Wholesale Programs Expand

Financial Freedom Thursday introduced HECM Fixed Rate Product, its first closed-end, fixed-rate reverse mortgage insured by the Federal Housing Administration.

While the IndyMac subsidiary expects variable-rate Home Equity Conversion Mortgages will remain the dominant option amongst borrowers, the fixed-rate program is expected to strongly appeal to investors because the closed-end structure offers more predictability on cash flows, which is critical for match funding a fixed-rate instrument. In turn, more lenders will be attracted to offer the product and ultimately widen credit access and lower costs for borrowers.

“We’ve worked extensively with industry leaders to clarify the rules governing fixed-rate HECMs in order to achieve a product that meets seniors’ needs and which we believe will lead to the development of a strong secondary market for the product,” Chief Executive Michelle Minier said in the written statement. “We expect that other lenders will embrace and replicate this closed-end, fixed-rate HECM product, making it the industry standard fixed-rate model.”

And there’s more to come, as the Irvine, Calif.-based reverse lender said it plans to launch a fixed-rate proprietary jumbo next quarter.

Illiquidity in the secondary market had led IndyMac Bank to temporarily withhold from originating prime, single-family residential, full-doc jumbo loans. But, the Pasadena, Calif.-based lender, which has switched focus from primarily Alt-A to agency-eligible originations and growing retail operations, announced it returned to originating such products late last month through all its distribution channels.

“Given current market conditions, we are assessing our products and terms daily and they are subject to change on a more frequent basis than under more normal market conditions,” IndyMac spokesman Craig Barberio told MortgageDaily.com in an e-mail today. “While we are moving significantly into the retail channel on an opportunistic basis right now, we remain absolutely committed to our core wholesale channel.”

The jumbo offerings include 5/1 and 7/1 adjustable-rate mortgages and 15- and 30-year fixed-rate loans. For loans of up to $2 million and $1 million, borrowers must have a FICO score of at least 680 and a down payment, or equity, of 25 percent and 20 percent, respectively. To borrow up to $750,000, a minimum FICO of 700 and down or equity of 15 percent with mortgage insurance is required, according to the announcement.

American Guardian Home Loans announced it added prime, conforming and government loans to its menu in order to help qualify more borrowers amid the subprime squeeze. The Lake Forest, Calif.-based wholesaler is also offering guidance to assist brokers become approved by the FHA and is working on putting together or sponsoring broker training to include seminars and classes.

“We will continue to offer low risk, non-prime programs as long as the borrowers will benefit from the loan,” said American Guardian President Kamran Khosravi in the written statement.

American Guardian is reportedly licensed in Arizona, California, Colorado, Hawaii, Idaho, Florida, New Mexico, Nevada and Oregon.

Pennsylvania-based American Home Bank N.A. recently touted it was able to expand, rather than reduce, its loan menu because it avoided jumping on the subprime bandwagon “and as a result we remain very well capitalized and have plenty of money to lend and fund loans,” according to an announcement.

Second mortgages, 100-percent financing products, and a “jumbo buster” loan that is a combination of a first and second mortgage are reportedly among the new products, of which several are low down payment and affordable programs intended for first-time borrowers.

First-time “home buyers are being crowded out because of the credit meltdown in the marketplace,” American Home said in the announcement. “In reality, 95 percent of homebuyers can qualify for our mortgage loans; we are looking to serve that segment of the market and others who are being abandoned.”

A new funding venue exists through Carolina Bank Wholesale Mortgage. Specializing in loans sold in the secondary market, the new division of Carolina Bank offers conforming, government, jumbo and other prime loans, according to an announcement.

The programs are available to select brokers, community banks and credit unions located primarily in North and South Carolina, Virginia and other southeastern states, Carolina Bank said.

The wholesale program additions and new lender come as others have reduced exposure to this market, including HSBC Finance Corp., which will close its subprime wholesale lending channel, E-Trade, which will no longer take applications from brokers, and Impac, which will close all mortgage operations except its retail conforming origination unit. Option One Mortgage Corp., which parent H&R Block has considered winding down, last month also made a string of changes to its underwriting, including no longer accepting submissions secured by condos in Florida.

Led by Phillip B. Carmac as its president, the Greensboro, N.C.-based wholesale division reportedly anticipates hiring 10 to 15 people by March 2008.

LoanSifter recently announced the launch of a prime/Alt-A search engine that it says is the first to allow brokers and correspondents to evaluate every lender they use. The loan product and pricing engine offers fast, accurate analysis, detailed presentation and customized filtering, enabling originators to save time and pre-qualify and price loan scenarios against all of their lenders’ rates and guidelines.

“Our highly adaptable solutions provide originators with tools that help transition their roles from ‘loan order-takers’ to informed ‘lending advisors,'” LoanSifter President Bruce Backer said in the written statement.

LoanSifter is in the last phase of allowing originators to use the Prime/Alt-A search engine at no charge, according to its Web site. The product is expected to be commercially available this fall, the announcement said.