Montana has been heavily promoting its state-level reverse annuity mortgage (RAM) program for seniors. Unspent funds allocated to the program can be used by helping the state’s older residents obtain reverse mortgage financing at relatively low interest rates. federal housing administration (FHA) backed Home Equity Conversion Mortgage (HECM) or proprietary product options.
That’s according to Housing Director Cheryl Cohen. Montana Department of Commerce and executive director Montana Housing Authority. Over the summer, Cohen has been writing columns and other promotional materials for the RAM project. she sat down house lineThe Reverse Mortgage Daily (RMD) provides more details on the driving and unique elements of the RAM program.
The function of RAM program
Previously, RMD analyzed the RAM program and highlighted its differences from the HECM program. A state spokesperson explained that the RAM program offers greater flexibility in eligibility, lower closing costs and correspondingly lower loan limits than the state limits attached to the HECM program.
When asked about its ability to meet the needs of the state’s seniors, Cohen said the RAM program is uniquely suited to the mission of Montana seniors.
“The primary purpose of this program, enacted by the state Legislature in 1989, was to recognize that many older homeowners in Montana were low-income and could obtain an additional source of income through homeownership,” she said. “This program is designed to provide that choice. As rising costs and inflation particularly impact Montana seniors, especially those on fixed incomes, this program is a valuable resource.
She said many of these seniors have already paid off their mortgages or maintained very low balances, and a RAM plan could add extra stability to their financial situation. Similar to other types of reverse mortgages, the proceeds are often used for other goals the senior homeowner may have.
“Some of the borrowers we work with use small cash payment options to improve the accessibility of their homes, which also helps them stay in the communities of their choice for as long as possible,” she said. “This, in turn, contributes to the overall stability of Montana’s real estate market.”
new public push
For her part, Cohen joined the Montana Housing Authority in 2018 and assumed her current position in 2020.
“That’s when I learned about this very small reverse annuity mortgage program,” she said. “It has an available balance, which is rare because our programs rarely have funds available and I certainly don’t like having any resources left when we need to deploy resources to serve our citizens.”
She explained that recent op-eds, editorials, press releases and interviews are an acknowledgment that there is plenty of cash available to fund more RAM loans.
“As a result, approximately $5.5 million is currently available in the reverse annuity mortgage program to support Montana seniors,” Cohen said. “That’s really the driving force behind the marketing campaigns, the push, the op-eds — because, hey, we’ve got this resource and we want to make sure we’re deploying it and getting it out to those who can be best served by this program. people.
unique distribution
Some of the same types of educational barriers faced by public and private entities in HECM are also factors faced by Cohen and Montana. These include a lack of product awareness and reputational challenges with reverse mortgage products. But the distribution pipeline for RAM loans is very different, Cohen explained.
“I think one of the things that makes our RAM program very unique is that we don’t use the typical loan originator pipeline,” Cohen said. “When we receive calls from interested applicants or their family members, we refer them to a team of advisors within Aging and Disability Framework organizations. These agencies are either agencies on aging or aged services agencies, Counselors are specially trained to provide support to older people, particularly working with our RAM programme.
This means RAM applicants work directly with the state instead of working with loan originators and lenders. As with the HECM program, counseling is a key element of the eligibility process, and the state uses dedicated State Health Insurance Assistance Program (SHIP) counselors who also provide assistance to Montana seniors with other programs such as Medicare.
“Counselors help them complete the paperwork and submit it to Montana Housing Authority staff,” she said. “We review applications for eligibility and compliance with our program requirements, and then we execute and service the loans directly ourselves. I think that’s a fairly unique set-up within the RAM environment – it’s a state-administered program and there’s no involvement with the private sector. A direct partnership, unlike most other HECM or other loan products.
Of course, its reach is much more limited. In an op-ed earlier this summer, Cohen said only 241 RAM loans had been issued since the Legislature first authorized them in 1989. Dollar.
Editor’s note: Expect Cheryl Cohen to provide more information about the RAM program soon, including potential opportunities for reverse mortgage industry collaboration and an outlook on the program’s success metrics.
