With the FDIC seizure of IndyMac Bank on Friday. Questions abound for the Reverse Mortgage unit--Financial Freedom. It appears that the Home Equity Conversion Mortgages [HECMs] will continue business as usual. They are HUD guaranteed loans and it is likely someone may just buy them outright if IndyMac FSB does not continue to service them. Seniors should not be concerned about access to funds if they have this type of Reverse Mortgage.
The proprietary account, known as the Cash Advantage Account, may have a diffferent story to tell. Generally for homes over the FHA lending limits, IndyMac had problems marketing them to investors and had announced the program would be discontinued. What does this mean to those seniors? It could mean limited access to remaining equity while this is sorted out. It could mean that the change in HECM limits and procedures may make a refinance into that program a possible option. The key is to not act too quickly.
Answers are more likely to come later this week. I will cite these stories addressing Financial Freedom here on the blog as a service to my clients who have obtained a HECM loan. And to any mortgage officers who are in a similar position.