In the world of reverse mortgages, there are basically two types of programs. Government-backed reverse mortgages and jumbo reverse mortgages, also known as proprietary reverse mortgages. The latter are so called because they are designed and funded by individual banks. Given their conservative loan to value ratios, they generally only make financial sense when used on a home whose value far exceeds the FHA limits.

The past two years has seen many new proprietary reverse mortgage programs enter the marketplace. Countrywide bank entered the fray last year, offering both the government-backed reverse mortgages and their own jumbo reverse mortgage. But earlier this week, they eliminated their jumbo program. Their decision must have been driven by investor sentiment in their stock and of course, mortgage-backed securities in general. Loan volume was probably not the issue since Countrywide rocketed up the ranks to become the top lender for reverse mortgage loan volume for the month of March.

They will probably continue to offer the FHA Reverse Mortgage, known as the Home Equity Conversion Mortgage or "HECM". (Don't you love the LONG names the government has to give everything?) The HECM is sold to Fannie Mae, though the lender usually retains the servicing, so there is no lack of funds available for the program.

The loss of Countrywide's program to California reverse mortgages will be felt across the state. Limiting choices to fewer programs means that the exisiting programs will be in greater demand, likely resulting in less favorable terms. Still, there remains ample choices for California seniors seeking a reverse mortgage.

I'll continue to report developments in the reverse mortgage business here on this blog. Thanks for stopping by!