Gardner Historical Museum

The settlement of Kansas and many states to the west
have long played a very important role in the history of reverse mortgages.

Reverse mortgage is a loan option for people from 62 years and above who have made a sustainable or complete down payment on their mortgage and whose pension cannot cover their monthly expenses. Such people might not want to move out of their neighborhood or into smaller less expensive apartments. With a reverse mortgage the beneficiary does not have to service the loan with monthly cost and there is little or no risk of losing their home as long as they reside in it.

Reverse mortgage first appeared on the scene in Great Britain around the 1930s. It met with success and soon spread to other parts of Europe in the 1970s. The name during its early stages was home-equity reversion. It started as a family business until investors took over the then first home-equity company and changed the name to the Home & Capital Trust Ltd.

After its success in Britain and Europe reverse mortgage finally crossed the Atlantic and arrived the United States in the 1980s. It fully took root in 1987 with the creation of the Home Equity Conversion Mortgage program, a HUD program. From its beginning it was aimed at senior citizens who had paid all or significant parts of their mortgages. People who were home equity rich but cash poor could from then on benefit from their home equity with a reverse mortgage.

By the early 1990s reverse mortgages had become widely accepted and quite popular in the United States apart from in Texas. Reverse mortgages were banned in Texas because of the constitution which made home equity lending illegal. In 1989 after a vote in favor of the constitution’s amendment the ban was lifted. The new constitution favored large home-equity loans. Today reverse mortgages in Texas are widely popular and increasing becoming a choice for many who qualify for them. Counseling is always advised before deciding to get a reverse mortgage as there are pros and cons involved which should be considered carefully.

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"Reverse Mortgages Will Continue to Allow the Western Seniors to Retain their Homes"