About Face in the Reverse Mortgage Market?

According to news compiled by AmericanBanker.com, the Reverse Mortgage niche in the Mortgage Industry is getting ready to blast off. Plenty of banks are jumping on the bandwagon before it gets really rolling. JP Morgan Chase and Citigroup are both considering ways to get in on the action.

Says an article from American Banker's Mortgage Update email, "A growing number of financial companies are moving into reverse mortgages, or thinking about doing so."

A wave of baby boomers-the ever desirable demographic-will be turning 62 this year, the minimum age for Reverse Mortgage loans. Of course, anyone who's anyone knows that the upfront fees on Reverse Mortgages are a killer because they are insured by the FHA. Legislation being considered in Congress may change all that, prompting a whole slew of originations that were held back by those higher fees. Financial Planners are already starting to suggest Reverse Mortgages as an option for their eligible clients. Some people are choosing a cash-account Reverse Mortgage, which has much lower closing costs.

With the subprime mess, banks are looking at the newest niche mortgage product and Reverse seems like a good candidate. Why, you ask. Because this loan product has the backing of the U.S. Government so can't you imagine all those slick twenty-something phone jockeys who sold a gazillion bad sub-prime mortgages licking their lips at the possibilities of ripping off old people and then saying, "and best of all it's backed by the U.S. Government so you know it's safe"?

Seniors must be wary of these types. There are requirements in place before taking a Reverse Mortgage, like independent counseling.

"Before a customer signs anything they must take homeowner counseling," warns Jim Calimopulos, Director of NY Lending Operations at Madison Funding, Inc. "Some unscrupulous Loan Officers are strong arming customers to sign before they fully understand what's going on. Or they're showing up on the doorstep with the counselors themselves to rush things along."