Record year seen in reverse mortgages

Real Estate Weekly, Oct 17, 2001

NRMLA announced today that the industry is on pace for a record year, largely exceeding last year's loan volume. With 7,155 Home Equity Conversion Mortgages or HECMs closed and an additional 7,286 loans in the pipeline waiting to close; NRMLA projects a likely total volume of roughly 10,000 loans for FY 2001 compared with 6,650 HECM closed in FY 2000.

"This will be a banner year for our industry," said Peter Bell, President of the National Reverse Mortgage Lenders Association. "The concept of the reverse. mortgage is taking hold with senior homeowners, their adult children and advisors as they have begun to appreciate the versatility of this financial planning tool."

This current loan volume represents a striking uptrend for the industry over prior years. In FY 1998 and FY 1999, 7,937 and 7973 loans were closed respectively, and in FY 2000, HECM production dropped to 6,650.

Reverse mortgages are originated largely by private lenders. HECMs are insured by the Federal Housing Administration, an arm of the U.S. Department of Housing and Urban Development (HUD). Other types of reverse mortgages are the Fannie Mae Home Keeper loan and a jumbo reverse mortgage product designed for homes with values in excess of $400,000 offered by Financial Freedom, a subsidiary of Lehman Brothers Bank, FSB.