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News Release
HUD No. 07-089
For Release
Wednesday
June 20, 2007
MORE THAN 300,000 SENIORS BENEFITING FROM HUD
REVERSE MORTGAGES
Tenfold increase in HECMs over the last 6 years
WASHINGTON - More seniors than ever before are
reaping the benefits of reverse mortgages to enjoy
their golden years. New data from HUD reveals that
more than 300,000 seniors have used the
federally-insured Home Equity Conversion Mortgage (HECM)
loan program to convert the equity in their home
into cash without having to move.
"For some senior citizens on fixed incomes, reverse
mortgages are a great way to cash in on their home
equity to make needed repairs, pay unexpected
medical bills or just to supplement their
retirement. Seniors shouldn't have to choose between
taking out a loan to fix up their home and putting
food on the table. With a reverse mortgage, this
difficult decision is a thing of the past," U.S.
Housing and Urban Development Secretary Alphonso
Jackson said.
Insured by HUD's Federal Housing Administration
(FHA), HUD's reverse mortgage loans require that the
borrower be a homeowner, 62 years of age or older;
own one's home outright, or have a low mortgage
balance, and must live in the home. Reverse mortgage
recipients are also required to participate in
HUD-approved housing counseling programs before
obtaining the loan.
Since 1990, more than 308,000 senior homeowners have
used HUD's reverse mortgage program, which covers
almost 90 percent of the reverse mortgage market, to
borrow against the equity in their homes, making
cash readily available to cover necessary expenses.
There has been a 10-fold increase in the number of
reverse mortgage loans backed the FHA between 2000
and 2006. More than 76,000 seniors obtained a
reverse mortgage through HUD in 2006, compared to
just 6,637 people in 2000. The number of HECM's
insured by the FHA has steadily increased over the
past 17 years, with the largest increases coming
over the past six years. The FHA insured 18,084
loans in 2003 and more than doubled that amount to
37,789 in 2004. In 2007, the FHA has already backed
69,833 loans, putting the HECM program on pace to
surpass its 2006 total this summer.
Unlike a traditional home equity loan or second
mortgage, no repayment is required until the
borrower no longer maintains the home as their
principal residence. If the homeowner has an
existing mortgage on the home, it will be paid off
with proceeds from the reverse mortgages. The
remaining equity can be distributed as a lump sum,
on a monthly basis, or on an occasional basis as a
line of credit.
Reverse mortgage are the bright spot in today's
housing market, and their significance will only
increase as more baby boomers reach retirement.
Today, more than 34 million Americans are over age
65, according to the Census Bureau. By 2030,
Americans 65 and older are expect to number almost
70 million and to represent 20 percent of the
population.
To help more seniors take advantage of reverse
mortgages, HUD's Government National Mortgage
Association (Ginnie Mae) is also creating a HECM
mortgage-backed security that will allow FHA-insured
reverse mortgages to be used as collateral to back
Ginnie Mae securities. This change will expand the
reverse mortgage business and should provide seniors
with lower rates by allowing mortgage lenders to
obtain a better price for their loans in the
secondary market.
"As retiring baby boomers become eligible, reverse
mortgages will continue to gain in popularity.
Seniors are looking for financial independence and
security late in life, and reverse mortgages
continue to be their best bet," Jackson added.
HUD is the nation's housing agency committed to
increasing homeownership, particularly among
minorities; creating affordable housing
opportunities for low-income Americans; and
supporting the homeless, elderly, people with
disabilities and people living with AIDS. The
Department also promotes economic and community
development, and enforces the nation's fair housing
laws. More information about HUD and its programs is
available on the Internet at www.hud.gov and
espanol.hud.gov. For more information about FHA
products, please visit www.fha.gov. |
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