Montana officials are actively promoting the Reverse Annuity Mortgage (RAM) program, designed to help seniors in the state by providing financial assistance while allowing them to stay in their homes. The RAM program, enacted by the Montana Legislature in 1989, offers a state-subsidized reverse mortgage specifically for residents aged 68 and older.
The program is noted for its potentially more advantageous interest rates compared to federally sponsored reverse mortgage options, providing seniors with a valuable financial tool.
Cheryl Cohen, a state housing official, recently highlighted the RAM program in an op-ed to raise awareness. She emphasized that the program assists senior homeowners by providing monthly payments to help manage daily expenses while remaining in their homes.
Eligible homeowners can borrow between $15,000 and $150,000, with the maximum loan amount determined by 80% of the home’s FHA-determined value. The program also offers lump sum advances at closing and up to $10,000 for paying off prior mortgages or making home improvements.
Montana Promotes Reverse Annuity Mortgage Program to Aid Seniors
Curt Larson, a Montana-based reverse mortgage originator, noted that awareness of the RAM program is relatively low, even among industry professionals. He found the program intriguing and explained that it is state-serviced, with income limits based on household size.
The RAM program differs from traditional FHA-backed Home Equity Conversion Mortgages (HECMs) in that it does not offer a standby line of credit and has a fixed amortization period of 10 years. Borrowers receive monthly payments and can use the funds to pay off existing loans.
Larson pointed out that the RAM program’s interest rate is set at 5% with an 80% loan-to-value ratio, and the program does not involve reverse mortgage professionals in its distribution. Instead, potential borrowers apply directly through the Montana Board of Housing.
Although Larson will not benefit financially from promoting the RAM program, he sees value in being knowledgeable about it, especially for clients who may not qualify for traditional reverse mortgages.
Despite the program’s benefits, its outreach has been limited. Since its inception, only 241 RAM loans have been issued, totaling over $15 million in principal.
Currently, active loans show an average principal amount of around $107,000 and an average monthly payment of about $741. Cohen believes that the RAM program remains a viable option for Montana seniors who wish to stay in their homes but need extra funds to cover expenses, provided they attend a required counseling session before applying.
