"In the past, we haven't addressed that demographic group. We would have offered them traditional mortgage products, but the reverse mortgage serves a different need," said Varney.

Created in 2004 as a collaboration between CommunityAmerica's CUSO One, Lenexa, Kan. and CU Holding Company, Kansas City, Mo., TruHome Solutions recently added TruHome Realty Solutions in partnership with CU Realty, Scottsdale, Ariz. It's also in the process of finalizing a partnership with an existing local title company in which TruHome will be the majority owner with the rights to buy out.

While traditional mortgages tie up homeowners' equity in their home, reverse mortgages--also known as federally-insured Home Equity Conversion Mortgages (HECM)--allow the homeowner to take equity out of their home to cover the cost of personal needs or help them meet other financing responsibilities.

"Nationwide, when reverse mortgages first came out, everyone was very wary because they mistakenly saw it as a way to scam the elderly out of the equity in their homes. But as people have become more educated about reverse mortgages and are more aware of the benefits, we're seeing more interest in the product," said Varney.

Unlike traditional mortgages that require the borrower to meet certain income levels and other criteria to qualify for loans, reverse mortgages don't have those requisites. The product also doesn't have the same responsibility of making a monthly payment.

Borrowers can choose to receive reverse mortgage funds either as a lump sum, monthly income, line of credit, or a combination of the three. They can use the funds for any purpose--home repairs and improvements, medical expenses, in-home or long-term care, education, and supplemental retirement income. But there are currently geographic variations to the maximum amount of loans that can be funded through reverse mortgages. In August though, Congress passed legislation--the Expanding American Homeownership Act of 2006 (H.R. 5121)--that would make substantial improvements to the FHA HECM program including creating a single national loan limit for the HECM program equal to the conforming Freddie Mac loan limit. The measure also includes provisions that would: establish a "home purchase" option that would allow people to use a reverse mortgage to purchase newer housing that better suits their needs; and remove the volume cap on the number of HECM loans that FHA can insure. Two amendments were also added to HR5121. One would make a technical change to existing law that would give HUD the ability to insure HECM loans on co-ops. The second amendment would require HUD to study the mortgage insurance premiums charged on a HECM loan. At press time, the Senate had not yet passed its own version of the measure, S. 3535. "Credit unions have also been wary of reverse mortgages and wondered if they're really good for members," said Varney. "Credit unions typically don't like to offer products that have hidden pitfalls like negative amortization products, because they perceive them as not being in members' best interests. When reverse mortgages first came out, that's how credit unions first approached the product. Now some credit unions are starting to see the benefits of the product, and they're doing things to make sure the member and family members are aware of the benefits," he continued.

According to Varney, some credit unions are actually requiring the involvement of the family of the member taking out the reverse mortgage to increase awareness of the impact so the family will be prepared to deal with the reverse mortgage if the member dies. By involving the family members up front, everyone's on the same page, and they can help their family member make the best decision.

"There's definitely an education component to reverse mortgages," said Varney. "Any credit union that gets into the product has to be prepared to educate the member about the product and the impact on them and their family."

At this time, Varney said TruHome is researching the best route to offer the product. Since the CUSO doesn't offer the product now, and there's only a limited secondary market for it--Fannie Mae buys reverse mortgages, but Freddie Mac doesn't--Varney said TruHome is looking to partner with a company that already offers the product.

One of the companies it's considering is Financial Freedom, a subsidiary of IndyMac.

"We want to see if there's a way for us to be the front face for credit unions. But because it's a very complex product and you have to manage the disbursements, we're going to look at outsourcing the servicing management piece," Varney said.

"Regardless of the company we go with, TruHomes will maintain control of the sales process. We'll be the one talking with the member, originating and processing the loan. We'll outsource the servicing and do our due diligence on the company we partner with to make sure they service our members the way we want them to and not try to cross-sell them," he added, noting that after a while, TruHomes may decide to handle the servicing themselves. [email protected]