Reverse Mortgage Continued Growth
Good news from the NRMLA
Higher loan limit of $417,000 for reverse mortgages may start around November 1
Growth in the number of reverse mortgage loans being made to senior citizens may have slowed, temporarily, according to the National Reverse Mortgage Lenders Association, but the 2008 fiscal year ending September 30 closed the books on another record year of growth for this special loan. Growth, however, was only 4.3 percent over FY2007.
The industry closed 112,154 reverse mortgages (Home Equity Conversion Mortgages, or HECMs is the official name), in Fiscal Year 2008, which ended September 30, surpassing the record loan volume for FY 2007, according to data provided by the Department of Housing and Urban Development (HUD).
The growth rate, however, slowed to 4.3% after a robust 40.9% in FY2007.
This current loan volume does, however, continue growth for the industry each year since 2001. Most recently, loan production has grown from 43,131 in FY 2005 to 76,351 in FY 2006 before climbing to 107,558 in FY 2007.
The Homeownership and Economic Recovery Act of 2008 may have dampened growth temporarily as it is likely many prospective borrowers have been waiting for HUD to implement new provisions that among other things will allow borrowers to receive a higher benefit and pay a lower origination fee, according to the association.
“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,” said Peter Bell, President of National Reverse Mortgage Lenders Association.
“We expect the growth of reverse mortgages to accelerate as seniors look for additional sources of income and because the new provisions of the Homeownership Act of 2008 broaden the market for reverse mortgages while making them more attractive.”
Source: NRMLA.org
