HUD Secretary calls reverse mortgages “bright spot in housing market”

In yesterday’s LA Times, we find one of the first true green light articles for reverse mortgages from a major newspaper. But of note, were the words of Housing and Urban Development Secretary Alphonso Jackson described reverse mortgages as “the bright spot in today’s housing market,” adding that “their significance will only increase as more baby boomers reach retirement.” Wow I did not know the government was in the business of well.. business. The article goes on to highlight:

Reverse mortgages have been criticized for high upfront costs. Lenders may charge 2% of the loan amount in origination fees — as much as $7,256 in California — and most borrowers also pay 2% for mortgage insurance, along with other fees that can far exceed those in conventional home loans.

Loan amounts are often subject to strict limits, and many financial planners are still not familiar enough with reverse mortgages to guide their clients.

But in an era when legions of older homeowners are sitting on vast amounts of untapped equity, reverse mortgages seem to be catching on. Competition has started to push down costs, and lenders are beginning to offer loans on unlimited amounts, a noteworthy shift in an industry that has mostly relied on federally insured mortgages with strict caps.

In recent months, Countrywide Financial Corp., Bank of America Corp. and BNY Mortgage Co. all have scaled up their efforts in the growing field. Full Story

Written by charles dennis on June 26th, 2007 with comments disabled.
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