Reverse Mortgage Provider Seeks 125,000 Older Texans In Financial Need After Tuesday's Vote

Business Wire, Nov 3, 1999

CHICAGO--(BUSINESS WIRE)--Nov. 3, 1999--

After Tuesday's overwhelming vote to enable Texas seniors to get reverse mortgages, one of the country's leading providers of the specialized loans announced it is searching for 125,000 seniors in need of financial help.

Steve Baer, president of Chicago-based Senior Income Reverse Mortgage Corporation, said at least 125,000 Texas seniors are likely to be interested in obtaining a reverse mortgage over the next five years, based on studies and testimony presented to the Texas Legislature.

Senior Income will start offering federally-insured reverse mortgages to older Texans now that Proposition 2 will become law. The state constitutional amendment, supported by 64 percent of voters, lets people age 62 and up borrow money without making any repayments for their lifetimes in their homes. Until yesterday, Texas was the only state in which reverse mortgages were unavailable to `house-rich, cash poor' seniors.

Baer said, "Older Texans can now turn their homes into `pension plans' by means of federally-insured reverse mortgage funds. Our clients will be able to generate a lump sum of cash for any purpose, such as home health care, prescription costs, home repairs, a new car, debt payoffs or gifts for loved ones. Or, they can elect to receive a tax-free monthly check as a supplement to their retirement budget."

Baer said his firm is among the top five reverse mortgage providers in the nation, and offers a free Consumer Information Kit to callers at 800/774-6266. Whether the homeowner takes a lump sum or monthly income, he said, the funds are tax-free, and government-guaranteed through insurance sponsored by the Federal Housing Administration.

For example, a 75-year-old couple in a $100,000 home could obtain almost $50,000 in cash, or $570 per month over 10 years, or $360 per month for as long as any co-owner lives in the home, according to Senior Income. Neither the funds used nor accruing interest charges need be repaid until the last co-owner of the home dies, sells, or moves. The interest rate on most federally-insured reverse mortgages today is 6.71%.

Baer said studies and testimony presented to the Texas legislature last year by Fannie Mae, the federally-chartered secondary mortgage lender that buys most reverse mortgages today, indicates that out of Texas' 2.5 million seniors, at least 125,000 are likely to be highly interested in a reverse mortgage within five years. He said Fannie Mae had done a great service by highlighting the need for reverse mortgages in Texas, the nation's fourth-ranked state for senior population.