Jumbo reverse mortgage products have evolved over the years. That transformation was due Department of Housing and Urban Development changes, the market crash and a few other factors, according to a recent Forbes article.
Originally jumbo products were reserved for more expensive properties However, there has been a lot more flexibility within programs and products across the industry.
"At the time the programs were first introduced, HUD was much more generous on the amount of money the program would allow as a percentage of the home’s value," according to the report. "This meant the property really had to be well above the HUD maximum lending limit for the jumbo or private program to make sense for most borrowers."
As the secondary market for mortgage products crashed, private market reverse mortgages became less popular among investors and dissipated in 2009. According to a report September 2014 marked the return of the product and while it didn't completely take off, it was still a step in the right direction.
"One of the biggest reasons proprietary or private programs have been able to become more prevalent is because HUD has contracted and restricted its program so much since 2015," Forbes reported.
"The losses HUD saw on its HECM program required it to restrict loan amounts and underwriting guidelines ... so much over the last five years that it has allowed private programs to be much better equipped to compete with the HUD product."
To learn more about the evolution on jumbo reverse mortgage products, click here.