If you are following the long saga of the housing finance industry, or if you have been participating in it since the 1980s, 1990s or early 2000s, you have noticed a pattern. It is a familiar pattern, and like fashion, old becomes new again. Old methods of business in the lending world have come back for another generation to experience.

This is certainly true in forward mortgage lending. In the 1980s and earlier, we used fairly simple, very straightforward products to

finance homes. Then we got creative. Some of that creativity was helpful to buyers and lenders alike. Some of it, of course, was not. And now here we are, once again lending like we used to. Overall, I think the outcome has been favorable.

Reverse mortgage lending has been undergoing a similar metamorphosis. In the early days, HECM loans existed to augment the borrower’s income so they could age in place, meet medical expenses and lead a better life than was possible without the loan. Early HECMs provided the homeowner with a way to supplement their income—a good, reasonable feature that provided both the borrower and the lender with longer-term assurances. This is where HECMs got their start and, even though they comprise only a small part of the overall housing market, were helpful to those seniors who needed them to remain in their homes.

Then there’s that creativity thing. Not that creativity is a bad thing or that we are against it—quite the contrary. The mortgage industry was, is, and ever shall be ripe for creativity and innovation. None of us will be done experimenting until a quality, performing home loan—forward and reverse—can close within 24 hours of origination. Yet, in the reverse market as in the forward market, we got creatively carried away. And like the forward market, the reverse market has become more conservative.

And with good reason. Reverse mortgage loans used correctly and for the right borrower are life-changing. Aging in place is a worthy societal goal. Coupled with the fact that after the mortgage crisis, the only or the most significant financial asset most aging boomers have is their home, reverse mortgage loans seem essential. The question, however, is will they continue to exist at all?

The HECM program continues to become more buttoned down. In recent weeks it has become clear that the HECM, like many forward loan products, is returning to its roots. We may not see lump-sum distributions anymore, and instead HECMs will provide supplemental income over the life of the loan. Even with this feature, they remain a good option for many seniors.

Is there room for non-HECM reverse lending, especially for portfolio lenders? There was before the housing crisis and there could be again. With home values having undergone the largest reset in history, it is a fairly safe bet that they will once again consistently rise, albeit more slowly than in the early 2000s. This would be a welcome trend for would-be portfolio reverse lenders. Moreover, if the pre-crisis duration characteristics hold true, these loans tend to have a shorter lifespan than their counterparts in the forward market, especially now that most everyone has refinanced into a low-rate, long-term mortgage.

Rather than think of the trends in reverse lending as negative, let’s think of them as another form of creativity and innovation. Mark Twain may have said it best: “History does not repeat itself, but it does rhyme.” If you look at fashion trends, you see hints of the past. Every generation puts their mark on retro revivals. Why should we be any different? There’s room for reverse loans in the U.S. housing market. Let’s get creative. Let’s put our mark on the next generation of HECMs and portfolio products.