HUD: Reverse Mortgages on the Rise

The Department of Housing and Urban Development says reverse mortgages have become increasingly popular among cash-poor, but equity-rich, senior citizens. HUD Secretary Andrew Cuomo told Congress the number of reverse mortgages has more than quadrupled since they first became available in the early 1990s. HUD's analysis of 38,000 reverse mortgages through 1999 found only 388 of the loans ended in claims against HUD's insurance fund. Premium collections are expected to exceed claims by more than $500 per reverse mortgage, allowing the agency to build a substantial reserve against any future claims. Focus groups in Providence, Seattle, and New Orleans found that 78% of those using HUD reverse mortgages were either "very satisfied" or "satisfied" with the program.