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In 1961, Deering Savings & Loan officer Nelson Haynes in Portland,
Maine, originated the first reverse mortgage to Nellie Young, the widowed
wife of Haynes's high school football coach. Mrs. Young continued to live
in her home after losing her husband with the help of this loan.
In 1969, UCLA Professor Yung Ping
Chen testified before the Senate Committee
on Aging that he supported an "actuarial
mortgage plan in the form of a housing
annuity" that would allow homeowners to
stay in their home based upon their home
equity.
In 1983, the Senate approved a proposal
to have reverse mortgages insured by the
Federal Housing Administration (FHA), and
in 1987, Congress passed the FHA insurance
bill called the Home Equity Conversion
Mortgage Demonstration. President Ronal
Reagan signed the bill into law in 1988, and
HUD began insuring reverse mortgages
through FHA.
e first FHA-insured reverse mortgage
was originated in 1989, and 157 loans were
issued in 1990, with a peak of 114,692 in
2009. According to HUD, 48,359 reverse
mortgages were originated in 2018, the
decrease attributable to the market crash 10
years earlier.
Other countries use reverse mortgages,
which are being touted as a policy strategy
for aging population not prepared for
retirement. In Canada, where the industry
is entirely private, reverse mortgages
grew 40% between 2017 and 2018. e
Australian government began a government-
sponsored equity release program in 2018
for homeowners over the age of 65, which
may continue to expand as private lenders
leave the reverse market. China—which has
241 million people over the age of 60 as of
December, 2017, amounting to 17% of that
country's population—began promoting
reverse mortgages in 2013, though there is
only one company offering them, and only
THE REVERSE
MORTGAGE
CONUNDRUM
Legal Industry Update
NATIONAL FOCUS
By: Michelle Garcia Gilbert
