A guide to reverse mortgages

Massachusetts officials have launched a website aimed at providing senior citizens with guidance on reverse mortgages, which let homeowners over age 62 borrow against the equity of their homes.

Some seniors trying to get by on fixed incomes have used them to help pay unexpected bills, or help stretch out Social Security payments. The loans can be disbursed in several ways, including a lump sum or a line of credit, according to state officials. Repayment is not usually required until after the borrower dies, sells the property, or moves.

But the loans should be seen as "a last resort," according to a statement by Len Raymond, executive director of Homeowner Options for Massachusetts Elders. Seniors, he said, should "be wary of high pressure sales tactics to obtain a reverse mortgage or use the proceeds of a reverse mortgage to purchase annuities or other financial products."

The website provides information about consumers’ rights. For instance, to try to prevent scams by unscrupulous people, Massachusetts requires all reverse mortgage borrowers to go through counseling with a counselor approved by the Executive Office of Elder Affairs. A list of about a half dozen approved counseling agencies is included on the site, which is run by the Office of Consumer Affairs and Business Regulation as well as the Executive Office of Elder Affairs.

There are also other helpful tidbits including warnings that borrowers should be wary of lenders that encourage them to purchase annuities, people who push them to transfer the title of their property in taking out the loan, and being urged to have the loan paid directly to a third party.

The site contains lots of useful information and answers for seniors, or family members trying to help them out. There is also a phone line that people can call for information [617-956-1500], which should be put to good use since I suspect some seniors interested in reverse loans aren't big on web surfing.

Have you had any experience with reverse mortgages? Have you found any service providers who’ve encouraged people to take out a reverse mortgage to pay for services?

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