Reverse Mortgage Solutions Grow In Popularity And Improve Image

In the late 80’s, mortgage brokers steered clear of the reverse mortgage solutions due to the perception that it was confusing, expensive, and risky. The consumer advocate and radio personality Clark Howard still remains somewhat skeptical of reverse mortgages but actually refers to this site in order to differentiate the pros and cons of reverse mortgages. Part of a rise in popularity after the late 80’s can be attributed to the introduction of the HECM (Home Equity Conversion Mortgage), which is a reverse mortgage product insured by the FHA. Numerous consumer safeguards have been been enacted since the 80’s, with the FHA consistently reiterating its dedication to applying accountability, transparency and access in the reverse mortgage market.

Wider acceptance has also been fueled by the recession and more baby boomers entering the market. There has been close to a 500% growth in origination volume from 2001 to 2004 (from 7,781 FHA HECM loans in 2001; to 37,829 in 2004). In the first nine months of fiscal year 2006, HUD counted 55,659 new HECM loans which is an 83-percent increase over the same period in fiscal year 2005. Lower costs may be another factor in reverse mortgage’s popularity. The market has also attracted more homeowners by broadening its consumer base. It has targeted the price conscious by lowering the closing costs of a reverse mortgage, and has also broadened its reverse mortgage rules with Congress passing a temporary extension of the lending limit for homes that are valued at more than $417,000.

 

The response above is not intended to be anything other than the educated opinion of the author. It should not be relied upon as financial advice.