A reverse mortgage is a loan mechanism that allows the owner of a home to borrow against the value of that home. This is done while the homeowner and borrower continues to live in the home, maintains the home and pays the taxes owed on the home and property. To qualify for such a loan the borrower must be at least 62 years of age.

While the first reverse mortgage established in the United States purportedly dates back to 1961 it was the housing bubble of the last decade that brought this form of lending to the public’s attention. And, as with so many things that blossomed during the distortions of the real estate bubble, the bloom is off the rose of reverse mortgages. The two largest providers of reverse mortgages exited the business during 2011.

Today’s market size is the dollar volume of the reverse mortgage business in the United States in 2001 and 2010. Worth noting is the fact that while these two points in time show a significant increase in this business, the peak came in 2009.

Geographic reference: United States
Year: 2001 and 2010
Market size: $0.5 and $10.3 billion respectively
Source: Tara Siegel Bernard, “2 Big Banks Exit Reverse Mortgage Business,” The New York Times, June 18, 2011, page B1, available online here.
Original source: Reverse Market Insight