Demand for reverse mortgages on the rise

As recently as December 2007 the Senate committee on Aging spent time discussing the aggressive marketing and sales techniques being used by mortgage institutions to attract senior homeowners into purchasing reverse mortgages. As larger populations of seniors are turning 63 every year, the demand for reverse mortgage loans are on the rise. There was a 56% increase in these types of loan in 2006 from the prior year. The Federal government in December 2007 removed the restrictions to the number of outstanding reverse mortgage loans they would underwrite at any given time. Prior to the new legislation, the original limit was 275,000.

Many of the largest banking institutions are now getting involved including Bank of America who just recently acquired Reverse Mortgage of America, a division of Seattle Mortgage Co. This is one of many acquisitions occurring in the mortgage industry to capture a stronghold on the reverse mortgage loan market. It is this activity that has gained the attention of the Federal and State governments. Congress is exepcted in 2008 to put more laws into place that provide stronger protections and minimize the commissions and flat fees mortgage companies can charge per loan.