You are viewing the printer-friendly version of Reverse Mortgages Gain PopularityReverse Mortgages Gain PopularityFor a fifth consecutive year, lenders originated a record number of federally insured reverse mortgages, and the number of applications being processed is even higher, according to the National Reverse Mortgage Lenders Association.During the most recent federal fiscal year, ending September 30, the Federal Housing Administration (an arm of the Department of Housing and Urban Development), insured 43,131 Home Equity Conversion Mortgages (HECMs) compared to 37,829 the prior year. HECMs account for almost 90 percent of all reverse mortgages made in the U.S. Los Angeles, Calif. remained the top reverse mortgage market in the country with 3,915 loans funded, followed by Santa Ana, Calif. (3,067); Sacramento, Calif. (2,161); San Francisco, Calif. (2,040); Denver, Col. (1,515); New York (1,454); Coral Gables, Fla. (1,387); Boston, Mass. (1,148); Detroit, Mich. (1,138) and Chicago. Ill. (1,087). Although national volume increased by only 14 percent (compared to 109 percent between 2003 and 2004), the number of seniors applying for reverse mortgages remains much higher. An informal poll of the nation's top three reverse mortgage producers—Financial Freedom Senior Funding Corporation, Seattle Mortgage Company, and Wells Fargo Home Mortgage—shows an average rise of 56 percent in the number of loan applications that are being submitted now compared to last year at this time. According to HUD, the number of "unendorsed" reverse mortgages in the pipeline awaiting insurance at the end of September 30 totaled 36,952, compared to 21,838 a year earlier. Usually, there is a 4-6 week delay between the time a loan closes and is insured. Year-end volume could have been a lot higher, said Peter Bell, President of NRMLA, but in many parts of the country it's taking twice as long to schedule mandatory counseling. Before an application can be processed, the prospective borrower must first meet with a counselor. Both HUD and AARP oversee a network of counselors whose job is to review the transaction, answer any questions the borrower may have and suggest alternative solutions. A reverse mortgage is a loan that enables homeowners 62 or older to borrow against the equity in their home, without having to sell the home, give up title, or take on new monthly mortgage payments. Loan proceeds can be used for any purpose, and taken out as a lump sum, fixed monthly payments, line of credit (except in Texas), or a combination. The loan amount depends on the borrower's age, current interest rates, and the value and location of the home. A reverse mortgage does not have to be repaid until the borrower moves out of the home permanently, and the repayment amount will not exceed the value of the home. After the loan is repaid, any remaining equity is distributed to the borrower or the borrower's estate. A senior's home does not have to be owned free and clear to qualify for a reverse mortgage. aa |