Transamerica reverses course on reverse mortgages Senior life

August 30, 1998|By ORANGE COUNTY REGISTER

Transamerica Corp., which began offering reverse mortgages in 1993, said it stopped accepting applications last month, following a similar move by Household Bank last year.

"The returns [for companies] are not as high as some firms had hoped," said Peter Bell, president of the National Reverse

Mortgage Lenders Association.

Transamerica's departure leaves three reverse mortgage programs in the nation: those of the Federal Housing Administration, Fannie Mae and Irvine, Calif.-based Financial Freedom Senior Funding Corp.

A reverse mortgage is a loan that allows older people to borrow against home equity with no repayment until they sell, move or die. Becoming widely available in the early 1990s, the loans have been used by about 50,000 cash-poor, house-rich seniors.

The departure by Transamerica, which offered reverse mortgages of up to $750,000, leaves a void in the market for "jumbo" reverse mortgages, Bell said. FHA and Fannie Mae have loan caps of about $170,000 and $227,000, respectively. Financial Freedom offers jumbo loans of up to $700,000.

Transamerica plans to keep existing reverse mortgage loans until they mature.

Pub Date: 8/30/98

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