Did you know the first reverse mortgage was originated in 1961?
Follow the timeline to see how the product developed.
1982: The Special Committee on Aging agrees that homeowners need access to their home equity. 1984: American Homestead announces The Century Plan, which set the stage for government insured reverse mortgages.
1987: The Home Equity Conversion Program is established as a pilot project at the U.S. Department of Housing and Urban development (HUD).
1988: Home Equity Conversion Mortgages (HECMs) are insured through the Federal Housing Administration (FHA).
1989: James B. Nutter & Company of Kansas City closes the first FHA-insured reverse mortgage.
1990: The one-year anniversary of HECMs. HUD raises the cap on insurable loans from 2,500 to 25,000 mortgages through 1995.
- 25,000 Number of allowable loans as of 1990
1994: Congress requires TALC (total annual loan cost) disclosures be provided to consumers, allowing them to shop for lenders.
1995: Lenders are closing 300 to 400 loans per month.
1996: Congress raises the cap on insured loans to 30,000 through 1996 and to 50,000 through 2000.
1997: The National Reverse Mortgage Lenders Association forms. Median borrower age is 72.
1998: The HUD Appropriations Act makes the HECM pilot a permanent program. Fee disclosures and education safeguards for consumers are created.
- 150,000 Maine Number of allowable loans as of 1998
1999: Financial Freedom develops its Cash Account, which becomes the most widely used HECM product.
2000: HUD reports that borrowers are satisfied with the reverse mortgage product and loan volume is growing.
2004: FHA implements rules for HECM refinancing.
2005: The first refinances take place. Loan originations increase to 50,000 per year.
- 250,000 Number of allowable loans as of 2005
2006: Wall Street enters the HECM market, sparking competitive interest rates. 84,000 loans are originated.
- 275,000 Number of allowable loans as of 2006
2007: Ginnie Mae securities are introduced. 87 percent of borrowers choose lines of credit vs. 13 percent who choose monthly disbursements.
2008: HUD announces a "turning point" in HECM history with the origination of 100,000 loans. The SAFE Act is established, requiring states to use uniform regulatory procedures for HECM loan originators. Ginnie Mae releases its fixed-rate lump-sum loan product.
2009: HECMs reach 115,000. The loan limit is increased to $625,500. More than 60 percent of borrowers choose Ginnie Mae's fixed-rate, lump-sum option. Ginnie Mae overtakes Fannie Mae, increasing from $1.36 million in 2008 to $8.54 million in loans.
2010: The HECM Saver is introduced, limiting homeowners' access to a smaller percentage of home equity. Ginnie Mae's volume is $11 billion. Generation Mortgage Company introduces the only proprietary HECM loan product.
2012: The Dodd-Frank Act transfers authority for HECMs to the Consumer Financial Protection Bureau.
2013: The HECM Standard and Saver are combined into a single reverse mortgage option. HUD set new safeguards for consumers, including higher mortgage insurance premiums for borrowing more than 60 percent of a home's value.
2014: Safeguards are instituted to protect non-borrowing spouses, which include Principal Limit Factors (PLFs).
2015: Safeguards for non-borrowing spouses are revised. Financial assessments are instituted to ensure borrowers' fitness for HECMs. For borrowers who don't pass the financial assessment, the Life Expectancy Set-Aside (LESA) was created to ensure their property taxes and insurance are paid.
These materials are not from HUD or FHA and were not approved by HUD or any government agency