Modified Reverse Mortgage Program

A program designed to assist elderly homeowners with property taxes.

What is a reverse mortgage?

A reverse mortgage is one in which a lender makes a monthly payment to the homeowner. These amounts, plus accumulated interest, are backed by a mortgage on the property. The lender is repaid in full when the property is sold or exchanges hands.

What is the City's program?

The City's program is a modified reverse mortgage because the City makes the program available only to pay all or a portion of a homeowner's property taxes. No monthly payments for living expenses are allowed.

Is it expensive?

No, not compared to most other programs of this type. The City of Madison has worked to keep costs to a minimum. Charges include:

• Adjustable annual interest rate based on the City's cost of borrowing plus one percent. (Note: In past years, the interest rate charged by the City was between 4.1% and 6.5%.)
• There is no monthly service fee.
• One-time cost includes initial title search to verify ownership of the property and recording of the lien on your property with the Dane County Register of Deeds. This cost is normally less than $60 and may be added to the amount borrowed for the first year's property taxes. This compares very favorably to other programs.

Will this loan affect my retirement pension, Social Security, Medicare benefits or eligibility in the Wisconsin Homestead Credit Program?

No, none of these will be affected by your loan.

What are the property qualifications?

• The property must be located in the City of Madison.
• The property must be a single-family residence.
• The property must be the primary residence of, and owned by, the person(s) applying for the modified reverse mortgage.

What qualifications must the owner(s) of the property meet?

• At least one owner of the property must be at least 65 years of age.
• The owner(s) of the property must have a combined total less than $30,000 in cash, stocks, bonds, treasury bills or notes, commercial papers, savings bonds or certificates, savings accounts and cash surrender value of life insurance policy or other assets that could readily be converted to cash.
• The annual gross income (from all sources) of the owner(s) of the property must meet the following guidelines:

1 person . . . . $43,050
2 persons . . . . $49,200
3 persons . . . . $55,350
4 persons . . . . $61,500

How much am I eligible to borrow?

You may borrow enough to pay all or a portion of your annual property taxes. The cumulative amount paid under this program, plus accrued interest and other loans secured by the property, cannot exceed 70 percent of the value of the property. The City Assessor's value will be used for this purpose.

How are my taxes paid?

At the time of closing on your loan, you will be required to sign a lien document. A lien on your property will then be recorded with the Dane County Register of Deeds. Upon filing of the lien, the Comptroller's Office will draw a check payable to both the property owner and the City of Madison. You will then be responsible for paying the taxes in the City Treasurer's Office.

How is the loan repaid?

The loan is due when you leave your home or transfer the title. You may sell your home at any time with no penalty. At the time of sale, the City's lien on your property would be paid off and you would keep the remaining funds. Upon notification of a potential sale or transfer, the City would forward in writing the balance due under this program.

Are there any other requirements?

You, as the property owner, must agree to maintain sufficient fire/loss insurance to cover the replacement value of your home and to name the City of Madison as an additional payee for losses. A Certificate of Property Insurance listing the City of Madison as a lienholder must be submitted prior to signing the lien document.

Utilization of a reverse mortgage should be planned carefully and viewed as a matter of last resort. Equity in the home is being utilized to pay property taxes and interest does accrue. However, for people who have a debt-free home but are "cash poor," the program is beneficial. In many cases, the annual increase in the assessed value of the home exceeds the amount borrowed to pay the taxes.

Information for this program is available from the following organizations:

Coalition of Wisconsin Aging Groups (CWAG)
2850 Dairy Drive, Suite 100
Madison, WI  53718
608/224-0606

East Madison/Monona Coalition of the Aging Inc.
4142 Monona Drive
Madison, WI 53716
608/223-3100

Energy Services Inc.
1225 South Park Street
Madison, WI 53715
608/267-8601

Madison Senior Center
330 West Mifflin Street
Madison, WI 53703
608/266-6581

North/Eastside Senior Coalition
1625 Northport Drive, Room 125
Madison, WI 53704
608/243-5252

Senior Services Coordinator
Community Services
215 Martin Luther King, Jr. Blvd., Room 225
Madison, WI 53703
608/266-6433

South Madison Coalition of the Elderly
128 East Olin Avenue, Suite 110
Madison, WI 53713
608/251-8405

West Madison Senior Coalition
517 N. Segoe Road, Suite 309
Madison, WI 53705
608/238-7368

Additional information and/or an application form may be obtained from the City of Madison Comptroller’s Office. Please contact:

Randy Whitehead
608/266-4026
rwhitehead@cityofmadison.com

Lisa Ehman
608/266-5917
lehman@cityofmadison.com

TTY/Textnet - 866/704-2340

For information on Dane County's Home Loan Program - or HELP - similar to Madison's Modified Reverse Mortgage Program, please call the County Controller's Office at 608/266-4109.

Helpful Internet Links:

For information on other services and resources available in Dane County for people age 60 and over:  

Dane County/Dean/St. Marys Over 60 Resources Directory

For information on other services and resources available in Wisconsin and other states for seniors:

Care.com Senior Care / Home Care Directory: A state-by-state listing of Senior Care / Home Care Resources