Reverse mortgage activity continues at a record pace.

HUD reports that as of mid-April it had received 73,840 home equity conversion mortgage (HECMs) applications so far in fiscal 2008, the accounting period that began October 1st. This compares with 59,913 reverse mortgages in the same period during FY 2007.

HUD to date has insured 59,413 HECMs, compared with 57,022 reverse loans it insured during the same period in FY 2007.

It seems odd that while applications are up 23.2 percent, actual HECM loan endorsements have risen only 04.2 percent. This is also curious when you see that overall FHA endorsements are 75.5 percent higher than a year ago.

Part of the answer may be that some seniors are waiting for reverse mortgages with higher FHA loan limits.

Another reason for modest HECM growth may seem a little odd: Reverse mortgages insured by HUD have been around for a number of years - seniors have not come to HUD because the private marketplace has closed down, FHA-backed reverse mortgages have long had a dominant position in the marketplace. Alternatively, many forward borrowers have been looking for an alternative to toxic mortgages and subprime loans. The result is that reverse mortgage originations are humming along at record levels for HUD - but the demand for forward FHA loans has increased far more.

One could see a substantial increase in HECM demand if loan limits were raised - and if HUD insurance premiums declined. Stay tuned.