By Roberta Maynard. The reverse mortgage industry, which had a robust year in 2001, is poised for record volume again this year. Reverse mortgages are loans to homeowners 62 years and older that allow them to convert part of the equity in their home into tax-free income. The most common type — FHA Home Equity Conversion Mortgages (HECM) — are on track to increase 64 percent in fiscal year 2002 over the previous fiscal year. At its current pace, some 12,780 HECM loans will be closed this year.
The National Reverse Mortgage Lenders Association, in Washington, D.C., attributes the increase in loan activity to two factors: consumers' growing awareness of the product and a rise in the number of lenders offering it. The number of HUD-approved reverse mortgage lenders had jumped 16 percent by May, when about 191 were handling reverse mortgages. Demographic trends, particularly the increasing number of older Americans, will continue to fuel use of this lending product, says the association. For more information, visit www.reversemortgage.org.
Published in BIG BUILDER Magazine, November 2002