Finance Of America Expands Homesafe Second Reverse Mortgage To Three More States

Finance of America (FOA) has expanded access to its HomeSafe Second product into Indiana, Ohio and Michigan, giving senior homeowners more options for tapping record levels of home equity without giving up their low post-pandemic mortgage rates, the company announced Tuesday.

Reintroduced in 2023 as what the company called the industry’s first second-lien reverse mortgage, HomeSafe Second is now available in 16 states: Arizona, California, Colorado, Connecticut, Florida, Illinois, Indiana, Michigan, Montana, Nevada, Ohio, Oregon, South Carolina, Texas, Utah and Washington.

The product targets homeowners 55 and older (62 and older in some states) who want a lump sum secured by a second lien and do not want to refinance a low-rate first mortgage in today’s higher-rate environment.

Similar to options under the federally insured Home Equity Conversion Mortgage (HECM) program, borrowers maintain ownership of the property and do not make monthly principal and interest payments on the proprietary HomeSafe Second loan as long as they continue to live in the home, maintain it, and pay taxes and insurance.

The move comes as many older homeowners are “equity-rich and rate-locked,” according to an FOA press release. Home values have climbed nearly 55% since 2020, according to the National Association of Home Builders, while mortgage rates have roughly doubled from pandemic-era lows in the 2% to 3% range.

At the same time, health care and living costs in retirement continue to rise. Fidelity Investments estimates that a 65-year-old retiring today may need roughly $165,000 to $175,000 to cover health care expenses alone over the course of retirement.

Americans 62 and older now hold more than $14 trillion in home equity, according to data published by the National Reverse Mortgage Lenders Association (NRMLA). Finance of America said it’s positioning HomeSafe Second as a tool for converting a portion of that equity into cash without triggering the need for a refinance.

“Many retirees are facing mounting pressure from rising healthcare expenses and everyday living costs, while navigating unpredictable markets,” Kristen Sieffert, president of Finance of America, said in a statement.

“For homeowners who have built substantial equity, their home can be a powerful financial tool. HomeSafe Second was created to reflect the realities facing today’s homeowner, giving them a way to tap that value without adding new monthly payments or sacrificing the low mortgage rate they worked hard to secure.”

Fitting into the home equity toolbox

For mortgage and real estate professionals, the product’s expansion underscores how housing wealth is being repositioned as a core retirement planning tool rather than a last-resort option.

With volatility in investment markets and a large expected intergenerational wealth transfer in the coming decades, more households are looking to strategically use home equity for several purposes.

• Funding home renovations or aging-in-place modifications
• Consolidating higher-interest consumer debt
• Bridging income gaps and preserving investment accounts in down markets
• Providing financial support to children and grandchildren

Traditional home equity lines of credit (HELOCs) remain widely available but require monthly payments along with standard income and credit underwriting.

HomeSafe Second is designed specifically for older borrowers who want to avoid new monthly obligations and preserve an existing low-rate first mortgage, with the tradeoff coming in the form of accrued interest for a reverse mortgage and standard product obligations around occupancy, maintenance and property charges.

As more baby boomers age in place and resist selling or refinancing, purchase and refinance volume may remain constrained. Specialized second-lien reverse products like HomeSafe Second create a potential new advisory and referral channel for mortgage lenders, financial planners and real estate agents who serve equity-rich, payment-sensitive older homeowners.

This article was generated using HousingWire Automation and reviewed by a HousingWire editor before publication. The system helps convert company announcements and industry data into HousingWire-style news coverage.