Reverse Mortgage Guide

The National Reverse Mortgage Lenders Association (NRMLA) has just issued new figures regarding the size of the reverse mortgage marketplace. Some of these numbers are enormous and explain why so many lenders have begun to enter the reverse mortgage field:

*”Americans age 62 or older hold an estimated $4.3 trillion of home equity,” according to the NRMLA/Hollister Reverse Mortgage Market Index (RMMI). “Although the reverse mortgage industry has seen tremendous growth in the last five years, only a little more than 300,000 reverse mortgages have been originated in its short history, representing less than 1% market penetration.”

*In the first quarter 2007 alone, says NRMLA, there was a $19 billion increase in senior home equity. This increase was reflected in a 0.4% increase in the RMMI to 205.6 from 204.7 in the prior quarter. The index will reflect the current value of senior home equity on a quarterly basis. However, this was the smallest increase for all quarters since 2000.

*There may be as much as $37 trillion in home value by 2030 says NRLMA, assuming historical appreciation and taking into account the demographic shift as boomers begin to turn 62.

There are a lot of reverse mortgage calculators online, but too often site visitors do not know the factors used to create results and they cannot get an amortization statement.
However, there’s at least one interesting exception. CircleLending is designed to help those with capital assist friends and family without.
One financial product offered by CircleLending is […] read more

The June issue of Mortgage Banking magazine offers an interesting article by Mary McGarity entitled, “Moving Forward In Reverse.”
One of the interesting points made in the article is that some 20 million homeowners may now qualify for a reverse mortgage and that the total value of their untapped equity could be as much as $3 […] read more

There’s a consumer information site for California residents, particularly those in Los Angeles, who have an interest in reverse mortgages.
But this site, paid for with taxpayer dollars and allegedly devoted to the betterment of consumers, says I cannot quote the material on their site. “May be reprinted for non-commercial use if a credit line is […] read more

The good folks at Air Force Times are reporting that the White House is opposed to an expansion of the VA loan program to include reverse mortgages. (See: White House opposes VA reverse mortgages, June 23, 2007)
The proposal is contained in a bill (HR 2475) sponsored by Rep. Michael Michaud (D-ME). The proposed legislation would essentially […] read more

A lender serving the California and Hawaii markets says it now offers FHA reverse mortgages at lower cost.
California-based Reverse Mortgage Lending says ”the high efficiency and decreased costs of internet marketing have lowered the company’s costs,” allowing them to reduce up-front costs.
“Many people that could benefit from a reverse mortgage have been reluctant to go forward due […] read more

Hud is reporting that it insured some 300,000 loans in the 16-year period between 1990 and 2006. It also says that it has nearly matched last year’s record total.
“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 […] read more

We usually think of reverse mortgage interest as always being deductible, but that may not be the case.
With a reverse mortgage, there is typically nothing to pay back until the property is sold or the borrower passes away.
Because nothing is actually paid to the lender there’s no annual interest deduction for most borrowers since most […] read more

A number of reverse loan officers have written to me regarding this blog and I thank them for their interest.
A number have said that my concerns regarding the lack of online calculators with full amortization statements are overblown. The solution, they say, is to contact a reverse mortgage loan professional.
This raises a question: Who do […] read more

We usually think of reverse mortgages in terms of lenders, interest and payments. In fact, it doesn’t have to be this way.
But suppose we said that someone would give us cash and we would have no payments as long as we lived in our home. That sounds like a reverse mortgage.
What doesn’t sound like a […] read more

Second homes were big in 2006, amounting to 35 percent of all sales,  according to the National Association of Realtors.
“The typical vacation-home buyer in 2006,” says NAR, ”was 44 years old, had a median household income of $102,200, and purchased a property that was a median of 215 miles from their primary residence; 42 percent of vacation homes […] read more

There are those who favor reverse mortgages and those who don’t. The debates they have are useful and help people better understand how such financing works.
John Gosselin, a Massachusetts attorney who deals in elder law, offers the case for reverse mortgages on his Gosselin Law Blog.
Gosselin suggests that one reason for reluctant […] read more

I’ve been looking online for a reverse mortgage calculator that tells me what I want to know — and what you should want to know.
There are plenty of calculators online and many want your ZIP code and date of birth. I’m okay with that. The forms want to know the value of your home. That’s […] read more

Where are you most likely to find seniors getting a reverse mortgage?
According to figures from HUD, in 2006 reverse mortgages were all-the-rage in just a limited number of metro areas, places where at least 1,000 reverse mortgages were originated.
Where are these cities? See if your community made the list below:

Baltimore (1,777)
Boston (2,407)
Camden (1,242)
Chicago (1,718)
Coral Gables […] read more

HUD calls it the Top Ten Things to Know if You’re Interested in a Reverse Mortgage but I wish the list was a little longer.
Let’s think about this. Imagine that you bought a car, a radio or a pair of shoes. After considering all the wonderful features regarding each product, would you not […] read more

Given all the publicity which reverse mortgages receive it may be interesting to measure their popularity.
According to the National Reverse Mortgage Lenders Association:
“Reverse mortgages have been around in one form or another since the early 1960s. The product remained in relative obscurity until 1990 when the U.S. Department of Housing and Urban Development unveiled the […] read more

I got a question from a reader the other day asking about reverse mortgages. The poor guy had contacted every lender west of Bermuda and complained that all he could find were adjustable-rate reverse mortgages.
Don’t fixed-rate reverse mortgages exist, he asked.
Absolutely. Just take a look at this news release:
MLS Reverse Mortgage Now Offers Fixed Rate […] read more

The Bank of America is seeking five “reverse mortgage analytics managers”.
According to an ad posted on Quantster.com, candidates should have “4-7 years of strong analytical experience in consumer or commercial banking.” Also, an “MS or PhD degree in Applied Mathematics, Statistics, Computational Finance, Engineering, Economics, Physics or applicable fields is a mandatory requirement to be […] read more