HUD Data Shows that Reverse Mortgages are Growing
The HUD (Department of Housing and Urban Development) released some data in December that indicates that despite the current recession in the economy, the number of HECMs has grown 6.4% when compared to the previous year.
HECMs are Home Equity Conversion Mortgages which is the HUD term for federally insured reverse mortgages.
In a HECM loan, a lender may advance money to a senior citizen in the form of a series of monthly payments, or a line of credit from which the senior can draw, or a combination of both. The homeowner is not required to make any payments on the loan as long as he or she remains in the house. The lender will collect the loan balance-including the accrued interest and other charges when the house is sold or the owner dies.
The number of federally insured HECMs was 115,176 in the calendar year 2008, compared to 108,293 in 2007. So far, only 1% of all US households have a reverse mortgage on them.
A consulting firm in California named Reverse Market Insight, Inc. did a more detailed analysis of HECM data and concluded that three of the top 10 reverse mortgage markets in the country are in the state of Florida. Miami, FL seems to be the top reverse mortgage destination. The FHA (Federal Housing Administration) insured 9,561 HECMs in the Miami metro area during calendar 2008. The statistics for the other leading areas are as follows:
Los Angeles - 4126
Tampa - 3956
Santa Ana (CA) - 3695
Baltimore - 3595
Phoenix - 3582
Orlando - 3556
Richmond (VA) - 3493
Philadelphia - 3317
Chicago - 3184
Further RMI analysis showed that 2,949 lenders originated at least one HECM in 2008, which is a 76.5% increase in numbers when compared to the previous year.
Awareness about reverse mortgages has increased dramatically in recent times. The NRMLA (National Reverse Mortgage Lenders Association) predicts higher growth of HECMs in the coming months, because of new changes to the HECM program. These changes are higher loan limits, co-op eligibility, stricter consumer protections, and home purchase component.
Thus, reverse mortgages and HECMs show a potential for strong growth in the months ahead.
when will reverse mortages be available for co-ops?