Reverse mortgages, which had failed to generate much interest in the decade since they were introduced, started to catch fire in the first half.
Experts credited rising home values and a marketing campaign launched last fall by the National Reverse Mortgage Lenders Association its first ever. 
Jeff Taylor, the vice president of senior products at Wells Fargo Home Mortgage, said falling stock prices were also an important factor. The downturn in the stock market has had a negative impact on seniors, who had been looking for portfolio earnings to subsidize their monthly income, he said.
Experts are also predicting a boom for the product as more Americans enter their senior years.
The Wells Fargo & Co. mortgage unit expects its funding of reverse mortgages to increase 42% this year, to over $256 million, Mr. Taylor said.
Were hearing reports of growth in volume amongst our membership across the board, said Peter H. Bell, the trade groups president. Many are reporting volumes going up by half or even tripling.
Reverse mortgages, a special type of loan available to homeowners 62 and older, let them borrow against the equity accumulated in their homes. The usual payment stream is reversed: Instead of the borrower making monthly payments to a lender, the lender makes payments to the borrower in return for equity in the home.
When the borrower moves out of the house of dies, the lender recovers principal plus interest through the sale of the property or from the borrowers estate.
Financial Freedom, an Irvine, Calif., lender majority-owned by Lehman Brothers,- originated $879 million of reverse mortgages in the first half of this year, almost 70% more than in all of last year.
Fannie Mae purchased 8,369 reverse mortgage loans with a total value of $340 million in 1999, 7,319 with a value of $287 million last year, and 5,551 with a value of $266 million in the first seven months of this year, according to Tom Atwell, the senior business manager of senior products at the government-sponsored enterprise.
Reverses mortgage are expected to fare even better as the senior population becomes more aware of them especially as more financially savvy baby boomers retire.
Census figures from last year indicate that there were 12.9 million seniors with more than $1.3 trillion of home equity that could be tapped in reverse mortgages, Mr. Atwell said. As a result, lenders are starting to expand their services in the niche market, he said.
If you wait until this is a hot topic, youll have problems entering it, because everyone else would have created positions in the market, Mr. Atwell said.
In January, Wells Fargo & Co. began offering reverse mortgage lending services at all of its 1,200 offices. Over time, seniors will at least look at this as another viable financial option, Mr. Taylor said. More financial planners are aware of it today than five years ago.
Reverse mortgages have been in existence since the early 1960s, but they remained relatively unknown for decades, according to the lenders group.
While experts say that the reverse mortgage market grew slowly but steadily in the 1990s, the group says it has grown heavily in the last two or three years. There are now over 120 lenders that offer the product, according to the lenders group.
Cultivating the reverse mortgage market is not easy, experts say. Lenders must deal with the fears of many seniors that reverse mortgages will threaten their childrens inheritance.
The majority of the folks who look at a reverse mortgage have lived through the Great Depression, Mr. Atwell said. Their house is very near and dear to them.
As a result, instead of using hard-sell tactics to market these loans, lenders need to use patience and simply provide information to address borrowers fears, Mr. Atwell said. The application process for these loans can last six to eight months, he said.
Federal regulations require applicants for reverse mortgages to attend loan counseling, where they receive a thorough explanation of the loan and alternative products. Lenders contract with nonprofit organizations to provide the counseling, which is also available through government agencies.
AARP (formerly the American Association of Retired Persons) keeps an eye on the reverse mortgage industry. It maintains a Web site and publishes a free guidebook for seniors about the product.
A reverse mortgage is a complicated transaction, said Bronwyn Belling, a specialist on reverse mortgages at the AARP Foundation, a research organization partially funded by the group. It is important that seniors get a good education and explore all of their options.
Nonetheless, reverse mortgages are a viable financing option for some seniors, she said. The AARP feels that this is a product all older homeowners should talk about.
Experts say lenders must commit considerable resources to enter the reverse mortgage market. Mr. Atwell said that one of the largest risks is that the borrower could outlive the loan, staying on the property longer than actuarial tables predict. In some instances borrowers keep collecting payments until they receive more money than the lender will be paid when the house is sold.
Jim Mahoney, Freedom Financials chief executive officer, said that with the in-depth counseling and all the safeguards, reverse mortgages are a very safe product for lenders.
Mr. Bell said that because federal regulations prohibit lenders from making reverse mortgage loans worth more than the value of the home, lenders do not worry about credit risk, and they are also allowed to charge higher origination fees, up to 2% of the value of the loan.
Though Fannie buys the lions share of the these loans, Lehman is developing a secondary market for securities based on jumbo reverse mortgages. The company completed the first securitization of such loans in August 1999 with an issue worth $317 million.
Securities based on reverse mortgages hold very little prepayment or refinancing risk, a Lehman spokesman said.
