Final answer:
The most popular reverse mortgage program is the Home Equity Conversion Mortgage (HECM), which provides elderly homeowners with the option to convert part of their home equity into cash without requiring monthly payments.
Step-by-step explanation:
The most popular reverse mortgage program is the Home Equity Conversion Mortgage (HECM), which is insured by the Federal Housing Administration (FHA). Designed to enable elderly homeowners to access their home equity without selling their home, the HECM program became a significant financial tool after the housing market collapse and the subsequent economic downturn known as the Great Recession. The program provides financial flexibility by allowing homeowners to convert a portion of their home equity into cash while still retaining home ownership.
Unlike traditional mortgages, reverse mortgages do not require monthly principal and interest payments. Instead, the loan balance increases over time as interest and fees are added to the loan balance. The loan is typically repaid when the homeowner moves out, sells the home, or passes away. This financial mechanism became particularly relevant during the economic recovery period when home equity was a valuable and often necessary resource for those affected by the housing market crisis and the prevailing economic conditions.