Reverse mortgages are for seniors who lack the income to meet their needs but have equity in their homes. These loans are especially attractive in hard economic times and in places such as St. Louis, where the local housing market remains in a swoon.

Under federal law, reverse mortgages are available to people age 62 and over. Such mortgages become due and payable only when the borrower permanently leaves the home, either by moving out and selling or by dying. In the case of a couple, if both individuals are owners of the home and borrowers on the reverse mortgage, the loan would not be due until the surviving spouse leaves the home due to move-out or death. It is up to borrowers, not the bank, to determine when they want to move out and terminate the reverse mortgage.

In addition, reverse mortgages do not obligate a homeowner for more than the property is worth at the time the home is sold and the loan is paid off. Rather, they allow seniors to tap equity, periodically or in a lump, to meet monthly expenses, pay medical bills and the like.

Loans are made according to a complex federal formula that takes a borrower's age and home value into account.

The effect is straightforward. As long as the homeowner holds title to the property and keeps up on taxes, insurance and maintenance, the owner can remain in the house indefinitely. Moreover, heirs may sell the house when markets rebound, pay off the reverse mortgage and keep the remainder.

Reverse mortgages have been slow to catch on in St. Louis. One reason is that elderly homeowners are naturally more conservative about finances. Also, consumer groups criticized early reverse mortgages as complicated.

But in 1988, Congress established the Home Equity Conversion Mortgage, which sets fairness standards for lenders. Many St. Louis banks offer HECMs, and upfront costs on such loans are falling.