During 2007, elderly borrowers contracted for more than 132,000 reverse mortgages. That’s 50% more than the year before and almost 10 times as many as five years ago. A reverse mortgage allows the recipient to draw down on home equity, but only if that individual is 62 or older. The loan goes without repaying it as long as that person stays in his or her house.

The loans are good news for many cash-strapped folks. Reverse mortgages can help cash-strapped retirees generate extra money for living expenses, pay for home improvements, lower other debts or fund the occasional splurge.

But, there’s a downside to reverse mortgages’ growing popularity. Loan-origination fees that can top $7,000 on a $500,000 home are attracting aggressive salespeople intent on making the sale. Some may try to persuade a potential borrower to invest the proceeds in high-priced financial products, such as annuities, boosting their commissions even more.

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