It's time to everse: Lenders facing recessionary woes would do well to think about offering reverse mortgages. (Mortgage Lending).

Mostly ignored by banks until recently, the reverse mortgage is slowly gaining acceptance. With RMs, as they're called for short, lenders give borrowers monthly checks, a line of credit or both in return for equity stakes in their homes. And, if you're willing to roll with the punches, RMs might

The reverse mortgage (or conversion loan) has faced skepticism and scrutiny, and has yet to receive full public acceptance. After all, the loan targets seniors, who are often vulnerable to complex financial transactions. And then there's that absurd but difficult to debunk notion that the banker is fiendishly lying in wait for his senior clients to die.

Still, acceptance is irrevocably growing. About 175 sellers are now in the arena, a broadly diverse group that includes not just mortgage banks, but mortgage brokers, community banks and a few big banks like Wells Fargo and Bank of New York.

These lenders sold only about 15,000 reverse mortgages in 2001. But that was twice as many as were sold in 2000. And the potential for future sales is truly mind-boggling. No fewer than 20 million seniors hold more than $2 trillion worth of home equity. But even this current equity pool represents just the tip of an enormous market iceberg that'll begin to surface within the next few years.

The U.S. population of people above retirement age is expected to double to 70 million people by the year 2030. At that point, seniors will represent a far larger percentage of the population, about 20% compared with 13% today. Meanwhile, of the portion of the population that is 65 or older, 80% still live in their homes. Of that group, 76% have paid off their mortgages.

In other words, lenders that can't offer RMs will sooner or later be left out of the loop. They won't just lose their places in a lucrative niche market, they'll also give up the leverage that RMs give lenders in selling a bundle of products of special interest to seniors, including everything from home improvement loans to trusts and insurance. Time may come when the reverse mortgage will become so ubiquitous that virtually every retired homeowner will have such a loan as one part of his income portfolio mix.