Shifting Into Reverse Can Mean Progress; RETIREMENT; Senior citizens cashing in on reverse mortgages as home values vault.(SERIES: THE NEW INVESTOR)(IBD SPECIAL REPORT)

Byline: CHRISTINA WISE

As senior citizens grow in number, so has the popularity of reverse mortgages.

In fiscal 2004, which ended in October, seniors took out a record 37,829 home equity conversion mortgages, according to the Housing and Urban Development Department. HECM mortgages are federally insured and account for 90% of the reverse mortgage market.

By comparison, in fiscal 1990 only 157 reverse mortgages were issued. And during the first five months of fiscal '05, the count is up to 16,731 reverse mortgages.

With reverse mortgages, the lender loans the borrower money in exchange for part of the home's equity.

Unlike a traditional mortgage, reverse mortgages have no monthly payments to make. Rather, the loan is ultimately repaid from the borrower's estate or the eventual sale of the home if the borrower moves out.

Unlike with many loans, most reverse mortgages have minimal qualifications -- mainly that the homeowner be 62 years or older and own the home.