Lenders brace for huge increase in reverse mortgages

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The number of federally insured reverse mortgages made in the United States last year jumped 77 percent, and legislators and lenders are bracing for another huge increase in 2007. The Federal Housing Administration, a branch of the U.S. Department of Housing and Urban Development, insured 76,351 Home Equity Conversion Mortgages (HECMs) in 2006 compared with 43,131 for 2005. The HECM is the most popular reverse-mortgage program and accounts for nearly 85 percent of the reverse market. A reverse mortgage is a loan against a home that is not payable until the homeowner dies, sells the home or permanently moves out of the home. Reverse mortgages allow homeowners age 62 and older to turn the equity in their home into cash without having to move or make a monthly mortgage payment. There is no minimum credit or income requirement to qualify for a reverse mortgage. "More seniors are recognizing that traditional retirements tools, such as IRAs, pensions and 401(k)s are not providing suffic...