Longbridge goes beyond reverse with Figure partnership, new ‘HELOC for Seniors’

Addressing a borrower gap

Longbridge aims to maintain competition via fixed rates for each draw, and it claims that payments made on the product can be lower than those found in a traditional HELOC.

Borrowers will have access to what the company calls a “reusable line of credit that offers interest-only monthly payments without a preset maturity date, while eliminating the risk of payment spikes or surprises down the road.”

The announcement addresses other recent customer concerns the company described in the wake of announcing its Platinum Preserve proprietary reverse mortgage. Namely, it concerns the frequently expressed reluctance of older homeowners to tap into home equity in retirement out of fear that it will limit the assets they can leave to heirs.

But the product also aims to address a gap that older customers may experience due to a lack of specialized products made specifically for them, Mayer explained.

“Too many older Americans are unable to access their own home equity, not because of poor credit, but because traditional lending products weren’t designed for life after 62,” Mayer said in a statement. “Over half of HELOC denials are tied to unaffordable monthly payments, and nearly one-third of seniors today carry mortgage debt into their 70s and 80s.”

Underlying data, Figure partnership

Mayer’s knowledge of the topic is well established as he co-authored a research paper in 2020 that details some of these dynamics.

While that work is focused on the reverse mortgage market, many of the cited factors and product availability findings are transferable when it comes to assessing the availability of senior-focused product offerings.

“We built HELOC For Seniors to offer a better way forward, offering the financial flexibility associated with a line of credit, but without sharply rising payments that come with traditional bank HELOCs, or the higher base payments associated with closed-end second liens,” he said. “So retirees can live more comfortably, not more cautiously.”

Data published in 2023 by the Harvard University Joint Center for Housing Studies (JCHS) found that “over seven million homeowners over age 65 pay more than 30% of their income on housing, with about half paying more than 50% of their income,” Longbridge explained.

That risk only increases for older customers due to fixed incomes and the increasing commonality of mortgage debt being carried into later life.

Figure CEO Michael Tannenbaum discussed the partnership by saying that his company’s technology acumen can help provide the new product with “automation, standardization and speed” from its existing platform, FigureConnect.

This makes the HELOC application process fully digital, allowing for preapproval in as little as five minutes, with full approval possible in 15 minutes, according to the companies. Closings can occur as quickly as one week “in most cases,” they added.

Product features

Longbridge also highlighted a series of other features it said are unique to HELOC For Seniors.

These include the ability to access between $50,000 and $400,000 per draw at a fixed rate, depending on factors like home value, lien position, title, credit profile, verified income amount and available equity at the time of application.

There are more flexible qualification criteria designed to allow for fixed-income sources like retirement or disability benefits; an “open-ended credit line” that allows borrowers to draw between 80% and 100% of available funds at a fixed rate; and an option to “redraw any paid-down principal payments up to a maximum number of 25 draws over a 10-year period.”

The product does not include a preset maturity date. The principal amount “generally does not come due until the borrower permanently leaves the home, provided the borrower stays current on all required payments, including interest, property taxes and homeowners insurance, and appropriately maintains the home.”

These are requirements that should already be familiar to the reverse mortgage industry.

Depending on individual circumstances, this structure could lead to lower monthly payments when compared to other types of mortgages, Longbridge explained.

Product development

The development of this product has been a long time in coming, Mayer added. It comes at a moment when senior-held home equity was most recently estimated at nearly $14 trillion by the National Reverse Mortgage Lenders Association (NRMLA) and RiskSpan.

On Tuesday at The Gathering, Mayer expanded on some of the thinking that went into the product’s conception and development.

“We want to open a conversation, and older Americans may need a different kind of product than we are currently offering in the U.S.,” he said. “I was in London, and the largest insurance company in the U.K. does this. It’s on their website.

“It’s a common product in the U.K., where 36% of borrowers 55 or older take equity products. In the U.S., it would be about 600,000 per year.”

Mayer credited the company’s attorneys with navigating a strict regulatory environment to develop a senior-focused product that is not a reverse mortgage. He said the product could prove “attractive” for older customers who are hesitant to engage with reverse mortgages.

James Kleimann contributed reporting from The Gathering.

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