The big push towards reverse mortgages is a relatively new phenomenon, but when did reverse mortgages originate and how long has this trend towards them been around?

It is generally considered that the idea of a reverse mortgage started in the 1960's, when some private banks began to issue these mortgages in response to a need from the elderly community. These reverse mortgages were not regulated by any specific government agency, and the way that they were approached, the interest rates charged and the fees required all varied greatly between the few banking institutions that would perform this sort of lending,

The real answer to when did reverse mortgages originate, at least, the type that we frequently see today, would be in 1989. In that year, the Federal Housing Administration, under the guidance of the US Department of Housing and Urban Development, began to issue Home Equity Conversion Mortgages. This is the most popular type of reverse mortgage, and it accounts for more than 90% of all reverse mortgages in the United States today. There are over 275,000 reverse mortgages held in the US ? which is actually more than the 250,000 loans that were aimed for by the FHA.

The large amount of reverse mortgages being overseen by the FHA means that there may actually be an end to the federal HECM, because the FHA only planned to issue 250,000 loans at any given time. Since 1989 that amount has been exceeded, but the US government has extended the cut off time until at least some time in 2007, if not in 2008. The cap number of 250,000 loans may be lifted or reassessed - Section 255 of the National Housing Act, which governs the HECM program, can be revised.

The amount of reverse mortgages being issued each year continues to grow exponentially, due to both advertising and a poor economy that stresses out many senior citizens. 30,404 reverse mortgages (HECMs) were issued in a nine month period in 2005, while 55,659 were issued during the same amount of time in 2006. This represents an 83% increase from one year to the other ? a huge amount when considered in any financial program.

It doesn't really matter how you answer the question, when did reverse mortgages originate ? because it's clear they're here to stay. More and more people each year choose to get reverse mortgages, due to the additional advertisement and availability of this plan.

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