HUD presents itself as the borrower's friend, your buddy when it comes time to get a mortgage. There's considerable truth to this claim, just look at FHA mortgages in general. While much of the mortgage marketplace is melting down, the latest numbers from HUD show that the FHA program is likely to double in size this year as borrowers seek safe and sane financing.

That said, there's another side to HUD, the side you rarely see in speeches or news releases.

About 90 percent of all reverse loans are insured by HUD. And how does the federal government help granny get the equity out of her home? According to a new 228-page study presented by AARP to the Senate's Special Committee on Aging last week, the "maximum allowable fee" under the FHA reverse mortgage program increased more than 300 percent between 2000 and 2006.

AARP's testimony says that a 74-year-old homeowner with a $300,000 home is likely to pay $30,000 in lifetime transaction costs for a reverse mortgage -- that's money which is not going for home improvements, trips, medicine, mortgage interest or heirs.

The magic phrase which should interest everyone is the expression "maximum allowable fee." Just who increased the allowable origination fee by more than 300 percent in six short years? Which elderly citizens told HUD that they wanted to pay more, lots more, for reverse mortgages? Has your income gone up more than 300 percent in six years?

HUD says it originated more than 100,000 reverse mortgages in fiscal 2007, a figure that rose 40 percent when compared with a year earlier.

That's great. But how many insurance claims did HUD actually pay out to justify its stiff up-front premiums? Is the reverse mortgage program anything but a cash cow for HUD? Should senior citizens who need money in their final years pay such sky-high fees? These are questions the Senate committee needs to ask.

Published: December 26, 2007

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Peter G. Miller, also known as OurBroker®, is the author of six real estate books -- including The Common-Sense Mortgage -- and is the original creator and host of America Online's Real Estate Center. Peter's weekly columns appear in more than 100 newspapers nationwide, he is also published in a variety of other media outlets and he is a frequent speaker at national events and conventions. Peter welcomes your questions, comments, and news releases via e-mail at .