History of Reverse Mortgage and Home Equity Conversion Mortgage(HECM)

The Home Equity Conversion Mortgage (HECM) program has a significant history tied to the evolution of reverse mortgages in the United States:

1961 — The First Reverse Mortgage

The very first reverse mortgage was issued in Portland, Maine by a banker named Nelson Haynes. He created the loan to help a widow stay in her home after her husband, his former high school football coach, passed away. It was a custom solution at the time — not yet a formal lending product.

1983 — Reverse Mortgages Gain National Attention

President Ronald Reagan signs legislation encouraging the development of reverse mortgages as a tool to help seniors access their home equity and stay financially independent during retirement.

1987 — Congress Authorizes the HECM Program

Congress passes the Housing and Community Development Act, officially authorizing the creation of the Home Equity Conversion Mortgage (HECM) program. This marks the beginning of a standardized, federally-backed reverse mortgage product.

1989 — The First FHA-Insured HECM Loan is Issued

The very first official HECM loan insured by the Federal Housing Administration (FHA) is issued to a woman in Kansas. This loan included new consumer protections and became the model for future reverse mortgages in the U.S.

1990s — Steady Program Growth

Throughout the 1990s, reverse mortgages grew in popularity. More lenders entered the market, and more seniors began using reverse mortgages as part of their retirement planning.

2000 — Public Awareness Campaigns Begin

HUD and various nonprofit organizations begin promoting reverse mortgage education and required housing counseling, helping ensure seniors fully understand the product before borrowing.

2008 — Financial Crisis and Program Scrutiny

The 2008 housing market crash prompted closer examination of reverse mortgages. HUD introduced new regulations to strengthen consumer protections and ensure the program’s long-term sustainability.

2014 — Major HECM Reforms Introduced

Significant changes to the program included:

Financial assessments of borrowers to ensure they could pay taxes and insurance
Limits on initial draw amounts to improve loan performance
New rules to better protect non-borrowing spouses

These changes made HECMs safer for both borrowers and lenders.

2015 — Line of Credit Option Gains Popularity

More borrowers began using the HECM line of credit feature as a financial planning tool, allowing them to draw on home equity as needed — with a growing credit line over time.

2017–2020 — Further Consumer Protections Added

HUD introduced updates to appraisal requirements, underwriting standards, and servicing guidelines. These measures were aimed at improving program stability and reducing defaults related to unpaid property charges.

Today — A Valuable Retirement Tool

HECM reverse mortgages are now a well-regulated, FHA-insured option used by tens of thousands of seniors each year. They’re not just last-resort loans anymore — many financial planners now view them as a strategic tool for: