Reverse Mortgage Loan Blog

Their mother loved the Bitterroot Mountains.

When she built her home in Stevensville, she made sure there was a window on the west side that framed the magnificent peaks.

Her daughters, Patty Clawson and Jan Jarvie, hope that someday soon someone else will enjoy the view.

The sisters have been waiting for that special someone for almost two years and now their time is running short to pay off a loan their mother took against the property.

The loan came in the form of a reverse mortgage from the Montana Board of Housing.

“It was a wonderful thing,” Clawson said. “It helped our mother pay her bills while staying in the home she loved.”

A reverse mortgage allows a person 62 years or older to convert home equity into cash without selling their home as long as they live there.

The Montana Board of Housing offers low interest reverse mortgages to low-income seniors. The 10-year loan is paid to recipients in monthly installments. The note doesn’t come due until the recipient either moves or dies.

Verne Bowers lived on a fixed income derived from a small pension from the railroad and Social Security. Money was always tight and so the extra couple hundred dollars meant a lot.

In the mid-1990s, real estate was better than gold in Ravalli County. Prices were soaring and it didn’t look like there would ever be an end to it. So no one in Bowers’ family gave it a second thought when their mother decided to sign up for a reverse mortgage.

“We all thought it was a good idea,” Jarvie said. “Her health insurance was going up. Her prescriptions were costing more. The extra money helped her a lot.”

When their mother passed away in March 2007, the family didn’t worry too much about selling the house.

After all, it was on a nice quiet corner lot. It was all on one level and could easily be set up as wheelchair accessible. And the neighbors were just lovely to be around.

“There is nothing wrong with this house,” Jarvie said. “It’s affordable and it’s a good neighborhood. We thought it would sell quickly.”

But it didn’t.

The house appraised for something close to $250,000. Looking for a quick sale, the family put it on the market for about $190,000.

“We were so sure it would go,” Clawson said. “That summer when we put it on the market, there were six houses within a two-block area that were for sale. I don’t think more than a handful of people even came and looked.”

Last October, when the listing expired with a local Realtor, the sisters didn’t re-sign.

“We didn’t think it was really helping any more,” Clawson said. “We put our sign out front and we’re doing what we can to sell it. … We’ve dropped the price, but we don’t want to give it away.”

“This was our mother’s home and she was so proud of it,” she said. “We’re considering any reasonable offer, but we’re getting nothing. The term reasonable is getting lower all the time.”

Bruce Brensdal, executive director of the Montana Board of Housing, said the state has been in the reverse mortgage business for 20 years now.

“It’s one of the smaller programs that we’re involved in,” he said.

Brensdal estimated the Board of Housing has probably completed close to 170 reverse mortgage loans in those two decades. About half of that number are active at this point, he said.

“We serve a niche of the population that includes very low-income seniors who are getting up there in age,” he said. “They really need this little bit of extra help. We try to keep the costs pretty low.”

For many of the people involved in the program, there really is no other option, Brensdal said.

“By the time we see them, some are selling things out of their home to pay for prescription drugs or the utility bill,” he said. “It’s a very difficult situation for them.”

The reverse mortgage allows seniors to use the equity they’ve built up in their homes over the years almost like a bank account. The 10-year loans cost the borrower 5 percent interest under the terms of the state program.

The loan is typically repaid after the home is sold.

Brensdal said families have different options on how they address the repayment. Some refinance to keep the house. Others sell the home, pay off the loan and split up the remaining equity.

“Houses are staying on the market a lot longer than they were,” he said. “So far, that hasn’t had a large impact on our program. … People have options and we try to do whatever we can to help them.”

The sisters wouldn’t argue that.

“The Board of Housing has been wonderful to work with,” Clawson said. “We can’t say enough good things about them.”

Under the terms of the reverse mortgage, the house cannot be rented while the state is part owner. Meanwhile, there are utility bills to pay, grass to mow and all the other maintenance that comes with homeownership.

“We’re going to have to do something,” Clawson said. “It might mean that we’ll have to get into our retirement accounts to pay off the loan. We need to do something different. … It’s such a nice home. Somebody is sure to want it someday.”

“We just hope that day comes soon,” Jarvie said.

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