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Mon, Feb. 24

Reversal of fortune

DEWEY ‹ Joyce Padilla and her husband Raul arrived in the community five years ago when things started to unravel for them.

Raul's diabetes ravaged his eyesight leaving the couple in dire financial straits.

Joyce said Raul was mowing the lawn at the golf course in StoneRidge when his eyesight started to flutter.

Joyce said Raul eventually left work for numerous eye surgeries that left him without a paycheck for 13 months.

Joyce's son read a community newsletter with an advertisement for a re-verse mortgage and he urged her to pursue it.

After a handful of failed attempts to refinance her manufactured home, Joyce, 67, got a little over $100,000 through her reverse mortgage that allowed her to pay off their home and Raul's medical bills.

"I feel like I lost 100 pounds," she said. "It's unbelievable what stress can actually do to a person."

A growing number of homeowners are turning to reverse mortgages.

A reverse mortgage allows senior homeowners to convert part of the equity in their home into tax-free income without having to sell the home, give up title or take on a new payment. Borrowers do not have to make monthly mortgage payments during the life of the loan. The loan becomes repayable when the borrower sells the home or permantently moves out.

The Home Equity Conversion Mortgage is the most popular of the reverse mortgage options.

The Federal Housing Administration, a branch of the U.S. Department of Housing and Urban Development, oversees HECMs.

Darryl Hicks, vice president of communications for the National Reverse Mortgage Lenders Association, said some people who pursue this type of mortgage aren't getting them as a last resort.

Hicks said some use the money to pay a debt or spend it on a dream vacation.

"It's a program that's used by different types of people who have different types of needs," he said.

He said the number of reverse mortgages in Arizona in 2005 was 830 and that number jumped to 2,726 in 2006.

Marilyn Watson, a reverse mortgage specialist with Financial Freedom, said all borrowers must be 62-years-old or older to qualify for them.

She saidsaid the FHA mortgage limit in Yavapai County is $285,000 with amounts varying depending on the age of the applicant and the home's appraised value.

Credit and income do not factor into obtaining the loan, according to Watson.

She said the borrower is responsible for closing costs and other fees.

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