HUD Reverse Mortgage

The Department of Housing and Urban Development, which insures most reverse mortgages, is looking into lowering the origination costs and mortgage-insurance premiums that homeowners pay.

Borrowers have several options for receiving the money. Most opt for a lump-sum payment while others choose a line of credit. Some prefer equal monthly payments that last for as long as a borrower remains in the home. (The sum of those payments can stretch beyond the value of the house, in which case the lender will book a loss.)

Roughly 90 percent of all reverse mortgages are insured by the government through a so-called Home Equity Conversion Mortgage, or HECM. Those mortgages cannot exceed a certain amount, regardless of how much the house is worth.

In the year ended Sept. 30, homeowners took out a record 76,351 reverse mortgages, according to the Federal Housing Administration. That's an increase of 77 percent over the previous year. Overall, half of all reverse mortgages ever issued have come in the past two years.