When mom visits, I can tell when she has watched the latest MTV music videos with the 13-year-old boy of the house. After this intergenerational bonding ritual, she staggers into the kitchen and declares, “Sometimes I think I’ve lived too long.”
We might joke about this eternal clash of tastes and values. But the idea of outliving ones peers and financial resources is no laughing matter.
To address this growing problem, the Ventura County Area Agency on Aging (AAA) has begun a campaign to educate elderly homeowners on the benefits of a reverse mortgage.
“There is a high percentage of home ownership, a high age factor and a high cost of living,” said Sue Tatangelo, AAA senior program assistant. “So the potential here in Ventura County is that older homeowners outlive their resources. They find themselves house rich but cash poor.”
According to 1990 census figures, 78% of the 86,000 seniors living in Ventura County are homeowners. That statistic, Tatangelo said, is higher than the national average of 65%. Moreover, a third of the county’s seniors are 75 or older.
“We’re not saying that everyone should have a reverse mortgage. And we’re not endorsing any products or institutions,” Tatangelo said. “But we recognize the financial needs of seniors in Ventura County. And as a senior advocacy agency, our job is to make information available for informed choices.
“A house is often a person’s largest asset. And tapping the equity could offer the potential to improve quality of life.”
To help inform Ventura County seniors about reverse mortgage options, the AAA received a grant from the American Assn. of Retired Persons (AARP) to develop the HECM Community Coalition.
“It is so frustrating--no one knows anything about reverse mortgages,” Tatangelo said. “From all our research we found no HUD-approved lending institutions in Ventura County that provide the HECM lending. And the nearest source for the prerequisite counseling is the Santa Barbara Housing Authority in Lompoc.”
And counseling is important in choosing the right mortgage.
“There are some reverse mortgages with a fixed term that requires repayment within usually three to 12 years,” said Ken Scholen, director of the National Center for Home Equity Conversion, a nonprofit consumer education organization in Minnesota.
On the other hand, some reverse mortgages that are open-ended--such as the Housing and Urban Development’s Home Equity Conversion Mortgage program--will include an insurance cost that permits for continued payments that exceed a structure’s equity or value.
“The HUD program is the most flexible of its kind that we’ve seen,” Scholen said. “And it can be a very good choice in the right circumstances. It allows you to continue living in your home, gets some cash out of it, and does not have any current repayment obligations.”
Tatangelo explained some aspects of the HECM program. The person or couple on the ownership title must be 62 or older. Borrowers must agree to accept free mortgage counseling from a HUD-sponsored agency. And family members are strongly encouraged to attend the session.
There can be a low outstanding balance owed on the house. Eligibility for the loan is not income-based, but determined by the amount of equity in the house. With HECM loans, the borrower receives monthly payments. Loan repayment does not have to be made until the residence is sold or the owner dies.
“There is flexibility in how you receive the funds. And they don’t care what you want the money for,” Tatangelo said. She said it might be for a motor home. Tatangelo said she knew of a woman who had charged $14,000 worth of medication to her credit card. The woman used her reverse mortgage to pay off the bill and now receives $600 a month for medication.
“A great feature of the HECM program is if you outlive the equity, the monthly payment will continue for the rest of your life if you occupy the home,” Tatangelo said.
This last feature motivated Ventura resident Dale Troxell, 59, to research a reverse mortgage for his neighbor, 88-year-old widow May Orm.
“She has no living relatives. She is housebound--just barely ambulatory. And we have 24-hour live-in care,” said Troxell, who accepts no compensation for serving as a trustee for Orm’s affairs.
For now, Orm’s resources seem to be adequate. But she’s been supplementing pension checks with her life savings. A fall and hospitalization last year prompted doctors to insist that Orm receive live-in care or enter a convalescent-care facility.
“She absolutely wants to stay in her own home--no rest home,” Troxell said. “So we’re making every effort to accommodate that wish. My wife, the live-in help and the local paper delivery man have a four-way deal to give her moral encouragement every day.
“She really doesn’t have anybody else to watch out for her. And she’s a nice gal. Somebody needs to step in and try to make her life as pleasant as can be.”
TO LEARN more about reverse mortgages, call the Ventura County Area Agency on Aging, 652-7560. The agency plans to conduct information meetings at each end of the county in January.
THE AARP’s Home Equity Information Center offers a free brochure, “Home Made Money,” that discusses the pros and cons of reverse mortgages. To receive a free consumer guide and lender’s list, write: AARP Consumer Affairs, 601 E. St. NW, Washington, D.C. 20049. Or call (202) 434-6030.
TO REQUEST a free list of reverse mortgage lenders, send a self-addressed stamped envelope to the National Center for Home Equity Conversion, 7373 147th St., Suite 115, Apple Valley, Minn. 55124.