Lenders originated a record 114,641 HUD-insured reverse mortgages in fiscal 2009, reports HUD. However, just 41,375 of the loans have been written in the first six months of fiscal 2010, and the pace of origination is about three-quarters the level a year ago.

HUD's Erica Jessup says production is down because seniors cannot borrow as much against their homes, consumers continue to misunderstand the loans, and because appraisals are lower.