A new study recently released by HUD’s Office of Policy Development and Research sheds light on the characteristics of HECM borrowers and shows how the “typical” borrower has changed in recent years as the HECM program has matured:

Changes in the Typical HECM Borrower
Characteristic:	2000 HUD Report	FY 2006 HECM Loans
Median Age	75	74
Single Females	56%	44%
Single Males	14%	17%
Couples	30%	39%
Median Value of Property	$107,000	$289,000
Initial Principal Limit (Max. That Can Be Borrowed)	$54,890	$159,000

Single females homeowners are still the dominant HECM borrower group, but single males and, especially, couples are an expanding presence in the market. “Couples”, incidentally refers not just to married couples; as used here the term applies to all HECM loans with two co-borrowers, irrespective of gender.

The purpose of the report is to provide data on HECM loans that will “enhance the development of an efficient secondary market for HECM loans”. Development of a secondary market able to attract private investor dollars is viewed by many as critical to the future growth of the reverse mortgage industry and to the removal of program obstacles (like high costs).

The study focuses on the rate at which HECM loans “terminate” (i.e. loan payoff due to borrower death, move-out, or other voluntary payoff such as refinancing) - a key consideration for investors looking at cashflows. There are several interesting and useful facts contained in the report relative to HECM loan terminations that we will discuss in future posts.

Social tagging: HUD Reverse Mortgage

A Few More Related Articles of Interest:

Boston College Survey Gives Reverse Mortgage Insights

Ginnie Mae Notes Significance of HUD Study to Reverse Mortgage Market

HECM Mortgage Payoff Types by Borrower Age

LOC - Line of Credit

PLP - Principal Limit Factor