Reverse-annuity mortgage (RAM) Definition
An alternative mortgage loan program in which the lender makes periodic payments to the borrower. The loan is secured by the borrower's accumulated equity in the home. This type of loan is usually taken out by an older, retired person who has substantially paid for a home, and now needs additional income to live on. The borrower receives periodic payments from the lender, or from an annuity set up with the proceeds from the loan. The owner continues to live in the house until death, with the sale of the home at that time used to pay off the loan. This is a plan for taking money out of a home; for converting an existing frozen asset into current income.