2008 Q4 Data Shows Reverse Mortgages Holding Up Well
Fourth quarter 2008 data show that reverse mortgage origination’s insured by the FHA (Federal Housing Administration) are doing very well, even during these times of economic turbulence.
The FHA had endorsed 27,653 reverse mortgages in Q4, 2008. Totally 115,176 reverse mortgages were endorsed by the FHA during all of the year 2008. Reverse mortgage loan limits went up with effect from November 6, 2008, and that has contributed to a jump in the number of reverse mortgages.
US Congress has already allowed a $417,000 loan limit for FHA-approved reverse mortgages. FHA calls them Home Equity Conversion Mortgages or HECMs.
Peter Bell, President of the NRMLA (National Reverse Mortgage Lenders Association) has said that a lot of seniors had been waiting for this ceiling increase and there will be a jump in reverse mortgages closings in in the first quarter of 2009.
The FHA’s HECM endorsements rose by 6.4% in 2008, compared to the year 2007. A study done by Reverse Market Insight, a consulting firm in California, has revealed that Miami, Florida is the No. 1 when it comes to number of reverse mortgages taken by seniors.
There are still some minor abuses of the HECM program which have not escaped the eye of the HUD (Department of Housing and Urban Development). Some third parties and even family members of senior house owners seek to strip equity from the owners and gain the proceeds themselves.
House Financial Services Committee Chairman Barney Frank has announced that he would like to work with the Inspector General and the AARP to see if Congress can do anything to address these minor abuses.
The HUD is rewriting the reverse mortgage counseling protocol and will soon require counselors to pass an examination. AARP (American Association of Retired Persons) will be conducting a mystery shopper program with HUD collaboration to test the quality of reverse mortgage counseling offered across America.
