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Reverse Mortgage News for Seniors
Senior Citizens Using HUD Reverse Mortgages Passes
300,000
Tenfold increase in HUD HECMs over the last six
years
 June 22, 2007 - More seniors than ever before are
reaping the benefits of reverse mortgages to enjoy their golden years,
according to the U.S. Housing and Urban Development. New data from HUD
reveals that more than 300,000 seniors have used the federally-insured
Home Equity Conversion Mortgage (HECM) loan program to convert the
equity in their home into cash without having to move.
"For some senior citizens on fixed incomes, reverse
mortgages are a great way to cash in on their home equity to make needed
repairs, pay unexpected medical bills or just to supplement their
retirement, HUD Secretary Alphonso Jackson said..
Seniors shouldn't have to choose between taking
out a loan to fix up their home and putting food on the table. With a
reverse mortgage, this difficult decision is a thing of the past."
Insured by HUD's Federal Housing Administration
(FHA), HUD's reverse mortgage loans require that the borrower be a
homeowner, 62 years of age or older; own one's home outright, or have a
low mortgage balance, and must live in the home. Reverse mortgage
recipients are also required to participate in HUD-approved housing
counseling programs before obtaining the loan.
Since 1990, more than 308,000 senior homeowners
have used HUD's reverse mortgage program, which covers almost 90 percent
of the reverse mortgage market, to borrow against the equity in their
homes, making cash readily available to cover necessary expenses.
There has been a 10-fold increase in the number of
reverse mortgage loans backed the FHA between 2000 and 2006.
More than 76,000 seniors obtained a reverse
mortgage through HUD in 2006, compared to just 6,637 people in 2000.
The number of HECM's insured by the FHA has
steadily increased over the past 17 years, with the largest increases
coming over the past six years. The FHA insured 18,084 loans in 2003
and more than doubled that amount to 37,789 in 2004. In 2007, the FHA
has already backed 69,833 loans, putting the HECM program on pace to
surpass its 2006 total this summer.
Unlike a traditional home equity loan or second
mortgage, no repayment is required until the borrower no longer
maintains the home as their principal residence. If the homeowner has
an existing mortgage on the home, it will be paid off with proceeds from
the reverse mortgages. The remaining equity can be distributed as a
lump sum, on a monthly basis, or on an occasional basis as a line of
credit.
Reverse mortgage are the bright spot in today's
housing market, and their significance will only increase as more baby
boomers reach retirement. Today, more than 34 million Americans are
over age 65, according to the Census Bureau. By 2030, Americans 65 and
older are expect to number almost 70 million and to represent 20 percent
of the population.
To help more seniors take advantage of reverse
mortgages, HUD's Government National Mortgage Association (Ginnie Mae)
is also creating a HECM mortgage-backed security that will allow
FHA-insured reverse mortgages to be used as collateral to back Ginnie
Mae securities. This change will expand the reverse mortgage business
and should provide seniors with lower rates by allowing mortgage lenders
to obtain a better price for their loans in the secondary market.
"As retiring baby boomers become eligible,
reverse mortgages will continue to gain in popularity. Seniors are
looking for financial independence and security late in life, and
reverse mortgages continue to be their best bet," Jackson added.
Editors Notes:
HUD is the nation's housing agency committed to
increasing homeownership, particularly among minorities; creating
affordable housing opportunities for low-income Americans; and
supporting the homeless, elderly, people with disabilities and people
living with AIDS. The Department also promotes economic and community
development, and enforces the nation's fair housing laws. More
information about HUD and its programs is available on the Internet at
www.hud.gov and espanol.hud.gov. For more information about FHA
products, visit
www.fha.gov.
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