Fannie Mae is introducing a new reverse mortgage that allows elderly homeowners to buy a new house, receive a large chunk of cash and have no monthly mortgage payment.
Under the program by the agency, formally the Federal National Mortgage Association, the buyer would use some of the proceeds from the sale of a previous home for a large down payment.
Robert J. Sahadi, Fannie Mae’s vice president for product development, introduced the new loan concept at the Western Secondary Market and Lending Conference in San Francisco recently, calling it “the first of a new generation of reverse mortgages that will provide a broader range of financial options for older Americans.”
The Home Keeper for Home Purchase loan was developed in response to requests from older Americans.
With the Home Keeper program, a 76-year-old borrower with $100,000 cash to purchase a home (funds from savings or sale of previous home) would qualify for $52,000 in equity (available funds). These available funds would constitute the new reverse mortgage, requiring $48,000 from cash reserves as a down payment. There would be no monthly mortgage payments and the borrower would keep $52,000 in savings.
