Beware of Dated Reverse Mortgage News Releases
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Not quite sure why the following press release is being circulated on the internet as current “news”:
Reverse Mortgage Volume Up 109% From Year Ago, Group Says
Monday, October 31, 2005 -WASHINGTON, DC – The volume of federally insured reverse mortgages taken out by older homeowners in the most recent federal fiscal year, ending September 30, increased by 109% from a year ago, as a blistering record pace of originations continues, according to the National Reverse Mortgage Lenders Association.NRMLA attributes the growth in reverse mortgage volume to greater public awareness about reverse mortgages, a larger number of lenders offering reverse mortgages, low interest rates, and an economic downturn combined with growing health care costs that have forced many older Americans to look for sources of additional income.
“While some signs suggest a recovering economy, many retirees are still struggling day-to-day to live comfortably or make ends meet,” said NRMLA President Peter Bell. “As a result of this, more and more older Americans are turning to reverse mortgages as the solution to their financial needs. With the help of a reverse mortgage,” he continued, “these seniors find they can cope with the myriad of financial pressures that include rising out-pocket-costs for medical care and prescription drugs, increasing property taxes on their homes, eroding Social Security checks, and meager rates of return from CDs and money market funds due to low interest rates.”
Nationwide, lenders originated 37,829 federally insured Home Equity Conversion Mortgages in fiscal year 2004 (October 1, 2003-September 30, 2004) compared to 18,097 the prior year.
HECMs are the most popular of the three reverse mortgage products currently available. Accounting for about 90% of all reverse mortgages made today, and available in every state, HECMs are insured by the Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development, which compiles the statistics on HECM volume.
The Top 10 markets include: Los Angeles, CA (3,345 HECMs made); Santa Ana, CA (2,164); San Francisco (1,666); New York, NY (1,406); Denver, CO (1,362); Sacramento, CA (1,300); San Diego, CA (1,285); Detroit, MI (1,063); Coral Gables, FL (1,009); and Chicago (912).
A reverse mortgage is a loan that enables homeowners 62 or older to borrow against the equity in their home, without having to sell their home, give up title, or take on a new monthly mortgage payment. The loan proceeds can be used for any purpose, and taken out as a lump sum payment, fixed monthly payment, line of credit (except in Texas), or a combination. The loan amount depends on the borrower’s age, current interest rates, and the value and location of their home. A reverse mortgage isn’t repaid until the borrower moves out of the home permanently, and the repayment amount can’t exceed the value of the home. After the loan is repaid, any remaining equity is distributed to the borrower or borrower’s heirs/estate.
A senior’s home doesn’t have to be owned free and clear to qualify for a reverse mortgage.
The information being reported is more than a year-old - comparing data from the federal fiscal year ended 9/30/04 to the fiscal year ended 9/30/03. Comparable data for the most recent fiscal year ended 9/30/05 show that HECM originations increased 14% from 37,829 to 43,131.
Not a big deal…probably just someone mixed up press releases from this year and last year. Still, a good reminder that we should always take information (even from authoritative sources) with a grain of salt and read documents carefully.
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