Reverse Mortgages Begin Trek to Mainstream Real Estate Finance Today (11/20/00) Vol. 17, No. 45 p.13; Sorohan, Mike
Some experts see growing possibilities with reverse
mortgages. Jeff Taylor, chairman of the MBA Reverse Mortgage
Advisory Group, is beginning to see a decline in the traditional
resistance to these financing products, also known as home equity
conversion mortgages, or HECMs. In fact, he describes the market
potential for them as "mind-boggling." A total of 38 million
seniors were age 65 or older last year, Taylor cites; and 15.4
million of those were debt-free single-family, or condominium
homeowners. Estimates show that as much as 8 percent of this
demographic, or about 1.3 million seniors, would consider taking
out a reverse mortgage. Recently, Texas emerged as a potentially
enormous market, with 2.7 million people over the age of 60.
Moreover, changes to HECM rules announced by HUD on Nov. 6 are
designed to trigger more reverse mortgage business. Taylor
believes the key to accessing these markets is through education.
As predatory lending becomes more prevalent, and homeowners
become educated about it, borrowers will recognize several
benefits of reverse mortgages. The safeguards involved in
reverse loans make seniors far less susceptible to abusive
lending. The biggest obstacle to widespread use of reverse
mortgages has been the perception that they reduce inheritances.
Taylor explains that in today's economy, people are more
self-sufficient and are not relying upon inheritance money.
Children should explain to their parents that they want them to
take advantage of their hard work. Taylor stresses that
third-party counseling will show that reverse mortgages are
retirement-planning tools and not the mark of a dire financial