Reverse mortgage agricultural loan

The Federal Farm Loan Act of 1916, signed into law by President Woodrow Wilson, is a United States federal law that established 12 regional Farm Loan Banks to serve members of Farm Loan Associations. Farmers could borrow up to 50% of the value of their land and 20% of the value of their improvements. (www.wikipedia.com)

It has many benefits but does not accord any different service to senior citizens

Mortgages play a critical role in the lives of many citizens both junior and senior.  The variance between requirements by lending institutions and the perception by many that it may not be possible for these above a certain age to service their mortgage debt brought about absurdities.  Apart from the inability to access loans to improve either their homes or advance their agriculture, they who are seniors may be unable to face their day to day basic needs.

Reverse mortgages as agricultural loans

With the reluctance depicted above and the general lethargy on responsible officials, most senior citizens in the United States almost invariably face reduced production after retirement or even age.

The concept of reverse mortgages was introduced to temper with the financial distortion usually faced by retirees.  Although most of these loans are taken with the sole for general upkeep, some senior citizens will use them as agricultural loans.

An advantage that reverse mortgagors will get from accessing reverse mortgage agricultural loans as opposed to the normal mortgage or loan is in the interest, the mode and time of repayment and off course the remedies available to the lender that he/she shall limit their security to the mortgaged property and no other.

How to access reverse mortgages for agricultural land

The American Homeownership and Economic Opportunities Act and other statutes provide for requirements that must be met by an applicant in order for them to acquire reverse mortgages, be it for home or agricultural use. 

They must prove that they are 62 years or above, that they own a home with equity in it (the difference between the market value of the house and any unpaid loan) and that they have been living on that particular property for a period of not less than one month.  The amount of loan and the lender may be determined by a borrower’s home equity.

For these senior citizens who have met or can meet these requirements, it may be of relevance to know the extent to which lenders may offer loans. 

The Federal Housing Administration (FHA) which facilitates the Home Equity Conversion Mortgage (HECM) will generally offer loans to every senior citizen.  However, they are limited loan amount.  Reverse agricultural loans whose value exceeds US$ 500,000 may not be easy to come by from this government sanctioned and supported lender.

Fannie Mae’s Home Keeper loan may also be of use but still faces the same limitations as these experienced by HECM’s.  However, they are of help to these whose agricultural needs may not be humongous.

The last option that an intending reverse mortgage agricultural loan applicant will have is the conventional reverse mortgage or the private cash account reverse mortgage.

 These lenders can offer as much money as is reasonably conceivable for a reverse mortgage agricultural loan.  Seniors whose aim it to fully expand their agricultural scale may opt to apply for the loans as they are only subjected to the requirements applicable to Home keeper and HECM loans.

Expert counsel

Advice from players in the reverse mortgage markets and also agricultural planners is essential for any applicant.

References

1. http://www.fc.state.tx.us/homeinfo/homeindex.htm
2. http://en.wikipedia.org/wiki/Federal_Farm_Loan_Act
3. http://www.answers.com/topic/federal-agricultural-mortgage-corp