The median price of American homes is expected to fall this year for the first time since federal housing agencies began keeping statistics in 1950.

Economists say the decline, which could be foreshadowed in a widely followed government price index to be released this week, will probably be modest — from 1 percent to 2 percent — but could continue in 2008 and 2009. Rather than being limited to the once-booming Northeast and California, price declines are also occurring in cities like Chicago, Minneapolis and Houston, where the increases of the last decade were modest by comparison.

The reversal is particularly striking because many government officials and housing-industry executives had said that a nationwide decline would never happen, even though prices had fallen in some coastal areas as recently as the early 1990s.

While the housing slump has already rattled financial markets, it has so far had only a modest effect on consumer spending and economic growth. But forecasters now believe that its impact will lead to a slowdown over the next year or two.

“For most people, this is not a disaster,” said Nigel Gault, an economist with Global Insight, a research firm in Waltham, Mass. “But it’s enough to cause them to pull back.”

In recent years, many families used their homes as a kind of piggy bank, borrowing against their equity and increasing their spending more rapidly than their income was rising. A recent research paper co-written by the vice chairman of the Federal Reserve said that the rise in home prices was the primary reason that consumer borrowing has soared since 2001.

Now, however, that financial cushion is disappearing for many families. “We are having to start from scratch and rebuild for a down payment,” said Kenneth Schauf, who expects to lose money on a condominium in Chicago he and his wife bought in 2004 and have been trying to sell since last summer. “We figured that a home is the place to build your wealth, and now it’s going on three years and we are back to square one.”

On an inflation-adjusted basis, the national median price — the level at which half of all homes are more expensive and half are less — is not likely to return to its 2007 peak for more than a decade, according to Moody’s Economy.com, a research firm.

Unless the real estate downturn is much worse than economists are expecting, the declines will not come close to erasing the increases of the last decade. And for many families who do not plan to move, the year-to-year value of their house matters little. The drop is, of course, good news for home buyers.

It does, however, contradict the widely held notion that there is no such thing as a nationwide housing slump. A 2004 report jointly written by the top economists at five organizations — the industry groups for real estate agents, home builders and community bankers, as well as Fannie Mae and Freddie Mac, the large government-sponsored backers of home mortgages — was typical. It said that “there is little possibility of a widespread national decline since there is no national housing market.”

Top government officials were more circumspect but still doubted that the prices would decline nationally. Alan Greenspan, the former Fed chairman, said the housing market was not susceptible to bubbles, in part because every local market is different.

In 2005, Ben S. Bernanke, then an adviser to President Bush and now the Fed chairman, said “strong fundamentals” were the main force behind the rise in prices. “We’ve never had a decline in housing prices on a nationwide basis,” he added.

But Global Insight, the research firm, estimates that the home-price index to be released Thursday by the Office of Federal Housing Enterprise Oversight, a regulatory agency, will show a decline of about 1 percent between the first and second quarter of this year. Other forecasters predict that the index will rise slightly in the second quarter before falling later this year.

In all, Global Insight expects a decline of 4 percent, or roughly 10 percent in inflation-adjusted terms, between the peak earlier this year and the projected low point in 2009. In California, prices are expected to decline 16 percent — or about 20 percent after taking inflation into account.

The government’s index, which compares the sales price of individual homes over time, is intended to describe the actual value of a typical house. Since the index began in 1975, it has slipped from one quarter to the next on a few occasions, but it has never fallen over a full year.

Another index dating back to 1950, calculated by Freddie Mac, has also never shown an annual decline. Price data published by the National Association of Realtors, based on the prices of houses sold in a given year, have also never declined. According to the association, the median home price is now about $220,000.

Mr. Schauf and his wife, Leslie Suarez, put their condo in the Sheridan Park neighborhood of Chicago up for sale shortly before moving to Texas last year so he could take a new job. They bought the two-bedroom unit in September 2004 for $255,000, with a 5 percent down payment. They redid the floors, installed new window treatments and repainted the walls.

They said they expected the condo to sell quickly. Instead, they have cut the price several times and have yet to receive an offer. The current list price is $279,000, though they expect to settle for less.

Without the money for a new down payment, they are renting an apartment in Austin. They also expect the monthly payment on their adjustable-rate mortgage to go up $200 in October.

Ms. Suarez, who grew up in the Dallas-Fort Worth area, says she is not as surprised because she remembers home prices falling after the oil bust in the late 1980s. “Growing up in Texas, real estate has never been a windfall,” she said. “For me, I always just wanted to break even.”

Housing prices have previously declined for long stretches in various regions. Most recently, prices fell in California and in the Northeast during the recession of the early 1990s.

The current slump is different from that one, though, in both depth and breadth. In fact, the national median price rose only slightly faster than inflation from 1950 to the mid-1990s.

But as interest rates fell and lending standards became looser, prices started rising rapidly in the late 1990s, even in places like Chicago, which had rarely seen a real estate boom. The result was a “euphoric popular delusion” that real estate was a can’t-miss investment, said Edward W. Gjertsen II, president of the Financial Planners Association of Illinois. “That’s just human nature.”

Many families are clearly richer because of the boom. In the Old Town neighborhood of Chicago, the town house that Ian R. Perschke, a technology consultant, and Jennifer Worstell, a lawyer, bought in late 2004 has appreciated more than 30 percent, they estimated. The gain was big enough to allow them to take out a larger mortgage and renovate two rental units in the house. But Mr. Perschke said he understood that he was “not going to see that appreciation over the next three years.”

Prices in Chicago peaked in September 2006 and have since dipped 1.7 percent, according to the Case-Shiller home-price index, which is tabulated by MacroMarkets, a research firm.

For all the attention that the uninterrupted growth in national house prices received, some economists argue that it was misplaced. The Case-Shiller index, which many experts consider more accurate than the government measure, did show a drop in prices in the early 1990s. (Unlike the government’s measure, it includes mortgages of more than $417,000, which are not held by Fannie Mae or Freddie Mac.)

After adjusting for inflation — the most meaningful way to look at any price, economists say — even the government’s index fell in the early 1990s.

Dean Baker, an economist in Washington who has been arguing for the last five years that houses were overvalued, said the idea that house prices could go only up had fed the bubble.

“It was very misleading,” said Mr. Baker, co-director of the Center for Economic and Policy Research, a liberal research group. There are a lot of people, he said, who bought “homes at hugely inflated prices who are going to take a hit. You also have a lot of people who borrowed against those inflated prices.”

Perhaps the most prominent housing booster was David Lereah, the chief economist at the National Association of Realtors until April. In 2005, he published a book titled, “Are You Missing the Real Estate Boom?” In 2006, it was updated and rereleased as “Why the Real Estate Boom Will Not Bust.” This year, Mr. Lereah published a new book, “All Real Estate Is Local.”

In an interview, Mr. Lereah, now an executive at Move Inc., which operates a real estate Web site, acknowledged he had gotten it wrong, saying he did not fully realize how loose lending standards had become and how quickly they would tighten up again this summer. But he argued that many of his critics have also been proved wrong, because they were bearish as early as 2002.

“The bears were bears way too early, and the bulls were bulls too late,” he said. “You need to know when you are straying from fundamentals. It’s hard, when you are in the middle of the storm, to know.”

Have you ever walked into a home for sale and thought, “Oh my goodness, does this place need work!” If you’re like most people, we all have the open house horror stories to tell, especially Realtors. I’ll never forget shopping for my first house and being shown a beautiful home (on the outside) with “blood red” wall to wall carpeting on the inside and pink walls to boot! Now that I’m older and wiser, I can see past the cosmetic horrors but am one of the few (only 10%) who do. So how do you quickly and easily prepare a home to sell without breaking the bank? Let’s jump in…
1. Remember the Masses – Rule # 1 and # 2, I consider the Golden Rules of home staging because this is what separates “home staging” from interior decorating. Interior decorating takes into consideration the personal tastes, personality and preferences of the home owner whereas “home staging” focuses on creating a valuable marketing commodity so that it appeals to the general home buyer who is trying to visualize themselves in the home. Unlike the home seller who is emotionally invested in the home, a Professional Home Stager is trained to see the home is an objective and critical buyer would so that they can position it to the best of it’s ability by focusing on rule #2
2. Keep to the Cosmetic – Only improving those things in the home that will add to the bottom line. Stagers keep to the cosmetic so that it makes financial sense in the sale price of the home. By focusing on the most dramatic transformations on the cheap a professional home stager gets equally dramatic results in the resale of the home. Home Staging in essence is an investment in future home sales earnings by the home seller and sometimes even the Realtor involved.
3. Consider the homes integrity when you prepare it to sell – In other words, it is what it is, what it is. Don’t try and make a Tuscan style home into a craftsman…it just won’t feel right to buyers or anyone else for that matter. A successful home staging works with the personality of the home rather than against it in order to get best resultsCreate Warm Lived In Spaces. Yet No One Lives There – When you walk into a home, you can usually tell exactly what age, style and personality individual lives there? If there are baby toys in the family room, a dog bed in the corner and a dozen family pictures on the mantle that gives you a clue as to who lives there which is as it should be for a home NOT for sale. In order to create broad appeal to buyers however we need to strip the home of the seller’s specific personality and quirks while still giving it warmth and style. There is a definite “fine line” between “lived in” and sterile looking. Shoot for the model home look and if you don’t know what that looks like visit some in your area.
5. Find the Focal Point and Make It Fabulous! – The basis for any good design lies in finding the focal point of a room and making sure it really shines. The focal point is the first place someone looks when they walk into a room. In the home staging sense we want to make sure the eyes are drawn to the best part of the room while conversely playing down any negative aspects of the room. Walk into a room and take note of what you notice immediately…is it positive or negative? Remember, buyers are looking for reason NOT to buy the house…make sure those focal points don’t give them any.
6. Clean is Critical! – This really goes without saying but unfortunately needs to be said and emphasized because many times home sellers cannot objectively clean their own home. Their noses have adjusted to any strange odors that buyer’s notice and that rusty sink drain goes completely unnoticed by the seller who has lived there for ten years now while the buyers are repulsed. How do you combat this lack of objectivity by the sellers without offending them? Quick tip, cleaning windows, walls and reflective surfaces helps to add light and space to a room. I’m dating myself when I say, “be a Felix not an Oscar”.
7. Create the Illusion of Space – This is a standard maxim of home staging. It states that by removing extraneous furnishings you can create the illusion of space within a room. Everything in a room must earn it’s place so it’s usually safe to say that 50% of what’s in a room can be packed away now in order to stage the room effectively and create space without stripping it of it’s personality.
8. “Up Down” to Update – The best thing a home seller can usually do to update their home is to remove those purchases over 10 years old. I call this “up down” to update. Take down the old flowery prints, old pink swag drapes and brass chandeliers. It’s usually cheaper and easier just to remove or camouflage those distracting out dated furnishings rather than buy new ones. Every accessory’s sole purpose should be to update or modernize the existing space so given today’s trends the accessory left out should be large and less of them.
9. Let There Be Light! Brainstorm lighting of all types within every room. Whenever you show a home make sure every light is on in the house…no exceptions. Buyers respond to “light and bright” so make sure your rooms have lots of natural light (trim plants and shrubs around windows) as well as artificial in the form of general, task and accent lighting. Kitchens especially need to be sunny and bright so use inexpensive under cabinet light as well as hanging lights over your islands and bars. Make sure every corner of your rooms are well lit by using simple up lights behind trees and tables. Use candles liberally as an emotional connection as well as form of lighting. Rule 10, 11, and 12 are particularly why using a professional home stager makes such a difference in the end result…successful staging is not easy, natural or automatic.
10. Remember It’s Calling, Balance Like A Rowboat, Scale Like a Dinner Plate and Be a Traffic Cop – Make sure each room has a clear purpose by remembering its original true calling. Most Buyers cannot use their imagination so don’t confuse them by having an office dining area or pool table in the front living room. Balance your rooms by evenly placing each piece on the sides of the room (like a rowboat). If you have a large entertainment center in one corner with nothing in the opposite corner to balance it, your room will feel tipped or off balanced and turn buyers away. Your professional home stager knows how to create equilibrium in a room. Make sure each piece in the room is in scale with one another. Like a properly balanced meal, don’t have a gigantic sofa with a tiny coffee table…it doesn’t work. A home stager borrows from other rooms to scale each one effectively. Finally, organize the traffic and flow in a room by making sure your furniture is not placed like wall flowers. It’s uncomfortable for anyone to have to walk through a conversation area to get to another room so make the traffic go around the conversation by pulling your furniture in. Believe it or not it makes the room appear larger rather than smaller as so many believe.
11. Color is Always King and Beige is Boring – I think we’ve all made some color mistakes in the past but Rule #11 can be a particularly fatal mistake many Realtors will make trying to play it safe with the home sellers by telling them to paint the house a neutral color. What you get is a bunch of black holes (furniture) in a white or vanilla setting…not good for those Internet photos. The reason why a Realtor would do this is very sound…most people cannot pick out color very well and use it to their advantage. If you don’t feel comfortable with this tricky skill then play it safe but remember, paint is the easiest and least expensive way to drastically improve interiors. If nothing else, have an experienced professional home stager give you a simple consultation and suggest colors. Decorators and Stagers will have the tools and rules to know when to play it safe and when to use color to highlight or downplay a particular feature.
12. Create “Emotional Connection Points” – Well you made it, point number 12 is like icing on a cake (and what would a cake be like without icing?). Like any great marketer, strive for “buyers envy” when they view your home by creating points throughout each room that speak to buyers emotionally about a lifestyle they can aspire to. This subconscious conversation gives buyers fuel for their imagination and multiple reasons to purchase this “emotionally” staged home. You want a buyer to walk into a house and say, “this is it, this is the one, this is where we FEEL HOME”. There are simple ways to do this: set out a tray on your master bed with a newspaper and cup of coffee, drape a throw and soft pillow over your favorite chair, set out plates, napkins, wine goblets and wine on an outside patio set and stack fluffy towels on your bathroom counter as well as several pillars of lit candles.
I hope these 12 rules have helped you in your efforts to prepare you home to sell. It takes a bit of work but is a small investment in a much bigger reward of selling your home fast and for more money. Good luck!

Acording to the Insurance Information Institute, renters are 50 percent more likely than homeowners to be victims of burglars.
But while 96 percent of homeowners have homeowner’s insurance, which covers theft, only 43 percent of renters have such insurance, said Jeanne M. Salvatore, a spokeswoman for the institute. “And that’s a shame because a basic renter’s policy not only provides coverage for theft, it also provides coverage for personal property and liability coverage for personal injury to others,” Ms. Salvatore said.
Robert Owens, the president of the Owens Group, says many renters who do not have their own insurance believe they are adequately covered by the building’s insurance policy. “The renter’s personal property is not going to be covered by the building’s policy,” Mr. Owens said.
Renters can choose between two types of coverage. “Actual cash value” coverage pays to replace damaged items after taking depreciation into account. “Replacement cost” coverage pays to replace the property at today’s cost. The premium for replacement coverage is typically about 10 percent higher.
Besides deciding between actual-cash-value and replacement-cost coverage, renters must also choose a “named peril” or “all peril” policy. A named-peril policy specifies what risks are covered, like fire, windstorm, hurricane and theft, and excludes everything else. An all-peril policy covers all risks except those specifically excluded, like flood and earthquake.
“With all-risk coverage, if you are having a party and someone spills a glass of red wine on your white couch, the damage to the couch would be covered,” Mr. Owens said. “With a named-peril policy, it wouldn’t be.”
Ron Tepperman, the principal in an insurance agency bearing his name, said that with basic renter’s insurance, the minimum coverage for personal property is generally $25,000. “That covers clothing, furniture, computers, televisions and appliances — basically, anything that’s movable,” he said. Such a policy would cost about $250 a year.
But in most cases renters find that $25,000 represents only a fraction of what it would cost to replace their personal property.
Mr. Tepperman also pointed out that almost all policies set limits on things like jewelry, furs, fine art and stamp and coin collections. “In many cases, there is a $500-to-$1,000 total limit on such items,” he said.
It is possible to buy “floaters” covering such items for an additional premium.
Michael Spain, who owns the Spain Agency, noted an advantage to having renter’s insurance: a policy with just $25,000 in property-damage coverage will also provide a minimum of $100,000 in personal liability coverage if someone is injured by the insured. That coverage includes the cost of legal fees for fighting a personal injury lawsuit, he said.
There are other benefits to having a renter’s policy. A person who buys a renter’s policy from the same company with which he or she has auto insurance typically gets a 5 or 10 percent discount on the auto policy, Mr. Spain said.
Ms. Salvatore noted another benefit of having both forms of coverage from one company: the ability to purchase $1 million of “umbrella” or “excess liability coverage” for both policies for about $200 or $300 more.

Not only has the reverse-mortgage industry left its infancy stage and started racing towards adolescence, but its next growth step apparently will be coming sooner than expected.

While reverse mortgages for second homes have been available through a handful of small regional banks, they will soon be offered by at least two national lenders. Bank of America, which recently announced an agreement to acquire the reverse-mortgage business of Seattle Mortgage Co., is expected to roll out the second-home wrinkle as soon the purchase is completed next month. BNY Mortgage, which last week introduced the industry’s first jumbo fixed-rate product, also will allow reverse mortgages on second homes under certain guidelines.

“The demographics of our seniors and the upcoming boomer group indicate there are multiple tentacles of financial planning tools that could be used in the long run,” said John Nixon, executive vice president and COO of Reverse Mortgage of America, a division of Seattle Mortgage Co. who will be moving over to BofA. “One of those tools would be helping people with significant equity in the second home to help tap that equity to make their lives more comfortable.”

Historically, reserve mortgages have been made to homeowners age 62 or older and exclusively on a primary residence. Rapidly appreciating and long-held second homes have become surprisingly valuable, providing another possibility for older homeowners to draw funds to supplement their income for monthly expenses, health care, family reunions and investments. There are no restrictions on how reverse-mortgage funds are used.

Sarah Hulbert, executive director for BNY Mortgage’s western regional center, said the New York-based lender would allow its new Prime Advantage fixed-rate jumbo reverse mortgage on a second home, provided the owner did not already have a Prime Advantage loan on the primary residence.

Reverse-mortgage funds can be distributed either in a lump sum, regular monthly payments, line of credit or in a combination of those options. When the house is sold, or the last remaining borrower dies or moves out of the home, the loan amount plus the accrued interest is repaid. The borrower can’t owe more than the value of the home.

Fixed-rate mortgages had been absent from the reverse-mortgage scene for more than decade until earlier this year. In the past, lenders relied primarily on adjustable-rate mortgages insured by the U.S. Department of Housing and Urban Development. These mortgages, known as Home Equity Conversion Mortgages (HECMs), account for nearly 85 percent of the reverse market. The HECM program has insured more than 240,000 reverse mortgages since 1990, while private “jumbo” reverse plans also have been available.

A reverse mortgage on a second home could be an appealing alternative for an individual or couple wanting to keep a family vacation home a few more years. Often, the parents would like to leave a cabin or getaway to their children yet need the equity from the cabin for their retirement years.

With a reverse mortgage, the parents could receive a needed monthly draw, lump-sum payment or helpful line of credit. When the parents die or transfer title to their children later in their lives, the kids could sell the property and pay off the reverse mortgage with the proceeds or refinance the property and continue the second-home use. When a child reaches the age of 62, the child would become eligible to take out a reverse mortgage on the vacation home.

There is no credit report or income qualification required. The only critical requirements are age and significant equity in the home. With the recent announcements regarding second homes, it’s now possible for a homeowner to have two reverse mortgages at the same time — one on the primary home and on the second home — thereby having two sources of tax-free income. (As mentioned, more than one BNY Prime Advantage reverse mortgage is not permitted, yet homeowners could have a Prime Advantage and another reverse product).

The ability to secure a reverse mortgage on a second home also creates interesting exit options for older investors. If an investor would rather keep a property for more personal use in the future yet needs some cash from a sale, the property could be converted to a second home and the cash could be produced by the reverse mortgage. The move would eliminate the need to refinance, all future monthly payments and the need to prove you had the income necessary for the refinance.

If the second home, or primary residence, plummets in value, owners would see their equity evaporate even faster by using a second mortgage. That’s because the amount spent, plus interest, would further reduce any loss in market value. While reverse-mortgage costs and distributions can be “washed” in appreciating markets, they can quickly erode the bottom line in a down market.

Reverse mortgages definitely are on the rise. Senior homeowners are taking equity out of their longtime residences to make ends meet during their retirement years, and to remodel their homes and help their children and grandchildren with the financial challenges of higher education.

In fact, the Home Equity Conversion Mortgage, which is insured by the federal government and is the nation’s most popular reverse mortgage, jumped from 43,081 closings in fiscal-year 2005 to 76,276 in fiscal 2006.

As reverse-mortgage funds are spent and the interest on these mortgages accrues, the lender gains a greater piece of the home. But let’s consider another possibility. What if a family member or a close friend received that equity instead of the lender?

Circle Lending, an aptly named, Waltham, Mass.-based company specializing in the organization of family and small-business loans, has introduced Family Advantage, a sort of reverse mortgage that keeps the home in the family — or with a friend or associate — once the senior homeowner moves out or dies.

“It’s not for everybody, but it has filled a niche, especially for some adult children who are already supporting their parents,” said Jim Smith, vice president of marketing and sales for Circle Lending. “It puts the arrangement into a business deal where all family members can see that it’s all documented and very clear.”

Conventional reverse mortgages allow senior homeowners, with a minimum age of 62, to receive proceeds from a lender — either in a lump sum, regular monthly payments, a line of credit or in a combination of those options. When the house is sold, or the last remaining borrower dies or moves out of the home, the loan amount plus the accrued interest is repaid. The borrower can’t owe more than the value of the home. The HECM program has insured more than 240,000 reverse mortgages since 1990, while private “jumbo” reverse plans also have been available.

The Family Advantage concept requires a family member or friend to write a check every month — or make a lump-sum payment — to the parent or homeowner. In return, the person writing the check earns an equity interest in the home, plus interest, when the homeowner moves out. It’s basically a home-equity loan funded by a family member or friend, secured by real estate. Hence, payments are received tax-free.

The challenge is locating a family member or friend with the means to play the bank. According to Circle Lending, the average rate negotiated between the two participating parties has been about 6 percent because the lending (related) party is not looking to maximize the return.

“A lot of times, at least one of the kids is already supporting the parents with some sort of monthly income,” Smith said. “But none of these payments are documented, or other siblings have no idea that one of their brothers or sisters is even helping the folks at all. Family Advantage documents all of these payments and creates a lien on the home that is repaid before other family members receive their interest in the home — which makes up a great deal of the average person’s estate.”

The cost to set up the Family Advantage loan averages $2,499 (includes documentation, lien recording, ongoing service, upfront consultation and distribution of the repayment) plus $9 for each payment made, typically a monthly check to the folks. However, lump-sum payments can be substituted at any time, allowing the lender-child to earmark expected bonuses to the program or other funds that could be coming from stock sales, home sales or potential big-ticket windfalls.

“We have one client who is a widow with no children,” Smith said. “She owns her home and contacted an acquaintance — somebody who has significant assets. They are obviously unrelated but they worked out an arrangement where the acquaintance will slowly accumulate equity in the property by making monthly payments to the homeowner. They worked out an acceptable interest rate for both sides.”

The upside of the concept is that there is no age restriction; the property secured could be a principal residence, second home or investment property; and the upfront closing costs are less than the standard reverse mortgage. In addition, borrower and lender are free to negotiate a reasonable interest rate yet one that clearly reflects a genuine business deal.

The downside of the deal is that the homeowners have no immediate recourse if the payments cease.

“We were simply looking for a way for people to annuitize their home and have the relinquished equity go to somebody they knew,” Smith said. “We provide a professional, third party to oversee the deal. We’ve found it’s simply a vehicle some families and friends can use.”

A mortgage origination market ever on the lookout for revenue opportunities is especially eager to identify new areas for profit in today’s slower environment, which is why private investors seem to be salivating about the growing — and aging — reverse-mortgage sector.

A regional trade meeting in Atlanta last week attracted more than 400 participants, a roomful of exhibitors and an intriguing handful of Wall Street representatives who mostly kept a low profile at the event as they eyed new securitization sources.

A sure sign of pending growth, from a previously sleepy market segment measuring only .03 percent of the “forward” mortgage loans last year, was the presence of representatives from UBS, Bear Stearns, Goldman Sachs and Credit Suisse/First Boston (CSFB). They were conducting quiet meetings at the show with reverse-mortgage originators, who could become prospective clients of these secondary market aggregators and investors, if and when the numbers add up.

To date, most reverse mortgages have been FHA-insured, and Fannie Mae has provided the secondary market for them through its Home Equity Conversion Mortgage (HECMs), although Ginnie Mae is developing an MBS program to expand the investor base.

Reverse-mortgage lenders originated 76,276 HECMs in fiscal year 2006, up 77 percent from the level in fiscal 2005, according to data reported by the Department of Housing and Urban Development. Though there are many restrictions and limitations in a reverse-mortgage transaction, the deal generally enables a homeowner age 62 or more to receive monthly payments from the equity in their properties with no repayment required until they move out, sell or die.

With the leading edge of nearly 80 million baby boomers set to hit the entry-age threshold for a reverse mortgage next year, it’s no wonder many mortgage market professionals are eyeing this segment with great interest. And in the modern market, no serious success can be achieved without the deep pockets supplied by Wall Street.

“We’re probably looking at 50 percent annual growth” in the years to come, forecasts Brett Kirkpatrick of Mortgage Financial Inc., a reverse-mortgage originator in Tewksbury, Mass.

Not for everyone…

But this market niche is not for everyone, insists Peter Bell, president of the National Reverse Mortgage Lenders Association in Washington, D.C., which sponsored the regional conference in Atlanta and plans a national conclave in San Diego in November.

“This type of lending requires a sea change in mentality,” says Bell. For one thing, “the closing time [on a loan] can be six months or longer,” he notes, owing to regulations intended to ensure that senior borrowers fully understand, qualify for and agree to terms of the transaction.

Nevertheless, private participation and growth is inevitable.

The reverse field is in a “state of infancy right now,” says Charles Gardner, director, Atlanta Home Ownership Center and HUD’s regional office there. “All signs indicate that it will become as prevalent as any other [home finance] product,” says Gardner. “It’s a surging market and [government] will not have a prominent role indefinitely, and we think that’s OK.”

But new entrants will have to learn the ropes and tread lightly in this specialty market, according to Paul Martin, business development manager, reverse-mortgage division, Security Title Guaranty Co., in Denver.

“No company wants a black eye (hurting) seniors,” says Martin, who recently joined the firm after helping to expand the reverse-mortgage group at Wells Fargo Mortgage Co.