CONVENTIONAL MORTGAGES

A reverse mortgage is a loan available to homeowners, 62 years or older, that allows them to convert part of the equity in their homes into cash. The product was conceived as a means to help retirees with limited income use the accumulated wealth in their homes to cover basic monthly living expenses and pay for health care. However, there is no restriction how reverse mortgage proceeds can be used.

The loan is called a reverse mortgage because instead of making monthly payments to a lender, as with a traditional mortgage, the lender makes payments to the borrower. The borrower is not required to pay back the loan until the home is sold or otherwise vacated. As long as the borrower lives in the home he or she is not required to make any monthly payments towards the loan balance. The borrower must remain current on property taxes, homeowners insurance and homeowners association dues (if applicable).

Top Reverse Mortgage Lenders

American Advisors Group

American Advisors Group, based in Orange County, Calif., was the biggest home equity conversion mortgage (HECM) lender by volume in 2014 according to Reverse Market Insight, a research company focused on the reverse mortgage industry. The HECM is the most popular of the three types of reverse mortgages and accounts for 95% of reverse mortgages in today’s market.

AAG is licensed in all 50 states, plus the District of Columbia. Its website states that the company has been in business for more than 10 years and has a 97% customer satisfaction rating based on the company’s own surveys. The company has an A+ rating with the Better Business Bureau (BBB) and 20 closed complaints in the last three years. That’s far more complaints than the other three reverse mortgage lenders described in this article, but AAG also closed almost two-and-a-half times as many loans as its closest competitor. AAG also has numerous complaints at ConsumerAffairs, an independent web-based consumer news and resource center. While you should take online reviews with a grain of salt, ConsumerAffairs does moderate user-submitted reviews, require users to create an account, and try to filter out fake and spam reviews. It also gives companies a chance to respond to complaints.

AAG is licensed in all 50 states, plus the District of Columbia. Its website states that the company has been in business for more than 10 years and has a 97% customer satisfaction rating based on the company’s own surveys. The company has an A+ rating with the Better Business Bureau (BBB) and 20 closed complaints in the last three years. That’s far more complaints than the other three reverse mortgage lenders described in this article, but AAG also closed almost two-and-a-half times as many loans as its closest competitor. AAG also has numerous complaints at ConsumerAffairs, an independent web-based consumer news and resource center. While you should take online reviews with a grain of salt, ConsumerAffairs does moderate user-submitted reviews, require users to create an account, and try to filter out fake and spam reviews. It also gives companies a chance to respond to complaints.

RMS/Security 1 Lending

Security 1 Lending, a division of Reverse Mortgage Solutions headquartered in San Diego, was the second-biggest HECM lender by volume in 2014. Security 1 is licensed in 40 states. It has retail branches in Calif., Ga., Mo., Texas and S.C., which means you can sit down and talk to someone about a reverse mortgage if you live in one of these states, and the company has been around since 2006. RMS is a member of NRMLA. You won’t find customer testimonials on Security 1’s website or a great deal of educational information, though you can request a DVD and information kit.
Security 1 Lending has an A− rating with the BBB and two closed complaints in the last three years. According to the BBB website, in 2014, Security 1 was subject to a suspended license and $4,178 fine in California related to failure to disclose certain key facts to borrowers. The company is not listed at ConsumerAffairs.

One Reverse Mortgage

The third-largest HECM lender by volume in 2014 was One Reverse Mortgage, a Quicken Loans company based in San Diego. Quicken Loans is an Internet-based lender. (See Mortgage Choice: Quicken Loans Vs. Your Local Bank.)That means you’ll need to be comfortable going through the entire process online and by phone and not meeting with anyone in person except, perhaps, at the closing. Interest rates and fees can be lower with an online lender, but this isn’t a universal truth so you’ll still want to shop around.

Liberty Home Equity Solutions

In fourth place by 2014 HECM volume, according to Reverse Market Insight, is Liberty Home Equity Solutions. Based in Sacramento, Liberty was formerly Genworth Financial Home Equity Access, or GFHEA, and was originally founded as Liberty Reverse Mortgage. It has been in business since 2004, and its sole focus is on HECMs. The company has funded over 40,000 reverse mortgages since its founding. Liberty is licensed nationwide.

Like AAG and One Reverse Mortgage, Liberty has a number of video and written testimonials from satisfied customers. It has an A+ rating from the Better Business Bureau, with four customer complaints in the last three years. The company is not listed at ConsumerAffairs. Liberty’s website has lots of educational materials available for prospective customers,and Liberty is an NRMLA member.