Reverse Mortgage Market Index Shows Decline in Senior Home Values & Home Equity
Washington, DC — Consistent with current housing market conditions, the quarterly Reverse Mortgage Market Indexâ„¢ (RMMI) showed a decline in senior home values and home equity held for the 3rd quarter of 2007. However, when compared year-over-year, Americans age 62 and over still have a significant amount of wealth tied to their homes.
In the third quarter, seniors held $4.255 trillion of home equity, down $25 billion from 2Q 2007, but still above the $4.212 trillion held in 3Q 2006. Furthermore, the combined value of homes owned by seniors declined by $10 billion to $5.077 trillion, compared to $4.970 trillion in 3Q 2006. The RMMI declined overall to 203.5 from 204.8.
“While the index, not surprisingly, reflects a quarterly decline in home values and equity across most parts of the country, reverse mortgages remain as popular as ever,” said Peter Bell, President of the National Reverse Mortgage Lenders Association, which publishes the RMMI in conjunction with the Hollister Group, LLC. During the most recent calendar year, the Federal Housing Administration (part of the U.S. Department of Housing and Urban Development) insured a record 132,252 reverse mortgages, compared to 85,639 the year before.
“Seniors recognize the value of using reverse mortgages to access the wealth they have accumulated in their homes to pay off existing mortgages and other debts, pay for healthcare, make needed repairs, or to supplement retirement income,” added Bell.
Reverse mortgages are becoming a more mainstream financial planning tool for older homeowners. A reverse mortgage enables older homeowners (generally age 62+) to convert part of the equity in their homes into income without having to sell the home, give up title, or take on a new monthly mortgage payment. The reverse mortgage is aptly named because the payment stream is “reversed.” Instead of making monthly payments to a lender, as with a regular mortgage, a lender makes either one or more payments to the borrower. The loan is repaid when the borrower moves out of the property.
National Reverse Mortgage Lenders Association (NRMLA) represents the reverse mortgage industry, serving as an educational resource, policy advocate and public affairs center for lenders and related professionals. NRMLA was established in 1997 to enhance the professionalism of the reverse mortgage business. For more information, visit www.nrmlaonline.org.
About Hollister Group
Hollister Group LLC is a consulting and financial analytics firm with specialization in reverse mortgage products. Hollister provides consulting to the reverse mortgage industry in new market entry, new products, and best execution. The Hollister Group is also supporting the reverse mortgage industry with unique data and analytics. www.hollisterllc.com.