History of the Reverse Mortgage — 1961 to 2026, Key Milestones & HUD Timeline

Bringing It to the Senate

Reverse mortgages have a history that predates the HECM program. In 1961, a Portland, Maine, savings and loan wrote an early U.S. reverse mortgage for a widow.

From there, the product took off and continues to help more older Americans remain in their homes as they age.

1969

It wasn’t until 1969 that the reverse mortgage concept was brought to the Senate Committee on Aging. Yung Ping Chen, a professor from UCLA, was the one to share his support of the product that would allow homeowners to tap into their equity to stay in their homes as they aged. The committee was intrigued by the idea.

1983

In 1983, the Senate backed a proposal for FHA reverse-mortgage insurance. The HECM demonstration was authorized by legislation signed into law in 1988.

1984

Then, in 1984, American Homestead presented the Century Plan, which was somewhat of a baseline for reverse mortgages insured by the government.

1987

In 1987, a bill was passed by Congress called the Home Equity Conversion Mortgage Demonstration. It was the pilot program that insures reverse mortgages.

Source: HUD Mortgagee Letter 88-38

1988

Following the pilot program, President Ronald Reagan signed the reverse mortgage bill into law in 1988, and HUD gained the right to insure reverse mortgages through FHA. The first FHA-insured Home Equity Conversion Mortgage (HECM) was issued to a woman in Kansas in 1989.

Source: Congressional Research Service Report R44128

1994

In 1994, Congress expanded reverse-mortgage cost disclosures. The implementing rules took effect in March 1995, with mandatory compliance beginning October 1, 1995. Then, in 1996, the program changed to allow residences with up to four units to apply for a reverse mortgage as long as the borrower occupies one unit as their primary residence.

1998

The HECM program was officially deemed permanent in 1998 with the HUD Appropriations Act. Some safeguards were also implemented at this time, such as full disclosure fees, to protect borrowers from unnecessary charges.

The Millennium Brings Changes

2000

As the new millennium kicked in, HUD announced that there would be an increase in origination fees for reverse mortgages. It was changed to either 2% of the maximum claim amount or $2,000.

2001

In 2001, HUD partnered with AARP to start testing and training approved reverse mortgage counselors, and establish HECM counseling policies and procedures. The following significant change to the HECM program came in 2004 when FHA added rules about refinancing HECMs. Then, in 2005, HECM refinances were made legal.

2008

In 2008, a national HECM limit of $417,000 replaced local limits, with special-area exceptions. HECM borrowers must be 62 or older at closing; eligible non-borrowing spouses may be younger. In 2009, the HECM for Purchase was introduced.

2010 to Present

Between 2010 and the present, several changes have been made to improve the HECM product. The recession left many people skeptical about how and whether a HECM could protect them as they age. Among the changes:

• 2010: MIP raised from 0.25% to 1.25%; interest rate floor reduced to 5.0%.
• 2013: HUD rolled out new HECM safety policies; discontinued the HECM Saver variant.
• 2014: Eligible non-borrowing-spouse deferral begins for new HECMs; revised financial assessment guidance issued.
• 2015: Financial assessment requirements take effect; HUD revises an optional deferral path for eligible non-borrowing spouses on older HECMs.
• 2017: Annual HECM MIP cut to 0.50%.
• 2020: HUD reduced the HECM floor rate from 5.0% to 3.0%, increasing borrower proceeds during lower interest rate environments.
• 2023: HECM maximum claim amount set at $1,089,300; legacy LIBOR-indexed adjustable-rate HECMs moved to spread-adjusted CME Term SOFR.
• 2024: HECM lending limit increased to $1,149,825; mortgage servicing requirements updated to reduce costs and improve efficiency.
• 2025: HECM lending limit increased again to $1,209,750, keeping pace with national housing market growth.
• 2026: HECM maximum claim amount increased to $1,249,125.

Curious About Today’s Reverse Mortgage? See how far the program has come. Get clear, honest answers from All Reverse Mortgage, Inc., a HUD-approved direct lender. Talk with a licensed specialist at (800) 565-1722, or request your free, no-obligation quote online.

Additional Resources:

• A Brief History of the HECM Program: Testimony of Peter H. Bell (.PDF Document)