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Reverse Mortgage History

The first reverse mortgage loan was granted In 1961 to Portland, Maine resident Nellie Young, a recent widow struggling to make ends meet. Through the generosity of Nelson Haynes of the Deering Savings and Loan, this loan was created specifically for her. What began as a simple act of kindness, this new type of loan revolutionized the mortgage industry by allowing homeowners to remain comfortable in their homes through the utilization of available equity. Then, in 1977, Broadview Savings and Loan president Arlo Smith created and publicly offered the Equi-Pay Loan in Cleveland, OH. Another two years passed before the Wisconsin Department of Development's Neighborhood Conservation Program developed their own deferred payment loan.

The 1980s saw many significant changes in the development of the reverse mortgage loan. American Homestead in New Jersey granted the first open-ended reverse mortgage and the Connecticut Housing Finance Agency developed the first split-term product in the first half of the decade, allowing consumers to customize their reverse mortgage for the first time. The Housing and Community Development Act of 1987, passed by Congress and received President Ronald Reagan's signature in 1988, proposed federal insurance for reverse mortgages. In that same year, the Virginia Housing Development Authority established the nation’s first line-of-credit reverse mortgage. As the 1980’s drew to a close, HUD released the Home Equity Conversion Mortgage (HECM) Loan handbook, and the first federally insured reverse mortgage was closed by James B. Nutter and Company.

With the dawn of the 21st century, several more advancements were realized including the first official national reverse mortgage counseling exam, followed by the availability of counseling via telephone. The American Association of Retired People, soon to be known simply as AARP, also contributed to reverse mortgage education enhancement through the creation of a web-accessible information source and a printable reverse mortgage guide for consumers. In 2005, Texas authorized a fully functioning reverse mortgage loan, making the state the last in the nation to do so. Within the last couple of years, the Economic Stimulus Act of 2008 has enhanced the reverse mortgage market by allowing an increased FHA reverse mortgage loan limit, currently set at a maximum of $636,150, and by making it unlawful to bundle other financial products into a reverse mortgage transaction.

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