State Treasurer Catherine Baker Knoll last week announced that the state would help remove obstacles that prevent senior citizens from borrowing against the equity in their homes.

The new Home Equity Conversion Mortgage Program aims to help Pennsylvania's 1.8 million senior citizens, the second largest senior population in the nation behind Florida.

Under the program, banks make loans to individuals using home equity as collateral, and the Federal National Mortgage Association packages the loans into pools. But banks have expressed reluctance to participate because of expenses created by the time lag between making the loans and selling them to Fannie Mae, according to Michael W. Arpey, general counsel to the treasurer.

To overcome that resistance, the state treasury plans to buy $5 million of bonds from the Pennsylvania Housing Assistance Agency.

Proceeds will be used for a revolving credit line to buy the loans from banks and carry them until Fannie Mae packages and sells them, which usually takes about 30 days.

The loans are known as "reverse mortgages," Knoll said in a statement is due only when the borrower passes on, sells the home, or permanently moves," she said.

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