The Clinton administration wooed elderly voters Thursday, saying it wants to expand a government program that lets older homeowners supplement retirement income with their home equity.

Reverse mortgages, as they are called, were pioneered by the Department of Housing and Urban Development in 1989. The current pilot program runs out in 2000, and it limits the government to insuring a total of 50,000 reverse mortgages.

In a joint press conference with the powerful American Association of Retired Persons, HUD Secretary Henry Cisneros said he would submit legislation to Congress to make the loan program permanent and remove the cap of 50,000 loans.

"We have many Americans who are house-rich but cash-poor," Mr. Cisneros said. For financially strapped elderly homeowners, like those who have lost a spouse or who find that a pension doesn't match the cost of living, reverse mortgages can be the answer, he said.

More than 12 million Americans 62 or older are eligible for the program, he said.

Reverse mortgages allow homeowners to borrow against their home equity, getting either a lump sum, monthly installments, or a line of credit. The FHA insures the loans, and the Federal National Mortgage Association, or Fannie Mae, invests in them. So far, the government has insured 16,500 loans.

When the borrower dies or moves out of the house, the property is sold, the loan repaid, and the difference passed on to the borrower or the estate.

With only 16,500 loans insured so far, why does HUD want to remove the 50,000-loan cap?

Mr. Cisneros said the move would show lenders that the program is here to stay, encouraging them to market and make reverse mortgages.

Roger Reynolds, nationwide reverse mortgage coordinator at Norwest Mortgage, Hemet, Calif., has made 1,300 of the 16,500 loans insured so far. He said he doesn't believe the cap has hurt FHA's reverse mortgage program so far.

Typical borrowers have been elderly widows who find their monthly pension and Social Security payments halved when their husbands die, he said.

Fannie Mae introduced its own program last year, but the two programs serve borrowers at different income levels, according to FHA officials and the Norwest lending executive.

Fannie Mae's loan limit is $207,000 - allowing it to serve borrowers who are better off than the FHA's. The government program is capped at $155,250 in high-cost areas.

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