Montana’s unique Reverse Annuity Mortgage (RAM) program is a state-sponsored reverse mortgage with lower interest rates and yields and a higher minimum qualifying age, making it comparable to a home equity conversion mortgage Loan (HECM) schemes distinguish: federal housing administration (Federal Housing Administration).
Cheryl Cohen, Director of Housing Montana Department of Commerce and executive director Montana Housing Authorityrecently sat down house lineThe Reverse Mortgage Daily (RMD) discusses the RAM program’s role for the state’s seniors and why there has been a recent push to promote the program.
In the second part of the interview, Cohen discussed the potential for greater collaboration with the reverse mortgage industry and outlined how “success” would be defined for the program.
Addressable population and reach
The RAM program and the HECM program maintain key differences in size and eligibility. Cohen previously explained that only 241 RAM loans have been recorded since the state Legislature established the program in 1989, but applications have also been more limited in terms of loan amounts and fee structures.
“Our loan amounts start at $15,000 and go up to $150,000,” Cohen said. “So if we’re talking about borrowers who have a larger outstanding mortgage on their home, the funds available for each loan may have some limiting factors on who qualifies. If someone owes too much on their home, this program may not be the best option. appropriate.
The RAM program does not charge any initiation fees, the state only charges the actual costs of title and appraisal. These are included in the loan amount, which Cohen says helps minimize fees and the ultimate impact on the borrower.
Currently, the program has approximately $5.5 million in outstanding funds available to provide approximately 36 additional loans totaling $150,000, with room to provide additional loans at lower loan amounts. As more loans are repaid, capacity will increase. Cohen said there are currently 41 outstanding RAM loans in Montana.
Cooperation potential
When asked about the possibility of further promoting the RAM program through partnerships with the reverse mortgage industry, Cohen said there is room to explore such opportunities.
“I always thought this was an opportunity to collaborate and at least get the word out so we could have different referral streams,” she said. “We want to have a policy conversation with the board. The program is run by the Montana Housing Authority, which is administratively affiliated with the Montana Department of Commerce. We are the state’s designated housing finance agency, so we have a Commission appointed and approved by the State Senate.
The commission is strictly involved in policy development and not in budget appropriations; those matters are handled by the Legislature and the governor’s office. But Cohen said the board did provide policy input and there is now discussion that there may be room to apply the RAM program to apartments.
Most existing loan programs involving apartments require approval from the Federal Housing Administration or the Federal Housing Administration U.S. Department of Veterans Affairs (Virginia), but many condominiums within Montana do not have these requirements. Addressing this issue could lead to greater adoption, she suggested.
“One of the policy elements we need to consider is whether we want to give staff discretion to approve apartments that do not fall within the framework,” she said. “If this limits future buyers of the property to cash buyers or using traditional As a buyer of the product, we also need to consider the potential risk of loan repayment.”
Of course, assessing the long-term risks to the country will be key before any final decisions are made, but Cohen said there’s a lot of interest in having this policy conversation. She believes the state is willing to work with reverse mortgage companies or related trade groups.
“If we’re looking for other trade groups or people involved in the reverse annuity mortgage space, I think there’s always an opportunity to bring those people to board meetings and have conversations about what’s going on in the industry and how we can be better partners. Move forward,” she said.
Success Metrics
When asked about the key success metrics that define the RAM program, Cohen said it ultimately comes down to how long eligible Montana residents can stay in their homes.
“This is a key measure of success,” she said. “As we’ve seen the returns (usually because we’re talking about seniors 68 or older), the homeowner or the borrower typically dies and then the property is sold to repay the loan. We don’t have anything on those loan repayments. Significant risks.
But when they do occur, some challenges may arise, including whether the account is managed. If a borrower fails to pay their property taxes, then the board must determine whether the funds will be used and work directly with the borrower to help them catch up if they fall behind.
“That’s an element we’re refining with the board to help people maintain stability,” Cohen said. “That’s another element of our partnership with the RAM Advisory Network – to make sure that the borrowers that we serve, if they qualify for other senior property tax relief or similar services, have access to all of the resources that they may be eligible for, to Maintain equity in their loan.
