Reverse mortgage is a loan that someday must be repaid

Some time ago, a puzzled reader sent me an official-looking mailing she'd received, and today the letter carrier brought me my very own copy. Pretty exciting.

It starts with news about a new "2007 Government Regulated Senior Program," which "protects seniors," and it offers a "2007 Senior Benefit Update" along with a picture of a couple of flags. I'm invited to respond to the federal-sounding "Senior Information Processing Center." And here's what it's all about:

Without once mentioning the words, somebody is selling reverse mortgages here. Nothing wrong with that. Nothing new either, of course. The Federal Housing Administration's excellent Home Equity Conversion Plan has been around for years now.

Reverse mortgages can be a fine deal for certain older homeowners who want to tap the equity in their homes. You can indeed, as the flier says, receive cash to pay off your existing mortgage, repair your home and "enhance your lifestyle." You do, as they point out, remain the owner. It's true there are no income or credit qualifications. You can indeed "create a lifetime income," and yes, it doesn't affect Social Security qualification, and yes, it's "tax-free."

What they never mention is that all this is simply a loan, secured by your home, and it will be paid back someday, when you no longer need the house.

"No monthly payments ever," they say. "Property passes to heirs." All true, but they forget to say that when you die or move out of the house, the whole reverse mortgage becomes due and must be paid off, usually through the sale of the house. The debt includes everything they've been sending to you over the years, plus interest, plus your original closing costs. Your heirs receive anything that might be left after that.

I was particularly taken with the form that asked: "What do you want to accomplish? Check all that apply: Home Improvements, Establish Emergency Fund, Travel," as if it made any difference what I did with the money.

They don't exactly lie, but if I were considering a reverse mortgage, I'd look for a more straightforward lender. Good information is available from the Web sites aarp.org/revmort and reversemortgage.org.

Real estate companies get

to decide who sells for them

Q: I am an agent who has been working for a real estate company. My broker told me he "had to let me go" for no good reason. I do not have a contract with him. Can he do that? -- via e-mail

A: That supervising broker can choose which salesmen he wants to be legally responsible for. Without knowing more details, I'd guess that he was within his rights.

Earnest money goes into

escrow before closing day

Q: I put down $3,000 on an offer to purchase and contract. That check has cleared my account. I thought it was held until closing. Am I wrong? -- J.S.

A: Yes, you are. The procedure should have been explained to you. The law requires your earnest money to be deposited promptly in an escrow (holding) account. It is not given to the seller. The amount will be credited to you at closing.

Reader enjoys funny, offbeat

letters received by House Calls

Q: My husband still is chuckling about the funny letters you printed last winter and keeps asking me to write to see whether you have more. So I'm asking you. -- D.S.

A: Those letters came out of my newest book, "I've Heard It All." It does include some of the most amusing questions this column has ever received, but the publisher intends it as "professional development," and I'm not sure they'd seem too funny to someone who isn't in the real estate business. Here are a few not particularly about real estate -- see what your husband thinks:

"Ms. Lank, My name is Rob and I'm attending my senior year and we have a term paper that has to be 50 to 100 pages typed and I am doing it on real estate and housing industry together so please send me all info you have please typed."

"Dear Edith Lank, Could you please tell me the top 10 states?" (That's the entire e-mail.)

"Gentlemen, Would you be kind enough to tell me about bridge clubs, preferably rubber bridge, in Western L.A. and/or Santa Monica. Sincerely yours."

"Dear Edith: Question please. Can a 73-year-old woman have no limit on her income? Thank you. -- M. O'B.

If these strike him as funny, tell your husband the book is available postage-paid for $20 directly from me. Mail a payment to the address at the end of this column.

Most states don't require

residency for real estate license

Q: Can an agent hold a license in two or more states? -- W.

A: Yes. Most states have procedures under which an out-of-state agent can get a license. Already holding one in another state wouldn't matter.

Edith Lank will respond personally to any questions sent to her at 240 Hemingway Drive, Rochester, NY 14620 (please include a stamped return envelope), or readers may e-mail her at ehlank@aol.com.