“Most elders are betting the farm.” This sentiment comes from Leonard Raymond, executive director of HOME (Home Owners Options for Massachusetts Elders). It expresses the long considered and well informed opinion of someone who feels strongly that many home equity loans in general, and reverse mortgages in particular, serve elder citizens badly.

Raymond’s Boston-based nonprofit agency has worked with elders over the past 20 years, helping them find useful alternatives to loans against the value of their home. Though he does not have exact figures, he estimates the number of Massachusetts elders taking home equity loans annually is in the thousands. That is reason for regret because undoubtedly many will come to financial grief.

“We are very much into equity conservation,” Raymond assures this inquirer, and he considers loans a last resort. In his view, “If you have to leave your home, it’s better to leave with cash than without.”

Open-ended reverse mortgages are very expensive, far more so than ordinary mortgages, says this expert. The application fees, closing costs, insurance, compounding interest, and monthly servicing fees involved in such deals can beggar elders, if they do not take care.

An attractive alternative for some elders might be “term reverse mortgages.” These devices feature a fixed indebtedness limit, usually no more than two-thirds of the property’s value. According to HOME, they also have “much lower closing costs, and no mortgage insurance premiums or service fees.”

Many elders take out open-ended reverse mortgages to make home repairs, unaware that there are alternative sources of financing. The city of Boston, for example, makes funds available for this purpose, as do some other municipalities. Though this money is steered primarily toward low-income homeowners, the income ceilings do rise over time, making more and more people eligible.

Another remedy for those needing help is property tax relief. Yet astonishingly few elders avail themselves of this benefit. In Massachusetts, Raymond reports, only 15 percent of those who are eligible take advantage of it. In Boston, only an astounding 7 of the 18,400 homeowners over age 65 have had their property taxes deferred.  They thus pass up a better deal than reverse mortgages can provide.

AARP has an extensive web site with information about reverse mortgages, and that agency does caution elders about the need of counseling before they make decisions. Len Raymond, however, judges the AARP site deficient in several ways. “Equity depletion is not there,” he says, emphasizing again that, for most elders, their home is their main financial asset. To deplete its value is dangerous.

And, according to him, most of the counseling, even for federally supported loans, takes place over the telephone, rather than in people’s homes. Homeowners need to consider seriously many factors before they can make sound fiscal decisions about their residences. It is not enough to have a single brief conversation with someone, no matter how well informed that person may be.

Ideally, financial planning needs to be part of a remainder-of-life planning process, Raymond suggests. Elders should take a long-term perspective that envisions the changes that will inevitably take place in their lives. In view of increased longevity, we must plan for the long haul.

With these cautions in mind, you can still find valuable some of the information on the AARP website: www.aarp.org/revmort-basics. I found the fact sheet included here helpful for beginning investigation. However, again, there is no substitute for talking with impartial knowledgeable people who are looking out for your good.

In writing this column in response to a reader’s request, I had envisioned simply providing technical information about reverse home equity mortgages. But it now seems that I can best serve readers by recommending that they contact HOME. The number of this Boston nonprofit is 1 (800) 583-5337. Over a 21-year period, this agency has worked with almost 24 thousand households and without charging fees.

This is a crucial time for many older homeowners. According to recent report, the indebtedness of Americans over age 75 has quadrupled of late. Foreclosures of property owned by elders have increased at an alarming rate. HOME, only one agency, is currently handling 80 such cases.

The approach of this agency can be summed up thus: “Loans are a last resort and should be needs oriented, consumer friendly, should provide an equity reserve for future contingencies, and should be informed by a long term planning process.”

Many new corporations have recently sprung up that take as their sole business the selling of home equity loans. Some of these businesses are presumably the targets of Raymond’s statement: “A lot of for-profit entities would like us to disappear.”

Scams threaten to rob us older homeowners of our greatest financial security. There are all sorts of slick operators at work who will not scruple to get us to act fast and disastrously, unless we take precautions. My own consciousness has been raised by contact with HOME, reason enough for my recommendation above.

Richard Griffin