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Reverse Mortgage News for Seniors
Reverse Mortgages Jump by 77 Percent over Last
Fiscal Year
More senior citizens cashing in home equity with
special mortgages
October 29, 2006 The number of federally insured
reverse mortgages made in the U.S. in the government's 2006 fiscal year
has increased by 77 percent. Rising home values, larger sales forces,
and increased consumer acceptance of these loans designed for senior
citizens has fueled the growth, according to the National Reverse
Mortgage Lenders Association.
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on
Reverse Mortgage News |
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During the most recent federal fiscal year, ending
September 30, the Federal Housing Administration (an arm of the U.S.
Department of Housing and Urban Development), insured 76,351 Home Equity
Conversion Mortgages (HECMs), commonly called reverse mortgages,
compared to 43,131 the prior year.
"More seniors are recognizing that traditional
retirements tools, such as IRAs, pensions, and 401(k)s are not providing
sufficient income to help fund everyday living expenses and healthcare,"
said Peter Bell, President of NRMLA.
"Thru proper education, more retirees are
recognizing that the home they have lived in for so many years can now
take care of them by using a reverse mortgage to access the equity
accumulated over 20, 30, 40 years, to help them living more
comfortably."
The Santa Ana, Calif., metropolitan area displaced
Los Angeles as the top reverse mortgage market in the country with 5,825
loans funded (compared to 3,067 in 2005).
Others in the top ten reverse mortgages markets and
the changes were:
● Los Angeles (5,758, compared to 3,915 in 2005);
● Sacramento, Calif. (3,625, compared to 2,161 in 2005);
● Coral Gables, Fla. (3,577, compared to 1,387 in 2005);
● San Francisco, Calif. (3,353, compared to 2,040 in 2005);
● New York City (2,492, compared to 1,454 in 2005);
● Fresno, Calif. (2,461, compared to 942 in 2005);
● Phoenix (2,438 compared to 720 in 2005);
● Boston (2,263 compared to 1,148 in 2005); and
● Denver (1,947 compared to 1,515 in 2005).
NRMLA attributes the explosive growth to several
factors, including high home appreciation rates in many parts of the
country, which allow seniors to access greater amounts of equity; more
lenders offering the product (NRMLA now represents about 500 firms
nationwide compared to 370 last year at this time); and greater
acceptance of reverse mortgages as a wealth management tool.
The government's top housing official, Brian
Montgomery, who serves as FHA Commissioner and Assistant Secretary of
Housing at HUD, commented at NRMLA's Annual Meeting in September, that
he anticipates reverse mortgages will one day be as commonplace as
401(k)s and other retirement planning tools.
"HUD has gone to great lengths to educate community
leaders and senior advocates about the potential benefits of reverse
mortgages, which has helped make more people comfortable with
recommending the product to their elderly clients," Bell noted. "I think
Commissioner Montgomery deserves as much credit as anyone for helping to
make reverse mortgages a more mainstream financial planning tool."
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 borrowers
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
cannot exceed the value of the home. After the loan is repaid, any
remaining equity is distributed to the borrower or the borrowers
estate.
A seniors home does not have to be owned free and
clear to qualify for a reverse mortgage. NRMLA distributes a free
information booklet on reverse mortgages, called Just the FAQs: Answers
to Common Questions About Reverse Mortgages. Consumers can order it by
telephone (1-866-264-4466, toll-free) or at NRMLAs Web site,
http://www.reversemortgage.org.
The Web site has extensive information on reverse
mortgages, a state-by-state list of lenders, and a reverse mortgage
calculator. To be listed on the NRMLA website, a lender must agree to
abide by the Associations Code of Conduct and operate in accordance
with its Best Practices.
NRMLA is a nonprofit trade association, based in
Washington, DC, whose members make and service reverse mortgages
throughout the U.S. and Canada. Members sign a Code of Conduct pledging
to abide by guidelines that assure fair, ethical, and respectful
practices in offering and making reverse mortgages to seniors.
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