Inflation provides a "good news-bad news" scenario for retirees who own houses.

The good news is that inflation has boosted the market value of many homes, and retirees may have gained substantial nest eggs with the increased equity. But there is little to be gained from the high equity value in a house if the owner can't have the money out.

Selling to extract cash from the equity is one way. But the retiree ends up with a bundle of cash and no place to live. I have argued that retirees should not sell their homes and rent replacement housing. They either should sell and buy small houses or condos, or move out of the big houses and rent them while living in smaller places.

-- Reverse -- annuity -- mortgages (RAMs might provide another alternative. The Federal Home Loan Bank Board opened the door to federally chartered savings and loan associations to offer RAMs, but few have started programs.

State-chartered savings and loans in California and Ohio have pioneered RAMs: The program offered by the Broadview Savings & Loan of Cleveland, one of the forerunners. Undoubtedly, the shortage of lendable funds and unprecedented high interest rates have been factors in slowing development.

A reverse annuity mortgage permits an owner to borrow against the equity value of the house for living expenses. The owner usually will own the house free and clear, and the equity provides a resource to be used for boosting income during retirement. Interest on the funds borrowed is added to the accumulating "bill" charged against the equity.

When the owner dies or decides to sell, the house is sold and the RAM loan is paid off in full from the proceeds. When interest rates were at lower levels, the annual appreciation of a house offset a large part of the funds borrowed under a RAM.

How long the equity in a house can support a person or couple depends on the value of the equity, with interest rates and the amount withdrawn monthly. Broadview S&L offers plans extending from five to 20 years.

Less cash is available each month over the longer periods. At the end of the RAM period, the Broadview plan offers three options.

The loan could be set up for repayment just as if the house were being purchased. Usually, this option is blocked by a lack of income unless eventual heirs provide interim cash.

If appreciation has increased the equity by a substantial margin, a new RAM may be negotiated and regular payments continue.