QUESTION: I am in my mid-70s and am interested in information on "reverse mortgages." Is there a lender in our vicinity? I own my own home and am on Social Security, which does not meet all the expenses. My husband has been ill for three years and his medication is very expensive.
ANSWER: I wish I could be more encouraging about this good-idea-whose-time-has-come-but-oh-so-slowly. Lenders are still leery about writing RAMs (reverse annuity mortgages). With a RAM, a free and clear home serves as collateral for a monthly check to the owner for life without requiring the owner to give up physical possession of the property. Lenders see it as a long, long wait before they get their money back.
Currently, HUD (the Department of Housing and Urban Development) is underwriting a pilot program protecting lenders against loss on the RAMs they write, but only 2,500 such loans have been authorized nationally. And in your area, for instance, only 50 such loans have been allocated for both the entire states of California and Arizona--not even a drop in the bucket.
So, until Congress authorizes a more meaningful approach (the figure of 35,000 RAMs nationally is being discussed), everything is on hold.