But in 1989, Congress created a new type of reverse mortgage known as the HECM or home equity conversion mortgage. This completely protects the home owner as long as he or she continues to pay the property taxes regularly on schedule, maintains the home or property and doesn’t change names on the deed, the home owner can remain in the house forever. If the lender fails, any remaining payment obligation is assumed by the FHA (Federal Housing Administration).

The HECM program, though slow to catch on, has been growing rapidly in recent years. The year 2009 saw about 130,000 HECMs being taken by home owning senior citizens in America. Feedback from seniors who have taken such HECMs has been largely positive. A 2006 survey said 93 percent said that the reverse mortgage had a largely positive effect on their lives. 95 percent reported that they were satisfied with their counselors (All HECM borrowers need to undergo through a counseling process).

Some media sources have been bad mouthing the concept of reverse mortgage. These are spurious claims about home owners being asked to vacate their homes by their lenders. Seniors can rest assured that with a HECM, there is no scope for a reverse mortgage lender to ask a senior to move out of his home during the lifetime of the borrower. Some media outlets have been drawing parallels between reverse mortgages and subprimes and projecting that reverse mortgages will go the way of subprimes. For information and clarification, the two programs are much different, and there is no chance of a financial fiasco in the case of a reverse mortgage as happened in the case of subprimes.

Subprime loans impose repayment obligations on the borrowers. The financial crisis began because of the inability of subprime borrowers to meet their payment schedules so as a result, the number of foreclosures boomed to unprecedented levels. But compared to this scenario, reverse mortgage borrowers do not have to repay the money they get from reverse mortgage. They only need to maintain the home and pay property taxes correctly. Foreclosures do not apply to the reverse mortgage concept at all.

Subprime foreclosures caused losses on the part of lenders and investors in the form of mortgage securities which had been issued against subprime mortgages. In contrast to this, reverse mortgage lenders will not suffer due to losses on reverse mortgages because they are insured by the FHA.

In summary, the current state of the HECM (reverse mortgage) market does not have any resemblance as to the conditions in the subprime foreclosure market that led to financial disaster and crises.

The senior citizens and others on fixed incomes have been hard hit and many people are seeing their returns on savings, C.D.’s and bonds dwindling so much that it’s costing them money once inflation, taxes and fees are considered.

Joe Parks, a retired accountant in Houston working for an organization that works to help people in investing decisions, said that the general downturn in the American economy has an impact severe enough to cause a half to three-quarters of a percent cut in the senior income derived via maturing C.D.’s.

People who rely on such investment incomes for financial support are being forced these days to consider new and different options.

Peter Strauss, an attorney who advises seniors, said that if your assets are not appreciating or producing any sufficient income, it is better to start considering a reverse mortgage as a ways and means of making a huge asset produce income on your behalf for your benefit.

Recently, interest on one-and-two year treasury notes was also down to just 0.89 percent and 0.40 percent. Companies and financial institutions such as Bank of America, Citibank and Wells Fargo offer negligible rates of interest on standard money market accounts and basic savings accounts.

The average citizen finds some financial stuff difficult to understand. A significant part of the federal government’s plan of repairing the economy is to pay savers nothing. If you see the line ‘yield on cash’ and it shows rates like 0.01 percent then that means it is going to take thousands of years to double a money investment.

People like Eileen Lurie decided to obtain a reverse mortgage to help offset the decline in returns from investments tied to interest rates. Lurie took a reverse mortgage from a bank and she said the bank was going out of its way to explain the product to her.

These reverse mortgages are made available for seniors aged 62 and above. They can convert their home equity into cash. The money thus obtained via a reverse mortgage is considered tax-free for all purposes and intents. There is no impact on Social Security or Medicare incomes and payments. The reverse mortgage loans do not need to be repaid during the life time of the senior as long as the senior continues to live in the same house or property.

Financial Returns through certificates of deposit have dropped to between 1 percent and 2 percent. About a year or so ago, these C.D.’s were producing 5 percent returns. Seniors are also reluctant to redeploy money into high-risk ventures and high-risk investments. They need easy access to cash to meet basic and foreseeable expenses.

The interest rates for Treasury securities and bank products are also very low and negligible. They are not anywhere close to the levels before the financial recession. During these times of financial hardship, seniors can turn to a HUD reverse mortgage to help themselves with more cash inflow as a way of earning from their home equity while continuing to enjoy possession of the same property or home.

According to the study, California, Florida and Arizona posted the highest foreclosure totals for 2008. California posted a total of 523,624 properties for foreclosure filing in 2008. This is the nation’s highest figure per state. Foreclosure activity in California went up by nearly 110 % from the year 2007. Also, this number represents an increase of nearly 498 % from the year 2006. Florida came in second nation-wide with 385,309 properties receiving a foreclosure filing in 2008. This represents an increase of 133% from the year 2007 and nearly 412% from the year 2006. Arizona came in third with 116,911 properties coming in for foreclosure filing. This number represents an increase of 203% from the year 2007 and 655% from the year 2006. Other states in the top 10 foreclosures bracket were as follows: Ohio, Michigan, Illinois, Texas, Georgia, Nevada and New Jersey.

Foreclosures and mortgage delinquencies are expected to continue to rise due to mounting job losses and a weak economy. The nation’s unemployment rate stood at 7.2 percent during December 2008 at its highest since the year 1993. Overall, the U.S. lost 2.6 million jobs for 2008.

Even with all the doom and gloom in the housing arena, there exists a ray of hope for senior homeowners 62 years of age or older. That hope arrives in the form of a HECM (Home Equity Conversion Mortgage) or Reverse Mortgage. As a senior home owner who has taken a reverse mortgage, you need not be concerned with increasing foreclosure rates and whether or not you will be able to meet your mortgage obligations. With a HECM reverse mortgage, monthly mortgage payments are not required at all.

Borrowers can remain in their homes for their lifetimes. They never have to worry about making a mortgage payment. They only need to keep the property in good repair, pay property taxes and maintain their homeowners insurance.

Now may be the time to explore the reverse mortgage option for seniors who currently do not have a reverse mortgage. It doesn’t matter even if the senior is a little behind on their mortgage payments, the senior may still qualify for reverse mortgage. To qualify, borrowers must be aged 62 or above, must be occupying the property as their place of primary residence and not currently be in bankruptcy.

The reverse mortgage money may be used by the senior home owner as he or she sees fit. The money can be obtained as a fixed monthly income or as a one-time payment which can be invested also. Seniors can continue enjoying occupancy of the same place of residence for as long as they live and do not have to pay mortgage payments again after taking the reverse mortgage. The lender will pay the senior!

So in these tough economic climates, seniors looking for a little breathing space in their tight financial budgets may consider opting for reverse mortgages on their properties.

Congressman Frank said that, in the case of the subprime loan, people are obliged to make payments. But in the case of reverse mortgage, people are receiving money. Thus there arises a clear distinction between the two.

In the case of the subprimes, as the values of the properties dropped, some people could not refinance, hence they were hurt. But comparatively, in the case of the reverse mortgage, the burden will fall on the government (because it is insured), just as it should. This is because this is not the fault of an individual but a part of a larger national economic problem.

Congressman Frank said that the results and the evidence in case of subprimes and reverse mortgages are very different. He invited people to read about the differences between subprimes and reverse mortgages. There is no talk about a reverse mortgage related crisis. But it is the subprime loans that shouldn’t have been granted in the first place, that have caused the financial crisis. Reverse mortgages are always given only up to the value or worth of a property. That way, people cannot be able to take out loans that their incoming cash flows cannot support. Thus subprime loans and reverse mortgages are two different use cases and should be viewed as such. Some of the things applicable to subprime loans are not applicable to reverse mortgages.

The host of the TV show, Kast, pressed Congressman Frank on whether he expected a crisis in the future in the case of reverse mortgages. Frank responded that we have had reverse mortgages for as long as we have had subprimes and reverse mortgages haven’t been a cause of the monetary crisis but the subprimes have been. This clearly illustrates that reverse mortgages are safer than subprimes as such they can’t be compared. Comparing subprimes with reverse mortgages would be like comparing apples and oranges.

Reverse mortgages help senior citizens during their times of financial needs. Borrowers need to be aged 62 years or above in order to qualify for a reverse mortgage. Further, the money derived from a reverse mortgage does not need to be repaid and can be used for any purpose as the home owner sees fit. The money can be drawn as a fixed monthly income, or as a one-time cash payment or as a line of credit. The only requirement is that borrowers need to keep the property in good condition and maintain the home owner’s insurance current.

Reverse mortgages are different from subprime loans, as seen by Congressman Frank. There is no need to repay the money obtained in a reverse mortgage. Sub primes were one of the causes of the current fiscal crises, but reverse mortgages are one of the solutions available for seniors to overcome the financial crises.

This is good news for the reverse mortgage industry itself and the senior home-owning borrowers looking to take up reverse mortgage on their properties.  It clearly shows that scammers have no place for deception in this legitimate and ethical industry. This is clearly a morale booster for ethical and honest reverse mortgage lenders, brokers, consultants and agencies.

The ready availability of comprehensive reverse mortgage information on the internet has empowered home-owning senior citizens to make informed decisions when it comes to taking up reverse mortgages. The AARP even has an entire section about reverse mortgages on its website.

The HECM or reverse mortgage loan is one of the most deeply and thoroughly regulated mortgages in the United States. For the ordinary unethical loan scammer, it is certainly not worth the time, cost and effort to try perpetrating reverse mortgage scams.

With these types of consumer protections in place, it is becoming quite clear that scammers have no place in this ethical reverse mortgage industry. Loan sharks are quickly discovering there are other easier ways of making illegitimate and dishonest bucks than selling HECM scams.

Most newspaper articles or video segments that cover reverse mortgages usually devote only a couple of minutes or a couple of columns. The AARP has dedicated a full 26 minutes covering the key questions of consumer protection and abuse avoidance as it applies to the field of reverse mortgage loans.

The report is interview-styled and includes footage of a diverse group of people including two political representatives (a Democrat and a Republican), a reverse mortgage industry insider, a member of the media and a consumer advocate.

One AARP survey showed that 93% of the seniors who opted to take a reverse mortgage were glad they took one. But it still remains to be ensured that those who take this loan are protected from abuses.

Barney Frank, chairman of House Financial Services, was a member of the committee that improved the protection for people taking reverse mortgages as part of the Housing and Economic Recovery Act of 2008. Peter Bell, president of the NRMLA (National Reverse Mortgage Lenders Association) noted that abuses of the reverse mortgage system usually happen with newcomers coming into the business who use misleading sales tactics to convince seniors into taking reverse mortgages over other financial options available to them.

No industry is immune to some bad apples in the form of unethical or mis-guiding sales people. We have seen such elements in every profession that is in existence today, so it is no different in the case of the reverse mortgage industry also. Which is what is observed by a consumer advocate from the Center for Responsible Lending, that the loan itself is often not the problem - (the abuse by unscrupulous people is).

Abuse of seniors taking reverse mortgage can take many forms one of which is convincing seniors to invest their reverse mortgage proceeds into an annuity or other inappropriate financial product. The unscrupulous sales people prey on older adults who are desperate for help and are badly in need of financial aid.

Mary Beth Franklin, Senior Editor of Kiplinger Financial Magazine, observed that, due to the recent decline in the stock trade, some senior citizens have been using reverse mortgages as a bridge… “for five to ten years..” until the investments rebound and start to recover.

One of the other most popular and widespread ways of supplementing retirement income is to take a reverse mortgage on your property. There are many banks and reverse mortgage lenders in the market today that provide reverse mortgages, and the market has become very competitive making this all beneficial for the customer.

Senior home owners age 62 or above are federally eligible to apply and qualify for reverse mortgage loans after going through a mandatory counseling process. The money can be drawn in the form of a one-time lump sum payment or as a monthly stream of income that flows in throughout the life time of the home owner. The money doesn’t have to be paid back to the lender during the life tenure of the borrower. The principal and interest become payable only when the home owner passes away or moves out of the reverse mortgaged property.

The extra line of income derived from a reverse mortgage puts seniors at financial ease and enables them to gain confidence about their social position and spending ability. The money can be used any way they see fit - be it for travel, vacation, medical expenses, education expenses of grand children, home remodeling, etc.

The additional level of financial backup from reverse mortgage offers senior home owners peace of mind and stability so they can live their pre-retirement lifestyles without any qualm of cash deficiency.

Reverse mortgage income is not taxable either; for the government considers  it  inappropriate to tax you on property you already own (and for which you are paying taxes in other ways and means).

Taken in perspective, reverse mortgages are good as an additional line of income for the senior home owners looking to improve upon their lifestyles with a little more money in their pockets.

The money obtained through reverse mortgage does not need to be repaid during the life time of the borrower, as long as the owner continues to live in the same property. When the owner passes away, the lender stakes claim to the property which is then sold or auctioned to recover the money (principal and interest).

Reverse mortgage money can be used as a source of monthly income by the home owning senior. The cash inflow can ease up tight financial budgets so seniors can have a little more breathing space and dollars to spend in their wallets. The money can also be used as a line of credit to draw upon during times of need. It can also be obtained as a one-time lump sum payment.

The money can be used for any purpose the home owner sees fit - it is tax-free income. The money could go for meeting medical expenditures, educational expenditures of children or grandchildren, home repairs, remodels, or for traveling/taking a vacation.

In these economically tough days, seniors may find it hard to keep up with the mortgage payments on their properties. It is easy to fall back on such payments and the dues then keep piling up. In such cases, in order to prevent a foreclosure, it is important to consult with a reverse mortgage professional at the earliest opportunity. Reverse mortgage money can be used to pay off the existing mortgage and the balance can be used as a source of income for the senior to assist as a means of living.

Thus reverse mortgages offer a beacon of hope during financial troubles in these troubled times of economic hardship.

Today, a house is treated as a piece of equity that can be used to induce cash flow. The expenses of a modern man are beyond what he can actually bear with his regular income. Therefore, he explores varies options to increase his funds, so that he can lead a respectable life. Using his house as equity is the result of one such endeavor.

During this economic meltdown, using home equity is one of the best ways to survive. It ensures a guaranteed return and thus it might be used to pay off the bills. It can be used to repay loans or bear the cost of education, mobile phone, vacation and car.

Home equity holds greater promise for those, who were basking in the leisurely comfort of their impending retirement. These people can use their home for reverse mortgage and thus get a continuous cash flow for their expenses.

Reverse mortgages are a loan provided against a home. Usually given to people above the age of 62, this loan does not require regular repayment. By dint of this loan, the borrower is given an ‘effective’ ownership, which can be used to repay the loan after his death or in case the property is being sold out.

Besides, reverse mortgage does not require the payment of any additional tax. Assuring steady  income, reverse mortgages does not always affect Medicare benefits and Social Security. However, people willing to partake this program are advised to first undergoo counseling sessions.

Reverse mortgages make use of home equity to generate regular income. It allows the borrowers to release their home equity in the form of one or more payments. Reverse mortgages are geared at senior citizens nearing or above retirement age. This loan  is not only profitable because it assures guaranteed returns: it is great because it allows the borrower to choose the payment options and interest rates of their mortgage. The borrower also has the liberty to choose between adjustable and fixed rates for their mortgages.

Some of the other notable features of reverse mortgage or equity line of credit (ELOC) are:

* Guaranteeing an account that can never be closed till you have a balance for ELOC
* No interest is accrued on unused equity
* The unused equity can grow at an interest rate of 0.5% per month
* The insurances and taxes related to the equity must be cleared on time

Due to the choice allowed by reverse mortgage plan, more and more seniors across the world are choosing it for their livelihood. However, it is necessary for the borrowers to review the contract properly, so that all the clauses of the mortgage are properly understood. Reverse mortgage counseling is also mandatory for the borrowers, and it might help them to choose the option most suited for their situation.