: pol
“ drastic nosedive in ‘their
‘.income, he points out, many
“senior. citizens. see-no alter-
native to.. _ selling , the home
o! onger. afford-to
Maintain and - investing: the
~ cash. ‘in . bonds—using: ‘the
interest to help them ‘keep
body- and ‘soul together
‘during the so-called ‘‘Golden
“ "as- -retirement-: #

“equity in: it, selling itis just
. about. the most, ‘disastrous

“step they can take, according
. to Mr. Kroll.

vita TO LIVE

To illustra’

his point: he

cites the case‘of a'65-year-old ©

homeonwer with free: title te :

' ca home, worth: :$60,000

current price and nothing by ;
t the old

‘home ‘and: “deducting real
‘estate commission “the. pen-
sioner winds up with $57,000
capital,” which” will. earn
$5,415 ‘a year in “9%%
‘Canada Savings Bonds. Add
‘the present basic old age
pension of $2,006 for a total
annual income of $7,421—
and nowhere to live.

_.ious than.the home that has

“oo ‘above accommodation,

ed i SU his “stead of $3,000-$4,000. And

Of that sum, ‘rental accom-

-. modation:: (probably © ‘emuch +

less” comfortable’ and’ spac- —

been sold) © will ‘eat. up”

‘anywhere from $3,000_ to
. $5,000 a year. ‘In addition, :

he'll lose his homeowneér’s
gtant of $480 a- year. And

’ because his income_is $7,421 ..

‘he’ ll’ forfeit supplementary _
pension benefits amounting

“to $2,114 a year, as well.as.
ine to pay $156. income’

In short, once he has sold
his $60,000 home, our

pensioner will wind-up with a

maximum of about $4,000 a
year (but probably Jess) for
all his needs after paying his
rent, which will also steadily
increase in step with infla-
tion. ,

Under the Kroll plan, if it
eventually’ gets off the
ground, that same senior
citizen would continue to live
rent-free in the comfort of his
own home. He would receive

(at current. ‘xates) $343. per -

month in old‘age pension and
supplementary benefits plus,
say, another $250 in monthly
loan payments—which- we'll
explain’ in“a:moment. Total:

$7,116 per year over and
in-

no income tax to pay.
REVERSE MORTGAGE

What are these ‘‘monthly
loan payments’* which would
make all the difference to his
disposable income as well as
enabling him to keep his
home?

ae
‘Noel Wright

In effect ‘they represent a

mortgage in reverse. Under
-Mr. Kroll’s scheme, known

as. Home Equity -Funding,

_the retiree homeowner would

obtain a loan for up to.67% of
the current value of his
title-free home—paid to him,
however, not in a lump sum
but in equal monthly instal-
ments over a given period.

For example, let’s assume
he took out such a loan for
$30,000 over a ~t0-yéar
period, paid in-120 equal

instalments of $250.
present rates of around
13-13'A% the cumulative

interest over the 10 years
would amount to about
$20,000, leaving him. with a
total debt of about $50,000.
At the same time the-value

of his $60,000 home would -

have increased to at least
$100,000, leaving him still
with a $50,000 equity if he

decided to sell at that point.’

Actually, however, Mr.
Kroll’s plan envisages such
monthly-instalment loans
continuing for as long as the
senior citizen homeowner
wished, because under cur-
rent housing market condit-
ions the cumulative interest
would automatically be cov-
ered by rising property
values—and probably more
than covered.

Cove wants moorages

Deep Cove pleasure boat
owners want their mooragés
back and took a first step in
that direction Monday night.

A delegation of Deep Cove
residents led by Neil Hunter,
1720 Deep Cove Road ap-
peared before North Van-

couver District council seek-.

ing the District’s support for
restoring recreational moor-
ing rights for a total of 30
vessels in the Cove.

Last year the National
Harbours Board, which has
jurisdiction over all Burrard
Inlet waters, cleared all
moored vessels (including
locally owned pleasure craft)

‘out of the area in a move

designed primarily to evict
floating homes and commer-
cial boats.

Most aldermen appeared
in agreement that Hunter's

well-prepared brief present-
ed a feasible proposal! for
recreational mooring with

safeguards against the prac-.

tices which led to last year’s
evictions.

After a brief debate
council decided to defer
further action until municipal
staff had reported on the
presentation and the NHB
had been consulted.

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‘date of
‘investment would be entirely’-

proceeds | of his estate. | _
FINDING LENDERS

The ‘figures. ‘quoted are

." ‘used merely to demonstrate
-. the Kroll principle. The: same
. principle. could obyiously..be

applied ‘toa ‘home of. any

other value and even to a.
: home not fully ‘paid, off,
- provided the owner’s: ‘equity
represented a major ‘portion

of the: value.

‘The only practical problem

would appear tobe. that of
‘finding the * lenders. Their

_ investment would be fully
secured, ‘as to both principal
and interest, by the home-

_owner’s property, in exactly —
the same way as a conven-

tional mortgage. But there
would be no regular cash
return to the lender during
the life of the loan. And the
‘liquidating the

up to the borrower—or his
executors.

One solution might be for
governments to fund the
plan. But in the short run, at
any rate, this could only lead
to increased taxation, to even
more inflationary dollars
being run off the government
printing presses, or. to both.
With this in mind, apparent-

‘dy, Mr. Kroil rejects the idea

of government funding and
insists that the money for his
scheme must comie from the
private sector, with govern-

The total Joan and intetést
o - outstanding would be event-
“ually .be- ‘repaid: when. the
“homeowner. finally~-sold’ or,.
- on-his prior death, ‘from the

Thrift Counter

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ment acting. ‘merely “as an”
approving agency: -

Given the handsome: prof :

its = chalked.” up by: - the
chartered banks and. ‘other |
financial institutions during _
the past year or two, that -

_ doesn’t. seem too unrealistic.

MONEY FED BACK

Even if half the old age

pensioners in Canada event-
ually qualified for thescheme
(almost certainly .a high
estimate); we might
talking about a gilt-edged, -
long-term investment, at
going interest rates, -of |
perhaps $200 million . per
month—spread between all ©
the banks, trust companies, :
credit unions, life insurance
firms and -other financial.
houses in the country. :

if: liquidity was a problem,

an exchange market for, such -

loans, analogous to the bond

market, could presumably be —-
established. And remember, |
tao, that the couple of: billion .

or saa year placed in the

hands _ of pensioners. month

‘by month would be immed-
iately . fed . back | into _ the

be |

propos

Personally ‘Uithink he maj

‘so-called.
brighter for: thou:

deserving seni :
sibly’ for. ee burden < Tittle

of us. oe

There’s. or hing like. a a ittle
public ‘‘feedback’” for
izing an idea whose | m
has: arrived. _

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