Dear Edith: I received a mailing called a "2007 Senior Benefit Update" about a new government program that will let me pay off my existing mortgage, retain the title to my home, pass property to my heirs and get a lifetime tax-free income on top of all that with no payments ever. I don't have to prove my income or credit, which is lucky because I'm just on Social Security.

If it sounds too good to be true, it usually is, but I can't see where the catch is. Are you familiar with this? — N.I.

Answer: The mailing you received doesn't exactly lie, and it's not a scam. But it's misleading. It does stretch things a bit when it talks about a "new 2007 government plan for seniors" because the FHA has been insuring reverse mortgages for many years now. Yes, the money you receive is tax-free, but that's because, like any other mortgage loan, it will someday be repaid.

You may have read "no payments ever," but what the mailing actually says is "no monthly payments ever." Yes, you can receive lifetime income, with no monthly repayments. And yes, you retain title to your home and your heirs can receive the property. But the mailing fails to mention one small item: There will be a loan out against the house your kids inherit. When you die (or if you move out), immediate repayment is due for everything you've received, plus accumulated interest and original closing costs. In many cases, the estate must sell the house to repay the reverse mortgage.

There's nothing wrong with the plan. It can be a lifesaver for financially strapped seniors who want to remain in their homes. Because the homeowners will make no monthly payments, income and credit scores don't matter. If the owners live a long time and end up receiving more than the house can sell for, that FHA insurance takes care of the shortfall.

The actual loan, though, comes from a regular mortgage lender. If I were looking for a reverse mortgage, I'd want an institution that dealt in a more straightforward manner than the people who wrote to you.

Who Gets the Money?

Dear Edith: Since my divorce in 2004, I filed a quick claims deed for my house. I own the house as of the quick claims deed, and have filed income taxes as owner of the property. But my ex-husband's name is still on the loan. I want to sell the property and am wondering: Will the sale of the property check be in my name only, without my ex-husband's name anywhere on it? — P.B.

Answer: If by "I filed a quick claims deed" you mean, "My ex signed a quit claim deed, giving me his share, and I had it entered in the public records" then yes, you are the owner and you are entitled to all the proceeds of a sale. The question of who is liable on your mortgage loan is a separate matter.

Selling to Developer

Dear Edith Lank: We were country people who have lived in our home for 53 years. Wal-Mart moved in across the street. Need I say more? Now banks, Sears, a carwash, Lowe's and many more have moved in. We have turned into a city within 10 years.

A developer is interested in our land. He has offered us $500,000. Can we sell it as one parcel? We first purchased the house, then a half-acre next to it, one acre in back and another next to it and finally another acre four years ago. Will we have to pay capital gains tax, or can it be sold as one parcel as it is joined together? It does have four separate deeds. — R. and D.W., via e-mail

Answer: In spite of your excellent letter (and the diagram you enclosed) I don't have enough information to answer your questions.

With this much money involved, you should be using all the professional help you can get. If you haven't already signed a sales contract, consult a certified appraiser for a skilled estimate of market value before you negotiate the sale price. But perhaps it's too late for that. I hope, in any event, that your own lawyer is preparing your sales contract, or at least reviewing it.

As for taxes, it's wise to contact a certified public accountant or an enrolled agent. Again, that would be a good step to take early on, in case there might be any tax advantages in the way the deal is structured. If it turns out you can consider the whole property as your house lot, the home seller's exclusion could mean you'd owe no federal capital gains tax at all.

Edith Lank will personally respond to any questions sent to her at 240 Hemingway Drive, Rochester, N.Y. 14620 (please include a stamped return envelope), or readers may e-mail her at [email protected]. Please visit her Web site at www.askedith.com.