HeraldNet writer Tom Kelly does a great job covering reverse mortgages. His most recent article, Even now, reverse mortgages a viable option describes how even with the credit crunch, the reverse mortgage industry grew for the 19th straight year. While the 4.3 percent growth in HECM volume isn’t close to what the industry has seen previously, with loan limits raised and fees capped at $6,000 people are expecting a surge of applications.
"One reason for the lower (reverse mortgage) volume was the uncertainty over the loan limits," said Peter Bell, president of NRMLA, the nonprofit trade group based in Washington, D.C. "There were so many people waiting on the sidelines to see what would happen. Why would you want to close a loan a few weeks ago when you could borrow less and get a higher interest rate?"
While the industry has seen the loan limits increase to $417,000, Kelly writes that Lenders vow to push vigorously to lift the ceiling to $625,500 as soon as possible, especially given the exit of all jumbo reverse mortgage products. Raising the loan limits to $417K helps people in certain areas of the country, but in places like California the new loan limits don’t provide much more benefit.
The best part of the article comes from the story about FHA Commissioner Brian Montgomery’s mother and reverse mortgages, which Kelly describes below:
FHA Commissioner Brian Montgomery, who will leave his post when the current administration exits in January, said there is a bright future ahead for reverse mortgages, despite the current credit crunch. He has tried to convince his mother to take out a reverse, but she, like many seniors, has been suspicious of the concept.
"I told her that I was her son and would always be looking out for her best interests," Montgomery said. "I also told her that I administered the program for the United States of America and thought it was a pretty good idea."