The Federal National Mortgage Association's first loan under its Home Keeper reverse mortgage program was closed last week by Wendover Funding Inc., Greensboro, N.C.

Reverse mortgages allow older homeowners to withdraw equity from their property and don't require repayment until the home changes hands.

The four-month lag between Fannie Mae's announcement of the program and the closing of the first loan, in Colorado, left some lenders wondering about the development of the product.

But the program's progress is "pretty much what we expected," explained Robert Sahadi, vice president for housing initiatives at Fannie Mae. "There's a very slow burn on closing time for this loan," he added. "It's a major financial decision."

Documentation has been the main obstacle to getting the Home Keeper program off the ground, explained Mike Hyman, senior vice president of production and wholesale lending at Wendover.

Fannie Mae needs to develop and distribute documentation of separate requirements for each state in which the loan will be made. Lenders then have to create disclosure documents on a state-by-state basis, Mr. Hyman explained.

Fannie Mae expects to have requirements set for 35 states in the next month, Mr. Sahadi said.

"All of our correspondent lenders have told us that they have people interested in the Home Keeper product," Mr. Hyman said.

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