ICBA - News - News Release - Financial Freedom Lowers Reverse Mortgages Costs, Enhances Benefits for Seniors with Introduction of HECM Advantage™
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Financial Freedom Lowers Reverse Mortgages Costs, Enhances Benefits for Seniors with Introduction of HECM Advantage™

HECM Advantage™ is First in Suite of New HECM Products to be Offered

Irvine, CA (February 15, 2007) Financial Freedom, a subsidiary of IndyMac Bank F.S.B. (Indymac Bank®), and the nation’s largest provider of reverse mortgages, announced today the launch of HECM Advantage™, the first in a suite of new reverse mortgage products based on the federally insured Home Equity Conversion Mortgage. Compared to the HECM monthly adjustable product with the old margin of 1.5%, the HECM Advantage™ offers a lower interest rate and access to more home equity that can be converted to cash at a lower overall cost over the life of the loan.

"We examined all aspects of the reverse mortgage and its cost structure to identify opportunities to enhance benefits and reduce cost beyond just simply reducing the margin," said Michelle Minier, CEO. "As a result, HECM Advantage™, in most cases offers senior borrowers the most compelling value currently available among all the HECM products and provides more net available cash, higher credit line growth and more monthly income than the 1% margin products on the market today."

On an example of a $350,000 home, a senior borrower age 65 may receive roughly $18,400 more cash while saving as much as $18,000 in interest accrual during the first 10 years compared to the same HECM loan with a 1.5% margin.

HECM Advantage™ will retain all of the consumer safeguards designed into all the HECM products, including:

  • Borrower retains title to home.
  • Loan is non-recourse/ borrower can never owe more than the home is worth upon repayment.
  • Unless a material default occurs, the loan does not have to be repaid until borrower permanently leaves or sells the home.
  • Eligible home types: single-family detached, manufactured, condo, PUD, 1-4 rental unit if one is owner occupied.
  • Cash benefit can be taken as a monthly income (for up to life), line of credit, a lump sum or in any combination.
  • Mandatory, independent counseling to ensure borrower understands the terms.

Financial Freedom is the nation’s largest lender of reverse mortgages, and has been for the last 10 years. The company closed 48,954 reverse mortgage loans in 2006, surpassing the record of 30,994 loans in 2005, a 58% increase.

More Reverse Mortgage Products Coming

HECM Advantage™ is the first in a suite of new HECM and Cash Account reverse mortgage products the company will be launching in coming months. Cash Account is Financial Freedom’s proprietary, jumbo reverse mortgage product.

"When you look at our history as a product innovator, we’ve been successful at developing products that offer consumers more choice and flexibility especially with regard to pricing and overall loan costs," commented Jim Mahoney, Chairman of Financial Freedom. "We were the first to offer a jumbo reverse mortgage and continued to enhance the product to provide a no upfront cost option for consumers, now called Cash Account Advantage. In 2007, we will introduce multiple, competitively priced products for both the HECM and jumbo markets consistent with our customer philosophy."

Reverse Mortgages Explained

Reverse mortgages enable senior homeowners 62 or older to access a portion of the equity in their home without having to sell the home, give up title, or take on a new monthly mortgage payment. Borrowers will never, under any circumstances resulting from the reverse mortgage, be forced to leave their homes providing they make their real estate property tax and insurance payments and maintain the property in reasonable condition.

Borrowers can choose to receive the reverse mortgage funds as a lump sum, monthly income (for up to life on the government-insured HECM program), line of credit, or any combination of the three, depending on the program. Borrowers can use the funds any way they wish and will not make any monthly mortgage payments on a reverse mortgage during the life of the loan. In addition, the repayment amount cannot exceed the value of the home. The loan becomes repayable when the borrower sells the home or permanently moves out.

About Financial Freedom

Financial Freedom Senior Funding Corporation, a subsidiary of IndyMac Bank, F.S.B., headquartered in Irvine, California, is the largest originator of reverse mortgages in the United States. Financial Freedom originated over $5 billion in loan fundings on $15.2 billion in home value in reverse mortgages in 2006 and is now the largest servicer of reverse mortgages with a servicing portfolio of approximately 116,000 loans

Financial Freedom developed the industry’s first reverse mortgage software, the Reverse Mortgage Analyzer, to help lenders compare the benefits between the HECM, Fannie Mae and the Cash Account products. The Reverse Mortgage Analyzer has been a powerful tool since 1997 and is the industry standard with more than 28,000 registered

users. In addition, the RMA software application has been used to train numerous reverse mortgage counselors.

Financial Freedom is also a founding member of the National Reverse Mortgage Lenders Association. NRMLA is a nonprofit trade association, based in Washington, DC, whose mission is to support the continued evolution of reverse mortgages as an important financial option for senior homeowners while educating both its members and consumers about the varied applications of this unique loan. For more information, visit the Financial Freedom Web site at www.financialfreedom.com.

Members of NRMLA sign a Code of Conduct pledging to abide by guidelines that assure fair, ethical, and respectful practices in offering and making reverse mortgages to seniors. For more information, visit the NRMLA Web site at www.reversemortgage.org.

About IndyMac Bancorp, Inc.

IndyMac Bancorp, Inc. (NYSE:NDE) (Indymac®) is the holding company for IndyMac Bank, F.S.B. (Indymac Bank ®), the 7th largest savings and loan and the 2nd largest independent mortgage lender in the nation. Indymac Bank, operating as a hybrid thrift/mortgage banker, provides cost-efficient financing for the acquisition, development, and improvement of single-family homes. Indymac also provides financing secured by single-family homes and other banking products to facilitate consumers’ personal financial goals.

With an increased focus on building customer relationships and a valuable consumer franchise, Indymac is committed to becoming a top six mortgage lender in the U.S. by 2010, while maintaining annualized earnings per share growth in excess of 15 percent. The company is dedicated to continually raising expectations and conducting itself with the highest level of ethics.

IndyMac Bank also offers a wide array of Web-enhanced banking services, including deposits, competitive CD and money market accounts, and online bill payment services. IndyMac Bank is FDIC insured.

For more information about IndyMac and its affiliates, or to subscribe to the Company’s Email Alert feature for notification on company news and events, please visit our Website at www.indymacbank.com.

®2007 Registered trade/service marks are property of Financial Freedom Senior Funding Corporation, A Subsidiary of IndyMac Bank, F.S.B . 
©2007 Financial Freedom Senior Funding Corporation