Home Equity Conversion Mortgage on Rise

The most popular is the Home Equity Conversion Mortgage, which is insured by FHA. More than 40,000 HECMs have been made since 1989, and over 7,000 were made in 2000 alone. Other types of reverse mortgages are the Fannie Mae HomeKeeper loan and three jumbo reverse mortgage products developed by Financial Freedom Senior Funding Corp. of Irvine, Calif.

Perception of these loans has changed greatly. When originally introduced, the product was viewed as a loan of last resort for destitute seniors, but as lenders and homeowners discovered new applications, the concept took off. The reverse mortgage continues to provide seniors with another financial tool.

Jumbo reverse mortgages can free up larger amounts of equity for the senior with a higher-value home and can be incorporated into the seniors estate planning strategy. Many borrowers work with their legal advisors to best determine the use of this equity release. But despite the higher equity release, these products follow all of the same guidelines, consumer protections and requirements of the two other reverse mortgage products, the HECM and HomeKeeper.

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