The U.S. Department of Housing and Urban Development (HUD) recently published a report which provides an overview of the design and history of the Home Equity Conversion Mortgage (HECM) program.  The report argues that 2008 will be viewed as a turning point in the history of the HECM program because the first quarter data confirms that the annual origination volume of HECMs exceeded 100,000 for the first time.  HUD feels the surge is timely, given that 2008 is the year in which the first members of the “Baby Boomer” generation turn 62.

In the next several years we will start to see if baby boomers will embrace HECMs as a mainstream product and we will also see if wealthier homeowners will use reverse mortgages as an asset management tool during retirement.  

Some facts on the history of HECMS from the report:

• HECMs were authorized by Housing and Community Development Act of 1987 and was initially limited to 2,500 total.
• HUD Insured the first HECM loan in November 1989.
• In 1998 the HUD Appropriations Act made the HECM a permanent program.

The report also includes a few charts that show things like how HECM principal limit factors vary by the combination of the borrowers age and interest rate.

To read a copy of the report check out the link below.

A Turning Point In The History of HUD’s Home Equity Conversion Mortgage Program

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