“Montana faces additional economic challenges due to inflation, which could place heavy stress on our most vulnerable populations, including seniors,” said Cheryl Cohen, division director of the agency’s housing division. ) explain. Montana Department of Commerce executive director of the Montana Housing Authority, wrote in a recent op-ed.
“Housing costs are soaring across the country, in part because supply is not keeping up with demand. While many Montana seniors own their homes with little or no remaining mortgage debt, they struggle to survive on a fixed income break even.
This is where RAM programs come into play. Cohen described the program as overseeing “low-interest loans” [which] Allowing older homeowners to generate an additional source of income from their home equity while providing them with the financial flexibility they need to continue living in their homes.
Differences from HECM
house lineReverse Mortgage Daily (RMD) submitted questions about the RAM program to the Montana Department of Commerce and received a response from a spokesperson.
As for how the RAM program is designed to address issues that a home equity conversion mortgage (HECM) may not, the department said many of the goals are the same, but the RAM program may have more flexibility in terms of eligibility.
“The Montana Housing Authority’s RAM program offers competitive or lower rates with easy-to-understand requirements,” the spokesperson said. “Board staff and participating advisors work closely with borrowers to help set up reverse mortgages, with closing costs often being hundreds to thousands of dollars less than similar programs.”
These closing costs are limited to “the actual costs of the appraisal and title company, with no administrative fees added by the commission.” Administration of the reverse mortgage itself is the responsibility of state housing staff, “who can be easily contacted in person if you have any questions.” ” or assistance. The Montana Housing Authority is administratively affiliated with the Montana Department of Commerce,” the spokesperson said.
Additionally, in her column, Cohen explains the different types of benefits available to RAM borrowers.
“The RAM program helps senior homeowners in Montana make monthly payments to manage their daily expenses in their home,” she said. “Qualifying homeowners can borrow a minimum of $15,000 and a maximum of $150,000. The maximum loan amount is based on 80% of the home’s value as determined by the FHA.
“In addition, a one-time advance of up to $10,000 is available at loan closing that can be used to pay off previous mortgages, liens and mortgages, or for accessibility improvements and other home repairs.”
longer retirement time
The loan-to-value for the HECM program is generally higher depending on the age of the borrower and the value of the home, with the 2024 HECM limit exceeding $1.1 million. The minimum eligibility age for HECM is 62 years and for RAM scheme is 68 years.
“As Montana’s senior population grows and lives longer, we are finding that even with the age limit of 68, many of our borrowers live beyond their allotted 10-year repayment period,” the spokesperson explained. “Offering loans to young people may exacerbate financial problems as more participants outlive these loans.”
The program’s availability also depends on financial outlays provided by the state Legislature to the department itself. The origination process also has similarities to the HECM program, with some state-specific requirements.
“Applicants must be reviewed by RAM counselors trained in the nonprofit sector to be eligible for our financing,” the spokesperson said. “Once they complete their meeting, housing staff work with the participant to determine need and financing availability. . Staff assist with obtaining appraisals, closing loans, and making payments. The Montana Housing Authority is the only entity that provides this service.
new communication efforts
As for why the state is now interested in raising awareness about the RAM program, speakers pointed to the economic conditions facing the state’s seniors as a key reason.
“The Board hopes to increase awareness of this program among Montana seniors and provide this option to help cover costs beyond what Social Security or other retirement income can cover,” they said. RAM earnings are required to be repaid, so additional funds can be used without incurring further debt. We hope these monthly payments will provide RAM participants with peace of mind and an improved quality of life.
That being said, both Cohen and department spokespeople said the RAM program also faces reputational issues faced by the broader reverse mortgage industry, which could dampen consumer demand.
“Reverse annuity mortgages are frightening to some seniors because of scams perpetrated by some providers of this type of finance,” the spokesperson said. “For this reason, we require consultation and have staff work directly with participants and their families Discuss any issues they may have. Payments we can provide can often cover medication costs or income gaps to help cover monthly food or utility bills.
The spokesperson also pointed to the success stories of borrowers awarded under the program.
“One borrower mentioned to staff that she had to sell furniture one piece at a time to pay for her medication, but she stopped this practice when she started receiving monthly RAM payments,” they said.
