History of the Reverse Mortgage – 1969 to Present Day Facts

Table of Contents

HECM Reverse Mortgage Program Milestones (1961–2025)

Year	Key Development	Impact
1961	First reverse mortgage issued in Portland, Maine	Local bank helps widow remain in her home
1969	Concept presented to Senate Committee on Aging	Reverse mortgage gains national attention
1983	Senate approves first FHA proposal	Sets stage for FHA involvement
1988	President Reagan signs HECM law	HUD gains authority to insure reverse mortgages
1994	Disclosure regulations introduced	Improves transparency for borrowers
1998	HECM program made permanent	Full safeguards and disclosure rules added
2006	Loan limits established ($417,000)	Standardizes borrowing amounts
2009	HECM for Purchase introduced	Expands program to home purchases
2009	National HECM loan limit established ($625,500)	Expanded access to higher-value homes
2010	MIP raised to 1.25%; floor cut to 5%	Adjusts costs and loan calculations
2015	Financial assessment + non-borrowing spouse protections	Stronger consumer safeguards
2017	Annual MIP reduced to 0.50%	Lowers ongoing costs for borrowers
2020	Floor rate lowered to 3%	Lowered proceeds in high-rate environments
2023	Lending limit tied to 150% of conforming loan limit ($1,089,300)	Increased borrowing potential
2023	Transition to CME Term SOFR	Modernizes program away from LIBOR
2024	HECM lending limit increased to $1,149,825	Reflects conforming loan limit adjustment
2024	Servicing rules updated	Reduces costs and improves efficiency
2025	HECM lending limit increased to $1,209,750	Keeps pace with national housing market growth

Bringing it to the Senate

Reverse mortgages have been through many changes in their short, 57-year (depending on who you ask) lifespan. As the story goes, a small, local bank wrote the first reverse mortgage in 1961 to a woman in Portland, Maine. The bank owner wanted to help the wife of his high school football coach stay in her home after her husband passed away.

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

The first proposal, approved by the Senate, was in 1983 and was brought by former Senator John Heinz. This proposal made the reverse mortgage product insured by the Federal Housing Administration (FHA).

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: http://portal.hud.gov/hudportal/documents/huddoc?id=88-38ml.txt

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: http://portal.hud.gov/hudportal/documents/huddoc?id=DOC_20456.txt

1994

The first set of regulations came in 1994 when Congress required lenders to disclose the total annual loan costs to borrowers at the beginning of the application process. 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.

2006

The establishment of a loan limit came in 2006. At this time, the limit was $417,000. Then, the first group of Baby Boomers started turning 62 in 2008, when someone could apply for a reverse mortgage. In 2009, the HECM for Purchase was introduced, and Congress increased the HECM loan limit to the current limit of $1,209,750.

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: Financial assessment guidelines finalized.
2015: Formal financial assessments and non-borrowing spouse protections were fully implemented.
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: Lending limit tied to 150% of the national conforming loan limit, raising the HECM cap to $1,089,300; adjustable-rate HECMs transitioned from LIBOR to 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.

Additional Resources:

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

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4 Comments on this Article

Tina Taylor
January 19th, 2019

If we had a HECM Reverse Mortgage in 2010 and, we got lump sum. Husband got sick could not live alone and had to move out. We tried to sell for six months but no luck. Gave back and they sold in auction and gave one year period to buy back and we did not so buyer moved in. That was that.
Now on FHA it says HUD loan pd in full but bank says it's a foreclosure and it's not cause HUD gave him a number for qualify. What can we do??? Thanks for letting me share!!
Reply to Tina
- Michael Branson
  January 22nd, 2019
  
  Hello Tina,
  I'm not sure which part you are disputing. The lender did have to foreclose on the loan, and they sold the property. It sounds like HUD may have had to step in and pay a claim and then subsequently sold the property to another party. This was why you paid mortgage insurance, so that HUD would step in and pay that claim on your behalf and the lender would not seek any recourse from you personally to repay the obligation but that does not change the fact that the loan was foreclosed.
  Are you trying to qualify for another HUD loan or to get the bank to change their designation of the loan status? HUD will not insure another loan if there was a loss on the first reverse mortgage unless that loss has been repaid. The lender will not change their loan status because even though you were never forced to pay for the foreclosure, the loan did ultimately end in a foreclosure action and the public records you describe (the foreclosure and the equity right of redemption) are all recorded documents. I'm not aware of any action you can take to erase the information now.
  Reply to Michael
Pam
June 7th, 2018

Is counseling required for 80 yr old couple to get a reverse mortgage
Reply to Pam
- Michael Branson
  June 7th, 2018
  
  Hi Pam,
  
  Counseling is required for all reverse mortgage applicants on an initial reverse mortgage loan. Different states have different requirements and time frames, but the counseling itself is required of all borrowers. HUD allows some borrowers who have previously attended counseling and who are refinancing a reverse mortgage that they closed less than 5 years ago to refinance without an additional session, but if they don't receive enough money from the new transaction or if the state still requires it, the counseling would be required anyway. For most borrowers, the counseling is a good reminder of what is required of them with a reverse mortgage and since you can never be sure what the appraised value will be, completing the counseling is usually a good idea even if you did the counseling within the past 5 years and think you may not need to.
  Reply to Michael

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