Reverse Mortgage Information

With all the financial setbacks experienced in many sectors of the economy last year, it was a surprise to see that the number of reverse mortgage loans given out last year ended with an increase over the year before. The 2008 fiscal year ended in September 30th, 2008 and the reverse mortgage books closed with another positive year increase over last year closing figures although just barely.

According to the National Reverse Mortgage Lenders Association, the growth in the amount of reverse mortgage loans taken out by seniors actually may have slowed down. Still yet when the fiscal year ended in September there was a 4.3 percent increase over 2007 closing figures.

The reverse mortgage industry recorded 112,154 reverse mortgage loans during the last fiscal year which surpassed the total recorded volume for 2007. The figures were taken from HUD (the Housing and Urban Development Department). Although there was an increase in total volume there was a drop in percentage increase as 2007 enjoyed a robust 40 percent increase over the preceding 2006 fiscal year. The growth rate therefore dropped from 40 to 4.3 percent which was a very sharp decline indeed. Since 2001, the industry has been enjoying steady growth in the number of loans given out. The 2005 fiscal year ended with 43,131 recorded loans, 2006 recorded 76,351 while 2007 fiscal year shot up to 107,558. The 2008 fiscal year recorded volume of 112,154 kept up with the yearly growth but analysts are keeping their eyes wide open because of the sharp decline in growth rate.

Some people believe that the 2008, Homeownership and Economic Recovery Act may have contributed to dampening the growth of the industry as many would be borrowers were waiting for HUD to bring new provisions. They were expecting the implementation of more borrower friendly provisions that would allow borrowers pay a lower initial set up fee and derive more benefits.

Peter Bell, President of National Mortgage Lenders Association was quoted as saying “Reverse mortgages are really one of the only positive stories in financial services this year because they provide a safe, proven solution to many Americans’ retirement funding needs, especially during the current financial crisis,”

Now that new provisions have been added to the Homeownership Act of 2008, which widens the reverse mortgage market and makes them more attractive it is expected that the growth in the industry will pick up once more. The new provision have made reverse mortgage more attractive. Also the passing of the Purchase Reverse Mortgage Loan law which mandates FHA to insure reverse mortgage loans for home purchases should also shake up the industry.