Wells Fargo is putting an end to reverse mortgages at the end of the month, the controversial home equity loan taken out by borrowers over the age of 62. According to the Wall Street Journal, the bank, which is the nation’s largest reverse mortgage issuer, said yesterday that it is no longer comfortable making those types of loans, given that home prices are still falling and that federal restrictions make it difficult to determine whether participating seniors will be able to continue paying their property taxes and homeowners’ insurance. Through the loan program, which is run through the U.S Department of Housing and Urban Development, aging borrowers receive regular payments from the equity of their homes, to be paid back when the home is sold, when the borrower dies, or when the borrower defaults on his or her property taxes or insurance obligations. [more]

Senior citizens and retirees are increasingly looking for ways to regain financial security, according to recent usage data from Golden Gateway Financial’s (note: correction appended) online Reverse Mortgage Calculator. Over the past three months, the number of seniors using the tool increased by 90 percent, indicating that older homeowners are following the overall trend in reverse mortgage growth. Their research may be somewhat futile, however, with declining home values diminishing the amount of money available to older Americans through such loans. In addition, new federal regulations have cut reverse mortgage proceeds by 10 percent, and these stand to be reduced even further when a piece of legislation that temporarily increased mortgage limits expires at the close of 2009. TRD

Amid the housing downturn, reverse mortgages for seniors are becoming increasingly popular. But these mortgages have high fees and require tapping into the mortgage holder’s home equity, which is not recommended for homeowners with any other alternatives, Wall Street Journal reporter Nick Timiraos told CNBC. Also, since home prices are falling, it is likely that home equity amounts are less than reverse mortgage amounts. According to the Federal Housing Administration, therefore, a homeowner would have to have no mortgage at all or a very small mortgage to be eligible for a reverse mortgage. The mortgages already have consumer protection, but John Dugan, controller of the currency, wants reverse mortgages to be more heavily regulated to make the process safer, according to CNBC’s Diana Olick. [more]