Move forward with caution on reverse mortgages

I live in an adult community and would like to obtain a reverse mortgage. I have had a difficult time getting information on this type mortgage. Can you help?

K.W.

Davenport

I'm not an expert on reverse mortgages, but I've received several similar questions, so I'll give you the basics.

ConsumerReports.org explains them well: "Homeowners borrow part of the equity they have in their property, and the principal and accrued interest are repaid only after they die or move out. Over time, the owner's equity diminishes while the amount of the loan increases - the opposite of a traditional mortgage.

"Unless you fall behind on taxes or allow the house to slip into disrepair, the lender can't foreclose on the property, even if you live many years beyond expectations and the size of the debt surpasses the value of the house itself. In most cases, the proceeds of a reverse mortgage can be taken in a lump sum, an open line of credit, or as monthly payments."

I caution anyone considering entering into this type mortgage to first fully understand the consequences. Get legal advice if necessary. Because the economy has not stabilized, there are some big potential problems. First, if inflation rates soar, your income from a reverse mortgage may not keep up.

About once a week I receive a question from a person with a reverse mortgage who can't keep up with rising association fees or special assessments with the payments received. Board members have also inquired what to do when an owner with a reverse mortgage walks away from his or her property. How does an association file a lien and foreclosure?

I have made several calls to brokers that sell reverse mortgages and, so far, none will discuss these questions.

How can I convince my board that I have a legal right to dry my washing outside? I conserve energy and also save money. In these times of a poor economy and my income reduced, I feel they need to allow us to use cost savings.

H.B.

Winter Haven

Florida Statute FS 163.04 mandates that "No deed restrictions, covenants, or similar binding agreements running with the land shall prohibit or have the effect of prohibiting solar collectors, clotheslines, or other energy-saving devices ..."

The statute allows the association to establish reasonable rules for the use of such devices. For instance, the board can allow only removable umbrella or folding racks and limit their usage to weekdays.