have considerable equity in your home, meaning your home should be largely paid off or you have significant value built up in it.
These mortgages are not just offered by any entity; they're insured by the Federal Housing Administration (FHA) and regulated by the Department of Housing and Urban Development (HUD). Meeting these qualifications ensures you can access the benefits of a HECM.
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What are the benefits of a jumbo reverse mortgage?
Discover the Advantages of a Jumbo Reverse Mortgage
Are you a senior homeowner seeking a financial solution when traditional options fall short? A jumbo reverse mortgage might be the answer. Here’s what makes this option stand out:

No Mortgage Insurance Requirements
Unlike Home Equity Conversion Mortgages (HECMs), jumbo reverse mortgages do not require you to carry mortgage insurance. This absence can significantly reduce your overall costs since insurance premiums for HECMs can be quite steep.

Generous Loan Limits
One of the most enticing benefits of a jumbo reverse mortgage is the higher borrowing limit. You can access up to $4 million either through a line of credit or as a lump sum. This amount is substantially higher than the annual limits set for HECMs.

Lower Minimum Age
While HECM borrowers must be at least 62 years old, a jumbo reverse mortgage lowers the age requirement to 55. This feature allows younger senior homeowners more time to leverage their home equity.

Flexibility in Home Types
Another clear advantage is the broader range of qualifying homes. Your property does not need FHA approval, a requirement usually associated with HECMs. This flexibility can make it easier for more homeowners to qualify.

By offering these standout features, jumbo reverse mortgages provide a viable financial solution tailored to fit the needs of senior homeowners seeking greater flexibility and more substantial loan amounts.

What are the drawbacks of a jumbo reverse mortgage?
Drawbacks of a Jumbo Reverse Mortgage
Considering a jumbo reverse mortgage? It’s essential to be aware of the potential downsides before committing. Here’s a detailed look at the key drawbacks.

High Closing Costs and Interest RatesOne significant drawback of jumbo reverse mortgages is the high closing costs associated with them. Because you're borrowing a large sum, the interest rates are generally higher compared to Home Equity Conversion Mortgages (HECMs). This is largely due to the lengthier borrowing term and the lender’s need to mitigate risk. High closing costs can make the initial financial burden heavier, so budget accordingly.

Vulnerability to ScamsAnother concern with jumbo reverse mortgages is their vulnerability to scams. Since they aren't subject to the same stringent regulations as federally-backed loans, unscrupulous lenders may try to take advantage. Always exercise caution and verify the credibility of any lender. If you suspect fraudulent activity, contact the Consumer Financial Protection Bureau (CFPB) immediately.

Limited ProtectionsLastly, jumbo reverse mortgages lack the protections that come with government-backed loans. While their flexibility might seem appealing, it also means they do not adhere to the Federal Housing Administration (FHA) rules. This can leave borrowers less secure and more exposed to unfavorable terms. Always read the fine print carefully before signing any agreements.
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Understanding these pitfalls can help you make a more informed decision about whether a jumbo reverse mortgage is right for you.