Reverse Mortgage -- The "Softer" Hard Money Loan by David Sands, Partner Troop Mesinger Steuber & Pasich, LLP Another new mortgage product has hit the market recently accompanied by quite a bit of publicity -- the reverse mortgage. Introduced under the name "the home keeper (tm) loan program" by Fannie Mae at the end of 1995, this new program is targeted to homeowners 62 years of age or older who have substantial equity in their homes. The program is expected to have benefits to borrowers (it is designed to help seniors having substantial debt or expenses to keep their homes) and lenders (it's credit bureau bankruptcy alternative a new and exciting product for lenders seeking to gain new volume or simply a marketing edge). What will this program mean to borrowers and lenders? This article will focus on Fannie Mae's new home keeper loan program, some of the issues affecting reverse mortgages and why borrowers and lenders need to be both excited and wary of this new product. The market for reverse mortgages has been undeserved for years. While recent estimates place the potential volume at as much as $20 billion, there have been no secondary market sources willing to purchase reverse mortgages, meaning that most mortgage lenders are unable bankruptcy alternative bankruptcy alternative or unwilling to offer the product. The introduction by Fannie Mae of its home keeper loan program will allow mortgage lenders to offer the product by providing a secondary market source to which these loans may be sold. While Freddie Mac is also reported to be studying the possibility of entering into the market, Freddie Mac has not yet announced any definitive plans. Fannie Mae's program is fairly typical of existing reverse mortgage programs. As currently structured, the program would allow borrowers who are 62 or older to tap the equity in their homes to pay expenses, make home improvements or simply mortgage company bankruptcy alternative to have cash on hand. The loans would be non-recourse against the borrower; meaning that the lender's sole recourse for repayment would be foreclosure upon and sale of the property -- the borrower could not be obligated to pay more than the home is worth and no deficiency could be sought from the borrower or the borrower's estate. Under the program, homeowners would be entitled to borrow against the equity in their home in an amount based upon the borrower's age, the amount of equity in, and the appraised value of, the home and the payment option selected by the borrower (that credit cards debt reduction bankruptcy alternative is, the manner