"You've worked hard for your home; now let your home work for you."

This is the pitch of the reverse-mortgage industry, which is stepping up efforts to inform home-owning senior citizens of a new, innovative lending program that can provide supplementary income during the golden years.

As America grays, median income drops, and some retirees are looking at ways to supplement incomes.

John D. doesn't worry too much about the sudden drop in his income since he retired at age 65. He is keeping up his standard of living, thanks to a reverse-mortgage loan that has converted the equity in his home into a $240 monthly check.

The program enables homeowners 62 and older the opportunity to receive money generated from home equity in the form of a reverse mortgage. No repayment is required until the homeowners permanently leave the home.

"Reverse mortgages are not new," said Lynne Rajani, branch manager of The Reverse Mortgage Co. in St. Louis. "They have been in existence since the early 1960s. But they didn't become widely known until Congress passed the Federal Housing Administration's reverse mortgage insurance proposal a half-dozen years ago."

Rajani was in Southeast Missouri last week.

"I visited with some folks who are interested in the loans," said Rajani. "We've had inquiries from Poplar Bluff, Dexter and Sikeston."

The Reverse Mortgage Co. is a subsidiary of Georgia-based Unity Mortgage Corp., largest lender of the reverse mortgage program. Since opening in 1990, the company has assisted more than 650 homeowners in 17 states, turning more than $52 million of home equity into disposable income.

Rajani is familiar with the program.

Prior to joining The Reverse Mortgage Co., she served as executive director of the Housing Options Provided for the Elderly Inc. (HOPE), a non-profit group which is a HUD-certified counseling agency for the FHA's reverse program.

"The program is not a well known one," she said. "When Congress passed the reverse mortgage proposal in 1987, 50 lenders were selected -- by lottery -- to participate in the FHA-insured reverse program, which went into operation two years later." Today, only 160 lenders in 42 states are making the FHA-insured loans.

A number of real-estate and loan people in Cape Girardeau have heard about or read about the program.

Rajani explained: "The plan is sponsored by the U.S. Department of Housing and Urban Development and is insured by the FHA. Basically, it allows a homeowner to borrow against the value of the home and receive loan proceeds in a manner they select. The homeowner maintains ownership rights, and repayment of funds is required only after the homeowner leaves the home."

Once the house is sold the loan will be repaid, with the recipient of the loan or heirs to retain any equity that is left. Upon the death of the homeowners, the house is sold by the heirs. The income is tax free, and will not affect such benefits as Medicare and Social Security.

The program sounds tempting, but there can be a downside.

"This plan is not for everyone," said Rajani. "When we talk to persons interested in the loan, we suggest they talk it over with their relatives before reaching a decision. The loans are still relatively new and get complicated. It can take up to five months or more to complete a loan plan, which can be expensive.

The recipient pays the closing costs -- appraisal, mortgage survey, title policy, credit report, attorney -- lender origination fee and interest, which can all be included in the loan balance. "There are virtually no out-of-pocket fees," said Rajani.

The interest rate is adjustable and is set by the value of the one-year Treasury Bill and a lender margin of 1.6 percent. "The rate is determined at the loan closing," said Rajani. "It adjusts annually on the loan's anniversary date. It can only adjust 2 percent up or down." During the loan's life, it can adjust a total of only 5 percent.

Still, for people who fully understand the program and its limitations, the loans can be lifesavers.

"These loans can help people psychologically, not just financially," said Rajani, who served as a counselor at HOPE.

The payment is available in a number of ways.

"The most popular way is a monthly payment," said Rajani. "We'll; work with the recipient on plans to receive the money, and these plans can be changed."

Plans include a tenure monthly payment with recipients receiving fixed monthly income as long as they live in the home; term, with recipients receiving fixed monthly income for a selected period of time; and line of credit, where a person can receive funds at times and in amounts selected up to the approved limits, which are determined by appraisal of the home and amount of equity.

One of the requirements for obtaining a reverse mortgage loan is that the person and spouse attend a free, confidential, counseling session with a FHA-approved agency.