Why is the loan origination fee so high on reverse mortgages?

The loan origination fee amount is set by the government. There is seldom a point in trying to bargain over the origination fee. In my opinion, shopping around for the cheapest origination fee won’t be worth your while. However, I wouldn't ever tell anyone not to look for a better bargain. I don't think you'll be able to find it, though.

Most lenders I have encountered require that the full amount to be set for every loan they fund no matter what their loan officer (the person who works with you) might like to do to lower the amount.

The reverse mortgage loan officer who comes and takes your loan application and walks you through the process will NOT be getting all of that…not even close.

A good bit of it goes to the lender they work for...the lender which is making you the loan on your home. The loan officer will only receive a portion of the fee.

I don't know for certain, but my best guess is they get between $200 and $500 of the origination fee depending on how many loans they originate for the lender on a regular basis. Most of the time this commission is the only income or compensation a full-time loan officer receives.

If you think of the hours, if not days, of time they put into originating the loan, getting you through the process and seeing that nothing falls through the cracks they’ve definitely earned their money. In addition, reverse mortgage loan officers maintain a home office, computer equipment, and often drive many miles during the loan process.

I wouldn't blame you for calling one of those numbers on late night television to see what kind of "deal" they might make you, though I really don't think there will be bargaining room. I honestly think that having a more localized, personal-touch, kind of loan officer will make you happier with the entire process. Calling the numbers on television or obtained through cards you receive in the mail will often get you in touch with a loan officer you will never meet. He or she will not know the local vendors you will need to make your loan run smoothly. Just my opinion based on my experience with borrowers...something to think about when you decide who you want to help you with your reverse mortgage.

Check out all your options and then come back here to get in touch with someone who is familiar with your territory.

Read about reasons why you might want a local reverse mortgage loan officer to originate your loan at this link.