When did reverse mortgages start?

Since its introduction in 1961, the reverse mortgage has changed and has become an important lending option that has now been used by more than one million households. Other changes included the change of HECM insurance from the General Insurance Fund to the Mutual Mortgage Insurance Fund (MMIF), and the advent of the HECM for Purchase program, which allows borrowers to purchase a home without paying monthly mortgage payments. Under the program, the reverse mortgage may be transferable to a different property if the homeowner moves. The idea behind reverse mortgages is somewhat similar, and has even more in common with the public risk-sharing of programs such as Medicare.

However, most reverse mortgages are homeowner-occupier loans only so that the borrower cannot rent the property to a long-term tenant and move out. At a 1969 congressional hearing, the concept of a reverse mortgage intrigues the Senate Committee on Aging. Lenders disclose estimated closing costs through several standardized documents, including reverse mortgage comparison, loan repayment, total annual cost of loan (TALC), closing cost spreadsheet, and good faith estimation (GFE). Reverse mortgages are often criticized on the subject of closing costs, which can sometimes be costly.

Then, in 1996, the program made a change to allow residences with up to four units to apply for a reverse mortgage as long as the borrower occupies a unit as their primary residence. When adjustable-rate reverse mortgages were the only available option, borrowers could only receive profits in the form of a line of credit or monthly payment with a small lump down payment. Also that year, AARP conducts another national survey of reverse mortgage borrowers that reveals that the borrower's motivation to move RM from “improved quality of life” to “debt relief.” Reverse mortgages have gone through many changes in their short 57-year lifespan (depending on who you ask). The reverse mortgage market rose slowly, then began to rise rapidly in the early to mid-2000s, when the US housing market skyrocketed.

In addition, several private lenders began offering their own reverse mortgage loans with their own eligibility requirements and qualifications. If the older spouse died, the reverse mortgage balance was due and payable if the youngest surviving spouse was left out of the HECM loan. The report is worth reading, as it covers almost everything one might want to know about reverse mortgages and the HECM program.

Mayra Holdiness
Mayra Holdiness

Infuriatingly humble pizza specialist. Wannabe pop culture nerd. Amateur internet scholar. Friendly bacon lover. Evil twitter fan. Freelance web fan.

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