Reverse mortgages are a significant bright spot in the otherwise dismal mortgage industry marketplace. The HUD says it originated more than 107,000 reverse mortgages in fiscal year 2007. That’s up more than 40 percent from a year earlier. Those numbers are important because the FHA is generally said to insure about 90 percent of all reverse mortgages, also known as Home Equity Conversion Mortgages.

Under HUD’s plan, lenders can make a claim when a loan has reached 98 percent of its maximum claim amount but is not yet due and payable. Of these assignment claims, only 109 resulted in losses to the FHA. Another 1,500 reverse loans simply went sour. Burns says there have been no “demand claims” from borrowers as a result of lenders who have not fulfilled reverse mortgage obligations.

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