The History of Reverse Mortgages: 60+ Years of Helping Older Americans Retire More Freely
The first reverse mortgage loan was written by Nelson Haynes of Deering Savings & Loan to widow Nellie Young, enabling her to stay in her home despite the loss of her late husband’s income. The program slowly grew in popularity in the 1970s, as private banks started offering reverse mortgage loans — before Federal Housing Administration (FHA) insurance was implemented.
Prior to evolving into the financial tool we know today, the reverse mortgage has hit numerous growth milestones over the years — advancing with process and product improvements, and greater consumer awareness, while redefining the financial possibilities available to older homeowners and homebuyers.
Looking back and moving forward
The reverse mortgage timeline shows us how much this product has changed in its 60+ years. And we can’t wait to see what the future holds.
1987: Congress passes an FHA insurance bill called the Home Equity Conversion Mortgage (HECM) Demonstration — a pilot program that insures reverse mortgages. President Reagan signs it into law in 1988.
1989: The first federally insured Home Equity Conversion Mortgage is issued.
1994: Lenders are required by Congress to disclose the total annual loan costs to borrowers at the beginning of the application process. This gives borrowers the opportunity to compare lenders and shop around for the best interest rates and fees.
1997: The National Reverse Mortgage Lenders Association (NRMLA) is founded, with a mission to educate consumers about the pros and cons of reverse mortgages, advocate for the highest ethical and professional standards among reverse mortgage lenders, and advise policy makers on reverse mortgage issues.
1998: The U.S. Department of Housing and Urban Development (HUD) Appropriations Act makes the HECM program official, while Congress allocates funding for counseling, education and outreach for consumers. Safeguards like full disclosure of fees are put in place to protect borrowers from excessive charges.
2001: HUD teams up with the American Association of Retired Persons (AARP) to create uniform HECM counseling policies and procedures, and test and train approved counselors.
2008: The $417,000 national loan limit is established.
2009: The lending limit increases to $625,000 — a major milestone for high-value markets.
2010: Inspired by recent product advances that made reverse mortgages more attractive, as well as concerns about retirees “running out of money” in their later years, financial researchers at leading universities begin to examine reverse mortgages as a risk management tool. As a result, they and financial advisors start to develop groundbreaking financial planning strategies using reverse mortgages.
2013: HUD rolls out new HECM policies that strengthen consumer protections, including new limitations on the amount of funds a borrower can take at closing and in the first year. This is designed to help extend the life of the borrower’s home equity.
2014–2015: HUD implements and clarifies protections for non-borrowing spouses who meet certain criteria, allowing them to remain in the home if the borrowing spouse passes away. As with any mortgage, they must meet their loan obligations, keeping current with property insurance, taxes, and maintenance
2015: To help protect potential borrowers and reduce default rates, lenders are now required to perform a financial assessment on each application, making sure borrowers have the means to meet their ongoing loan obligations — which includes paying for their property taxes, homeowners insurance, maintenance and upkeep, and other home-related expenses.
2017: The loan limit for HECM reverse mortgage loans increases from $625,500 to $636,150 for eligible candidates. It marks the first increase in the HECM lending limit since 2009, when President Obama signed the American Recovery and Reinvestment Act.
2021: The FHA announces amendments to offer more protection for eligible surviving, non-borrowing spouses to help them remain in the home longer if the borrower experiences certain life-changing events that affect loan eligibility.
2022: The HECM lending limit soars for the sixth consecutive year, hitting $970,000.
Looking to a brighter future
Reverse Mortgage Funding LLC (RMF) can help secure the financial resources for peace of mind in the years ahead. Call (888) 277-1567 to schedule an appointment to sit down with a licensed reverse mortgage specialist. We look forward to speaking with you and getting your questions answered.
This content is sponsored by RMF, one of the nation’s leading reverse mortgage lenders. We are dedicated to helping older Americans live the retirement lifestyles that they imagined and deserve, in the comfort of their own homes. As a result of our commitment to providing an extraordinary and positive customer experience, we have earned a 98% customer satisfaction rating; a 5-star / Excellent score on Trustpilot; 4.5 out of 5 stars on LendingTree; and an A+ rating with the Better Business Bureau. Call (888) 277-1567 to speak with one of our experienced reverse mortgage specialists to learn about our retirement financing products and solutions.