Reverse Mortgages on the Rise as Economy Continues Decline

More Older Americans Using Reverse Mortgages to Increase Cash Flow During Retirement, Offset Losses in Other Retirement Assets, or to Fight Foreclosure

OAKLAND, CA--(Marketwire - April 14, 2009) - A growing number of older Americans are securing reverse mortgages as a means to increase their cash flow in retirement or to avoid financial troubles, reported reverse mortgage broker Golden Gateway Financial after reviewing recently released HUD Home Equity Conversion Mortgage (HECM) reverse mortgage data.

According to the Housing and Urban Development (HUD), HECM reverse mortgage volume increased nearly 7,000 loans from calendar year 2007 to calendar year 2008. Similarly, HUD data shows that endorsement volume in March 2009 increased 24 percent from February of 2009, and set a new monthly record at 11,261 endorsements.

"As retirement investments have plunged and work opportunities grow scarce, reverse mortgages have become a valuable retirement planning tool for many older Americans," said Eric Bachman, founder and CEO of Golden Gateway Financial. "Reverse mortgages are also a powerful way for those facing foreclosure or in financial jeopardy to generate additional cash independent of a credit score or income requirements."

How a Reverse Mortgage Works

Created by the Housing and Community Development Act of 1987, a reverse mortgage allows a homeowner age 62 or older to obtain money by accessing the equity available in their home tax-free and with no requirement that it be paid back until the borrower dies or chooses to sell the home. There are no monthly payments of principal or interest with a reverse mortgage, and closing costs can be folded into the loan itself. The homeowner always retains their title, and there is no way the reverse mortgage borrower can be forced out of their home by the lender.

The loan principal and interest are due when the owner dies or moves. The owner or their heirs can repay the loan through the sale of the house or they may keep the house and use other funds for payment if they prefer. A HECM reverse mortgage is a non-recourse loan meaning that a homeowner or their heirs can never owe more than the current market value of the home, even if the loan balance is greater.

The amount of money available through a reverse mortgage depends on the borrower's age, the appraised value of the property, and the Federal Housing Administration loan criteria. A reverse mortgage does not have any credit or income requirements. The proceeds from a reverse mortgage can be used for any purpose.

Changes in Reverse Mortgages

During the previous year, reverse mortgages experienced many positive changes, making them an even more compelling option for many older Americans and their families. Changes include:

-- The HECM loan limit was raised to a national ceiling of $417,000 in 2008 and then again to $625,500 in 2009. This could make reverse mortgages much more attractive for more homeowners in high cost areas.

-- Reverse mortgages can now be used to purchase a new primary residence by allowing homeowners to finance the sale with reverse mortgage proceeds. In many situations, this could generate a profit from the sale of an older home, with no payments due on the new property. For those individuals concerned about selling their original property for a loss in the current economic climate, this provides an opportunity to retain ownership of the original property or even rent it out until home values appreciate once again.

-- Recent legislation caps reverse mortgage fees, limiting expenses for older Americans. This will make the product appealing to those concerned about the cost of closing.

-- Counseling fees can no longer be paid by lenders or brokers, in order to promote unbiased information from counselors.

-- Golden Gateway Financial recently introduced a prepaid card program for reverse mortgage borrowers alongside a service that allows seniors to automatically pay critical bills from reverse mortgage proceeds. Both products are designed to make reverse mortgages even more practical while also making them safer and easier for customers.

Reverse Mortgage Resources

For individuals interested in better understanding the reverse mortgage options available to them, or to evaluate how changes such as the new reverse mortgage for purchase product or increased loan limits might affect them, Golden Gateway Financial has a number of award winning calculators available on its site. Calculators and tools available at the company's website include:

-- Reverse Mortgage Calculator: A quick and easy way to explore reverse mortgages, determine how much money a borrower is eligible to receive, and to obtain a quote from lenders

-- Downsizing Calculator: Also known as Reverse Mortgage for Purchase; learn how changes in the law can help older Americans purchase a new home

-- Retirement Calculator: Assists those in retirement or those about to retire determine whether they have enough resources to maintain their desired lifestyle

-- Budget Reality Check: Helps individuals check their retirement budgets with detailed line items and helpful suggestions

To access these and other online retirement assessment tools and resources, or for more information about reverse mortgages, please visit

About Golden Gateway Financial

Golden Gateway Financial (, located in Oakland, California, is a comprehensive resource for senior citizens, baby boomers and soon-to-be retirees to assess their financial health at retirement. Through a unique set of online tools and clear and unbiased communication, the company helps individuals address "The Great American Retirement Dilemma." The tools enable users to better assess the security of their nest egg and to make intelligent choices to fully enjoy what should be the best years of their lives. The company also operates the industry's premiere reverse mortgage and life settlement services with proprietary calculators and products for each, and a team of trained counselors to help seniors better understand the products and evaluate whether they are right for them.

Contact Information: Press Contact: Michael Azzano Cosmo PR 415.596.1978