Reverse Mortgage Guide

While much of the mortgage industry mopes along, FHA is having a banner year.

Figures just released by HUD show that in the first quarter of 2008 the FHA received 464,600 mortgage applications for one-to-four-unit properties — that’s up 182 percent over last year.

A total of 237,800 loans were endorsed — an increase of 97 percent.

There is a substantial difference between the number of applications received and the number of loans actually insured — 226,800 applications for the quarter. It’s likely that some portion of this total is represented by application received during the quarter but not yet processed.

As to reverse mortgages, the latest HUD numbers show that as of mid-June a total of 78,490 HECMs were insured, a gain of just 3.9 percent over the past year.

Why the big gains for FHA loans generally but not for reverse mortgages?

The answer concerns how the program has evolved: According to HUD more than 50 percent of all reverse mortgages insured under the FHA program were originated in the 24 months before March 2008.

There were 37,790 HECMs issued in 2004, 43,081 in 2005, 76,282 in 2006 and 107,367 in 2007. Given that the program has had roughly 390,000 loans going back to 1989, it would be unreasonable to expect a huge percentage increase this year.

In effect, the HECM program is maturing.

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