REVERSEMORTGAGEHELPER

CFPB Begins Collecting Reverse Mortgage Complaints, Will Take Action

2011-12-14T08:45:00.000-05:00

The Consumer Financial Protection Bureau has begun collecting and fielding mortgage complaints from borrowers, including those with reverse mortgages, the Bureau has announced via its official blog. Officials have said this information will be used to guide rule making in the future when it comes to mortgage products.

So far, the bureau has a similar collection under way for credit card complaints, which it began in July following the bureau’s official launch.

“While we’ve only been able to accept complaints on credit cards right now, we’ll begin taking complaints and inquiries related to home mortgages on or about Dec. 1,” a blog post containing a report from the CFPB’s first three months of collecting credit card data stated. The complaint portal is now open.

Visitors to the bureau’s website can click a tab allowing them to file a mortgage complaint by filling out a form that asks what the issue is, how it’s related to the mortgage process, and what the desired resolution is.

Reverse mortgages are included under types of mortgages, along with VA mortgages, FHA mortgages, and home equity lines of credit.

The blog post on credit card complaints asks for readers’ help as they develop their policies. And while its top priority is to help consumers resolve their problems, the CFPB says it also wants to be transparent about its systems, operations, and information that it’s receiving.

“We propose providing a searchable public database that contains various data fields for each complaint, but excludes any fields with personal information,” it reads, going on to ask for consumer feedback on the policy.

Check out the CFPB’s mortgage complaint form.

Written by Alyssa Gerace

Source

MetLife Sticks With Reverse Mortgages

2011-10-21T08:35:00.002-04:00

October 13th, 2011
by Elizabeth Ecker Published in MetLife, News, Reverse Mortgage

The decision by MetLife to sell its forward mortgage operations came as a surprise to the reverse mortgage world as many wondered following the exits of Bank of America and Wells Fargo from the business, whether MetLife would be the next shoe to drop.

Not, so, say analysts following the decision announced Thursday, that MetLife would put its forward home mortgage loan business up for sale.
The decision came several months after MetLife said it was seeking a buyer for its bank, a move which it pursued due to increased regulation, it said at the time.

Upon the announcement regarding its “forward” mortgage business, the global insurance company said it would continue its reverse operations. While it didn’t specify as to the operational differences between the forward and reverse business channels, its statement expressed commitment to the business of which it now occupies the No. 1 spot. Analysts agree that MetLife is positioned to continue to gain from its reverse mortgage operations while the forward side of the business makes less sense for an insurance company.

“MetLife thinks that reverse mortgages are going to be an important instrument with regard to income distribution,” says Steven Schwartz, an analyst for Raymond James & Associates who follows MetLife. “That is an area that MetLife and many, many life insurers are targeting and see a big opportunity in helping people see that retirement funds they’ve built will last a lifetime.”

The reverse mortgage business and its alignment with MetLife’s broader insurance products is what makes MetLife different from the other reverse mortgage lenders that exited the business this year, with product mix being an essential component.

“The common thread between B of A, Financial Freedom, Wells Fargo, and now the Metlife announcement is that each is choosing to pare back ‘ancillary’ lines of business in favor of focusing on their core opportunities,” says John Lunde, co-founder and president of Reverse Market Insight. “For the first three, that meant banks keeping forward and getting out of reverse. Metlife, as an insurance company, is getting rid of its bank and forward while keeping reverse.”

For now, that means sticking with reverse mortgage products.

“I view that as validation of a viewpoint many of us have made over the years: reverse mortgages are less like forward mortgages than they are like life insurance,” Lunde says. “At least so far, Metlife seems to agree with that sentiment.”

It is an area where MetLift wants to continue doing business, Schwartz says. ”Lifetime income is an area where the life insurance industry is very well suited.”

Source

Does FHA Have Any Reverse Mortgage Surprises in Store for October?

2011-09-23T12:09:00.005-04:00

by John Yedinak Published in News, Reverse Mortgage

As the reverse mortgage industry approaches the Department of Housing and Urban Development’s fiscal year-end, participants are anxiously waiting to see if there are any surprises to kick off the new year starting October 1.

Around the same time last year, HUD announced it was raising the annual insurance premium charged to borrowers and reducing the amount of money they can receive from the Federal Housing Administration’s Home Equity Conversion Mortgage (HECM). All of the changes were expected, except for one surprise—the decision to lower the effective interest rate floor from 5.50% to 5.00%.

Even with the principal limit reductions, many borrowers started to receive more money because of the lower floor and low interest rates.

The change was welcomed by most originators and borrowers, but it shocked investors and put significant pressure on the prices they were willing to pay for Ginnie Mae’s HMBS product. Investors feared there could be a refinance rally as a result of the unexpected change, which sent pricing for the assets into a tailspin.

Over time, pricing improved, but it taught investors—who were still relatively new to the industry—that October often brings changes to the HECM program. This year, the industry isn’t expecting any significant changes, but investors are watching closely.

“It is certainly something I am concerned about,” said Jeff Traister, managing director for Cantor Fitzgerald when asked about the changes from last year. ”They only change I anticipate with any degree of confidence is some announcement surrounding financial assessment. But considering the surprise dropped on the market last year, nothing would shock me.”

The same sentiment was expressed by other investors when Torrey Larsen, CEO of Security One Lending, recently spent a week in New York meeting with different firms involved in the business.

“[Investors] are concerned about whether FHA drops any bombs,” he said during an interview. It’s nothing new, but the anxiety was heightened after the changes in the floor last year. “Every October they’re holding their breath a bit,” Larsen said.

While a spokesperson from HUD said the agency doesn’t have any changes scheduled, no one had any idea the floor was being lowered last year either.

The other topic on some investors’ minds was the upcoming financial assessment, Larsen said.

“We need to get the financial assessment right, with the industry taking the lead,” he said. Investors are very familiar with underwriting from the “forward” business, but they’re trying to understand how it will work with the HECM. The details are still being developed, but they’re looking for some guidance on what it will look like.

“[Investors] know that it’s coming and the reasons behind it,” he said. “They’re just looking for a bit of clarity.”

Even if there are some unexpected changes announced by HUD in the coming weeks, Traister said he is confident everything will work out in the end. Normalcy prevailed, despite the initial craziness of the changes,.

“It just wasn’t exactly a barrel of laughs getting back to normal,” said Traister.

Source

Get Your Wells Fargo Refund!!!

2011-07-27T20:42:00.002-04:00

Consumer Action wants to alert homeowners that the Federal Reserve has finedWells Fargo $85 million for allegedly steering homeowners into subprime loans when they would have qualified for prime loans at lower interest rates.

The Fed also accuses Wells Fargo Financial of falsifying income information on mortgage applications to qualify borrowers for loans that they could not afford.

Homeowners who refinanced their homes and received cash back (also called a "cash-out" mortgage) between January 2006 and June 2008 will be re-evaluated by the bank to see if they were steered into higher priced loans.

Borrowers with "cash-out" refinanced mortgages between January 2004 and June 2008 will receive notice from Wells Fargo if there is evidence that a homeowner's income was falsified without their knowledge.

Estimates are that each eligible borrower will receive between $1,000 and $20,000 in compensation. The Federal Reserve believes that more than 10,000 homeowners may be eligible for settlement funds.

The $85 million penalty is the largest fine the Federal Reserve has issued in a consumer protection case. The bank must change its oversight and employee compensation policies. Wells Fargo closed Wells Fargo Financial in July 2010.

For more information consumers should call Wells Fargo at 877-546-0090.

A Word of Thanks

2011-07-07T12:28:00.000-04:00

“ I find your agency wonderful to have clients do their reverse mortgage counseling with you. Your counselors seem very informative when it comes to the different reverse mortgage programs, and they are always available to help clients who call. Thank you for all your help with our clients who do call you for their reverse mortgage counseling.”

2011-06-28T09:54:00.003-04:00

Reverse mortgages will help millions of people stay in their homes and pay for a variety of retirement expenses in the coming decades.

Big banks want nothing to do with reverse mortgages.

In one of the stranger developments on the personal finance landscape in recent years, both of these statements turn out to be true. But you’d certainly be forgiven for looking at the headlines from the first half of 2011 and wondering whether reverse mortgages have a future.

First, Bank of America got out of the business of offering new reverse mortgages, which allow people 62 and older to access some of their home equity without having to make any mortgage payments as long as they live in the home full time.

Then, this month, Wells Fargo exited, taking subtle but pointed potshots at its regulator, the Department of Housing and Urban Development, as it said its goodbyes.
HUD does, in fact, intend to continue standing behind reverse mortgages, which might not exist were it not for the government insurance that backs most of these “home equity conversion” loans.

“People certainly shouldn’t be worried,” said Vicki Bott, who was HUD’s deputy assistant secretary for single-family housing until Friday, when she left for personal reasons.

This is a good thing. Reverse mortgages got a bad rap over the years, and deservedly so, for high fees and aggressive salesmen who persuaded elderly borrowers to extract equity and then drop the money in inappropriate annuities and other insurance products.

But let’s get real here. In the coming decades, millions of people in their 70s and 80s will run out of money. Social Security will be inadequate, they will have no private pensions and they’ll have spent all of their 401(k) savings, if they had any to begin with.

Making a mortgage payment is one of the best forms of forced savings we have. So for people who don’t want to sell their homes and downsize to free up money for living expenses (or can’t, for practical reasons), a reverse mortgage may be their best hope for continued solvency.

“There is an inevitability about the use of it,” said Jeffrey Lewis, the chief executive of the Generation Mortgage Company, one of the biggest remaining independent players in the reverse mortgage industry. “When you add up the savings of this generation, home equity and liquid assets are about the same.” Even taken together, home equity plus other savings won’t be enough for many people to live on, he added, so at some point plenty of people will have no choice but to tap as much home equity as they can.

The real question is how they will do that— and whether people like Mr. Lewis will be able to make any money helping them.

Here’s the strange thing about reverse mortgages: Lenders barely glance at your credit history, as long as you haven’t defaulted on any federal debt. In fact, they’re not supposed to. They basically have to take all comers as long as they have enough equity.

To review, reverse mortgages begin with a lender that is willing to pay you instead of you paying the bank. How much you get depends on your age, prevailing interest rates and the amount of equity you have in your home. The payout may also depend on whether you choose a lump sum, a line of credit, a regular payment for as long as you live or a regular payment for some fixed number of years. There are origination fees, mortgage insurance and many other things to consider, too. HUD’s reverse mortgage Web site, which is quick to warn about frauds, is a good place to start your research.

The lender gets the money back once you move or die and you or your relatives sell the property (or your heirs move in and write the bank a big check).

So why no credit check or other traditional underwriting? Well, the house and its equity stand behind the loan, and borrowers can’t tap all or even most of the equity in many instances anyway. And since they aren’t making payments, credit history seemed irrelevant to those who wrote the HUD rules a few decades ago.

Here’s the catch, though. The one thing you do have to do as a reverse mortgage borrower is agree to keep up with taxes, insurance and maintenance. If you don’t, foreclosure is a possibility. And in this economic environment, some people are not making their payments.

When Bank of America pulled out of reverse mortgages earlier this year, it mentioned none of this. It simply said it was redirecting its strategic focus.

But the announcement so frightened Torrey Larsen, president of Security One Lending, an independent reverse mortgage company, that he jumped on a plane to meet with a knowledgeable Bank of America executive. “My first fear was, What do they know that I don’t know?” he said.

He came away convinced of two things. First, the business was, as Mr. Larsen put it, “budget dust” to Bank of America. It simply wasn’t going to be large enough to make a financial contribution to a bank that big anytime soon.

But he has also learned something else. “Banks are really concerned about their headline risk and brand risk,” he said. “They don’t want to risk their entire franchise by foreclosing on people, let alone on grandma.”

When Wells Fargo made its announcement this month, it noted how falling home prices complicated the question of how much equity to offer to borrowers in the first place. But it also offered thinly veiled criticism of the fact that HUD was not yet allowing it to do more traditional underwriting. This was odd, given that HUD has made it clear in private conversations with lending executives and in media interviews that it plans to do exactly that very soon.

“I don’t know what HUD is going to do or not going to do,” said Franklin Codel, executive vice president and head of national consumer lending for Wells Fargo. “We didn’t get any clarity from our conversations. We have to make a decision with the information we have at hand.”

Then last week, American Banker, a trade publication, got hold of an e-mail from another senior Wells Fargo executive, Phil Bracken, who discussed concerns that HUD’s rules would effectively force the bank to foreclose on senior citizens. This, he said in the e-mail, created a situation where the reverse mortgage product “creates more reputation risk than value.”

This would all be pretty rich if the underlying prospect of putting seniors out in the street weren’t so sad. “The idea of reputation risk is such a canard in the hands of these institutions that I don’t even know where to start,” said Mr. Lewis of Generation Mortgage. “They took the very interesting strategy of making the government the scapegoat for them deciding to abandon a market that desperately needs them.”

The real question here, however, is who in the market needs the big banks the most — the customers or the giants’ former competitors. Many of the larger remaining players in the reverse mortgage industry have no national brand recognition. They use pitchmen like Henry Winkler, Robert Wagner and Fred Thompson to try to create a degree of comfort among consumer prospects. Having a couple of big banks abandon ship could leave customers questioning the stability of the product and the industry.

Meanwhile, HUD appears to be close to proposing new rules that would allow lenders to do financial assessments of borrowers and reject those who seem as if they may not be able to pay their property taxes and other costs.

There are a number of potential tools lenders could end up using besides rejecting certain applicants outright. They could set aside some of the lump sum in a sort of emergency fund that they could draw on if borrowers weren’t making tax payments.

Or they could force borderline borrowers to take monthly payments instead of a lump sum and divert part of the payments to an escrow account that the banks could then use to pay insurance companies and tax authorities.

Once this happens, fewer people may end up with reverse mortgages in the short term. But over time — as the baby boomers get further into retirement, as ever-higher percentages of retirees enter old age without a pension and as housing values recover — more people will need to draw on their home equity to pay their living expenses.

All of this is not to say that reverse mortgages are the best income-generating product for retirees. Far from it. But it will almost certainly become a necessary last resort for a nation full of increasingly strapped older people.

Credit Card Management Services, Inc.
Debthelper.com
4611 Okeechobee Blvd. #114
West Palm Beach, FL 33417
P: (800) 920-2262 F: (866) 920-2262

Source

$3.3 Billion of FHA Reverse Mortgages Underwater

2011-04-29T09:12:00.000-04:00

As reported by Reverse Mortgage Daily, April 25, 2011: Roughly 93,000 HECM loans, or 17.2% of the Federal Housing Administration’s reverse mortgage loans outstanding, are underwater by $3.3 billion total, according to analysis released today from New York, N.Y.-based New View Advisors.
The estimate is based on recent data from Department of Housing and Urban Development, which includes all HECM loans originated through January 2011.

The $3.3 billion figure compares loan balance to property value, New View explains, but does not account for property disposition cost. More accurately reflecting the situation, New View offers scenarios factoring in 10% and 15% haircut amounts, leading to estimates of 135,000 loans (24.9% outstanding) underwater by $4.9 billion and 166,000 loans (30.6% outstanding) underwater by $6.1 billion, respectively.

“HECM loans originated from 2005 through 2008 comprise substantially all of these underwater loans. In the 10% haircut scenario, they account for 91% of the underwater loans,” New View’s analysis says. “The 2006 and 2007 vintages are the worst offenders: each accounts for about 30% of the problem loans.”

The total underwater proportion of HECM loans at estimates between 17.2% and 30.6% compares with a recent report from CoreLogic, which estimates 23.1% of all forward mortgages are underwater.

The numbers will get worse before they get better, New View predicts. During the time over which the loans will pay off, growing loan balances and borrower advances, especially if combined with slow prepayments and a down housing market, will make the underwater problem worse, the analysis says. The underwater estimates represent how much FHA would lose if the loans paid off immediately, rather than over the next few years.

New View estimates the total value of outstanding HECM loans through January 2011 to be approximately $76 billion, and that about $7.3 billion negative net present value for the program since its inception, with the vast majority of the damage coming from the 2005-2008 HECM loan cohorts.

“If there is good news in all this,” New View says, “it is that the reverse mortgage industry has already undergone the painful process of reform, including reducing loan-to-value ratios (principal limits) and weaning itself off Fannie Mae….FHA’s FY 2012 budget predicts a modest surplus from newly originated HECM loans; this is a plausible estimate reflecting a more conservative HECM program.”

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Last Minute Budget Deal Eliminates Funding for HUD Counseling Program

2011-04-15T09:43:00.000-04:00

Funding for the Department of Housing and Urban Development’s counseling programs has been cut as a result of legislation scheduled to pass Congress this week.

Made as part of a last minute deal to avoid a government shutdown, the FY 2011 Continuing Appropriations Act (H.R. 1473) removes all ($88 million) funding from the agency’s counseling programs. The cuts will have a big impact on seniors interested in reverse mortgages, since HUD guidelines require borrowers go through HECM counseling before moving forward with the loan.

“This unique counseling helps older homeowners understand the costs, benefits, and risks associated with these loans,” said Barbara Stucki, vice president for Home Equity Initiatives at National Council of Aging. “Without this funding, the older Americans who can least afford it may have to pay for this critical advice out-of-pocket.”

As a result of grants made available by HUD to counseling agencies, many seniors were able to obtain this counseling at no cost. However, without the funding, seniors will be required to pay for the counseling out of their own funds.

As one of the eight national HECM counseling intermediaries, NCOA said the loss of the funding will also impact counselors’ ability to help reverse mortgage borrowers who are in default and at risk of foreclosure.

“In these difficult economic times, people have to increasingly tap their home equity to make ends meet,” said Stucki. “This new budget proposal is a major setback and increases the financial vulnerability of all older adults looking to use their home to stay at home.”

There are about 2,800 HUD-approved agencies throughout the country, which provide a range of services to millions of homeowners and prospective homebuyers free of charge. About half of the counseling sessions provided in 2010 were dedicated to helping those facing foreclosure, according to HUD. A spokesperson for the agency confirmed with RMD that all counseling funding has been cut but the agency had no statement at press time.

“The de-funding of counseling is an example of the numerous items that American rely upon that are being cut in this extraordinary budget environment, yet few people really know about at this point,” said Peter Bell, president of the National Reverse Mortgage Lenders Association in an email to RMD.

“While I don’t know if it will have any impact with so many programs being cut, I would urge all reverse mortgage industry participants to call your Representative’s office TODAY and tell them that you are concerned about the adverse impact of cutting counseling funds while we’re trying to overcome a housing crisis.”

Meg Reilly, a spokeswoman for the Office of Management and Budget, told ProPublica, “these were very tough choices to make.”

Reilly pointed out that the agreement had left intact a $65 million fund devoted to counseling for foreclosure avoidance. Advocates said that fund has not come close to meeting the demand of homeowners facing foreclosure. NeighborWorks, which administers the fund, requested $113 million for 2011 but received just over half that amount.

Source

A Reverse Mortgage Counseling Session

2011-03-21T16:39:00.002-04:00

My name is Claudia Fehribach and I’m a HUD-HECM counselor. When I tell people that, most of the time they have no idea what I am talking about. Well, I provide mandatory counseling for people that want to do a reverse mortgage.

A reverse mortgage is a program offered by HUD, where the homeowner, over 62, has the ability to access their house equity without having to move or sell their home.

The basics of this program:

• Pay off existing mortgages on the home.
• Loan proceeds are not taxable.
• Very easy to qualify: no minimum credit scores and no income requirements.
• No monthly mortgage payments for as long as the homeowner lives in the home

I counsel clients from all over the country and I always try my best to deliver the information in a way that can help the homeowners make an informed decision. As I speak with people from all types of backgrounds and levels of income, I realize how important my job really is.

I had a client for example that lived on a very tight budget. At times, she would eat only a bowl of cereal for lunch and dinner in order to be able to pay her bills. Seriously, in America, such a great and rich nation, we still have the most vulnerable suffering and enduring things that they shouldn’t have to. During my counseling, I was able to generate a personalized report that listed all options in terms of benefits that were available to her in the area that she lived.

I spend an hour talking to clients about Reverse Mortgage and at the end it’s really moving to hear how grateful they are for something so simple: information.

Information is knowledge and knowledge is power.

Claudia Fehribach
CPFC, HUD-HECM Exam Qualified Network Counselor
Credit Card Management Services, Inc
4611 Okeechobee Blvd, #114
West Palm Beach, FL 33417
cfehribach@debthelper.com
p: 800-920-2262

Reverse Mortgage Estate Taxing Matters

2011-03-15T08:50:00.004-04:00

http://www.nj.com/business/index.ssf/2011/03/reverse_mortgage_complicates_i.html

Q. My mother and my aunt live in a house that is in my aunt’s name. My mother would inherit the house. My mother, being a sibling, would be a ``Class C’’ relative and subject to 11 percent taxation. If they were both on the title as tenants in entirety, could this tax be avoided? Also there is a reverse mortgage involved, so what would that mean for the title?
—Glenn

A. Reverse mortgages can complicate matters, but first let’s address the inheritance tax.
If your mother and your aunt are sisters, then yes, your mother would be a Class "C" beneficiary for New Jersey inheritance tax purposes, and the tax would only apply if the house is in New Jersey.

"As the law exists today, the first $25,000 that your mother receives as a result of your aunt’s death is not subject to New Jersey inheritance tax, but the next $1.075 million of gifts is subject to inheritance tax at an 11 percent rate,’’ said Ruth Lynch Buchwalter, an estate planning attorney.

Inheritance tax is only assessed on the net value of the home. To the extent that the reverse mortgage needs to be paid, the net value that your mother receives will be reduced for the outstanding loan, Buchwalter said. For example, if the house is worth $300,000 and the reverse mortgage is $150,000, the inheritance tax would be 11 percent of $125,000. (The first $25,000 is not subject to the tax.)

On the reverse mortgage, it’s common that the mortgage could come due if your aunt makes any changes in the ownership of the home. She needs to check with the financial institution to see what conditions may apply, Buchwalter said.

Adding your mom as an owner isn’t as simple as you’re thinking.
Only a husband and wife can own property as tenancy by entirety, whereby it will pass to the survivor on the death of the first. Your aunt and your mom can, though, own property as joint tenants with right of survivorship, meaning upon the death of any one owner, his or her interest passes to the survivors, said Catherine Romania, an estate planning attorney.

But for inheritance tax purposes, Romania said upon the death of the transferor joint tenant (your aunt) within three years of the transfer, the property will be deemed to be owned entirely by your aunt and the transfer would be taxed as such. If the transfer is made more than three years before death, the entire transfer may still be subject to inheritance tax upon a joint tenant’s death.

"Transfer tax on all or a portion of the property may be avoided if it can be shown for example that the surviving joint tenant (your mom) previously owned or bought into the property for an adequate and fair price,’’ Romania said.

You should advise them to speak to an attorney who look at their entire financial situation to help make the smart choice, especially if your mom would stay in the home after your aunt’s death.

—Karin Price Mueller

www.Debthelper.com has qualified reverse mortgage professionals providing effective counseling solutions for your reverse mortgage. Call us today 800-920-2262 or visit us at www.reversemortgagehelper.org for more information.

Bank of America Names New Executive to Lead Reverse Mortgage Business

2010-11-04T07:47:00.002-04:00

November 1st, 2010

Bank of America has named Jesse Allen as the new head of its reverse mortgage business according to a company spokesperson.

Allen previously served as its reverse mortgage national retail sales executive and will succeed Steve Boland as the bank’s executive in the division.

BofA tells RMD that Boland was named to lead a new mortgage services group with its Global Wealth and Investment Management (GWIM) division.

The new group — recently announced jointly by Dean Athanasia, head of GWIM Banking and Merrill Edge, and Craig Buffie, sales fulfillment executive for Bank of America Home Loans – is part of the bank’s strategy to leverage its leadership across business lines to develop compelling product and service offerings. The new team will provide strategic direction and a single integration point for the GWIM standard mortgage business, both conforming and non-conforming said the company.

Bank of America made quite an entrance into the industry when it purchased Seattle Mortgage’s reverse mortgage division in 2007 for $220 million. As part of the deal, the bank acquired a portfolio of over $4 billion reverse mortgages, approximately 400 SMC employees as well as a retail sales force of more than 200 associates in 25 states.

After the acquisition, Bank of America has grown the business into the second largest retail and wholesale reverse mortgage lender in the country according to data from Reverse Market Insight.

Source

HECM CHANGES

2010-09-16T09:31:00.002-04:00

Preparing for Reverse Mortgage Counseling:

HUD. Preparing for Your Counseling Session

The decision to get a reverse mortgage is an important one. The Department of Housing and Urban Development (HUD) and the Federal Housing Administration (FHA) want to ensure you are able to make an informed decision and that you are able to choose a course of action that will meet your needs.For this reason, housing counseling for HUD's Home Equity Conversion Mortgage (HECM) is required.

The purpose of this overview is to provide introductory information on counseling and the HECM program, to help you prepare for your counseling session. After your counseling session, you will have a better understanding of the features of a reverse mortgage; the impact a reverse mortgage will have on your particular circumstances; and whether services or programs other than a reverse mortgage might better meet your needs.

What You Can Expect from Your Reverse Mortgage Counselor

Understanding what to expect from reverse mortgage counselors is an important first step in setting your expectations for your counseling session. Remember, only you can decide if a reverse mortgage is right for your situation. The counselor provides information to assist you in making that decision.

The counselor is responsible for helping you understand reverse mortgages and the appropriateness of a reverse mortgage to meet your particular need as well as alternatives to a reverse mortgage.

Reverse mortgage counselors will discuss your financial and other needs for remaining in your home, the features of a reverse mortgage and how it works, your responsibilities with a reverse mortgage, the impact of a reverse mortgage on you and your heirs, and the availability of other assistance you may need.

The job of the counselor is not to “steer” or direct you towards a specific solution, a specific product, or a specific lender. Counselors will help you understand your options and their impacts. Reverse mortgage counselors are required to follow specific practices, which are designed to ensure you receive quality counseling services and are protected against fraud and abuse. HUD requires that HECM counselors do the following:

Send you required materials ( i.e., this packet) prior to you counseling session,

Follow established protocols when conducting the counseling session, and

Follow up with you after the session has concluded.What You Can Expect from the Reverse Mortgage Counseling Process

Step 1. Schedule an appointment: The counseling process begins when you schedule your appointment for a counseling session. You must schedule an appointment directly with the counseling agency. Your lender cannot initiate or participate in the counseling session. This session is conducted in person or over the telephone; however, HUD advises that, if possible, you meet with your counselor face-to-face to gain greater benefit from your session.

Step 2. Counselor will contact you and send information: Once you have set up an appointment, the agency sends you a packet of information so that you can prepare for your session. Before you begin, you should also know that some agencies charge a fee for counseling; if you cannot afford to pay this fee, you should discuss your inability to pay with the agency at the outset of your session to understand your options.

Step 3. The counselor will collect from you: Your name, contact and other key information, including your interest in obtaining a reverse mortgage, for the counseling session.

Step 4. Counseling session: The counselor will discuss with you your needs and circumstances; provide information about reverse mortgages and other alternative types and sources of assistance that might be available to you. During the session, you will work with the counselor to develop an assessment of your current financial situation using the Financial Interview Tool, which will assist you in determining the best course of action.

You should be prepared to discuss your income, debts and expanses. You will also be offered the opportunity to obtain a Benefits Checkup which may provide information on funds and services in your area for which you may qualify.

Step 5. Certificate of Completion: Once you complete your session and you and your counselor are comfortable that you understand the essentials of a reverse mortgage, the counselor will issue a certificate which verifies for a lender that you have successfully completed counseling.

Step 6. Follow up: Your counselors will follow up with you to learn if you need further assistance and to understand the outcome of your counseling session. You may also call your counselor to seek further assistance after your session.

How a Reverse Mortgage Works

Before you begin your counseling session, it is helpful if you understand a few basics about a reverse mortgage. Reverse mortgages enable homeowners age 62 or older to convert their home’s equity into available cash – a lender advances you money (the loan) based upon the equity in your home.

The amount of money you are eligible to receive generally depends upon the amount of equity in your home and your age at the time you get the loan.With a reverse mortgage, you remain the owner of your home. You must continue to pay property taxes and homeowner’s insurance. You are also responsible for maintaining your home in good condition. You will not have to repay your loan balance for as long as you live in your home.

You can choose to pay off the loan through the sale of the property or prepayment of the loan at any time without penalty. Your estate may retain ownership of the property and must pay off the loan in full or the property can be sold to an unrelated party for the lesser of the unpaid mortgage balance or 95% of appraised value.

Types of Reverse Mortgages

There are three types of reverse mortgages shown in the chart below.
Single purpose reverse mortgage: Typically offered by state and local government agencies to be used in only one specific way, for example, home repairs

Proprietary reverse mortgage: Can be used for any purpose and may be suitable for borrowers with high cost homes

Home Equity Conversion Mortgage (HECM): Can be used for any purpose and is insured by the Federal Housing Administration.Payment Plan OptionsThere are several types of HECM loan plans available, including monthly and annually adjusting interest rate loansas well as fixed interest rate loans.

Borrowers can decide to take a line of credit with flexible draw down options, a term loan with fixed monthly payments for a specified number of years, or a tenure plan with guaranteed payments for life or a combination of these options.

Choosing a Reverse Mortgage to Meet your Needs
HECM payment plans are flexible.

The best payment plan for you will depend on your current and future financial needs and circumstances.

For example:If you have a small balance on your existing mortgage and would like to pay it off with the reverse mortgage, a line of credit plan would allow you to draw all the funds at loan closing and pay off the current mortgage.

If you need a set amount of money every month to supplement your income to help meet monthly expenses, then a tenure or term payment plan might be a suitable option for you.

If you know you will have some large health care expenses in the near future and want to have the funds available when needed, a line of credit may also meet your needs.

Your reverse mortgage counselor will discuss your goals for a reverse mortgage with you and will explain the different options available to help meet your needs.Costs to Obtain a HECMCosts associated with HECMs are the same as those for “forward” mortgages used to purchase a home.

These costs include lender fees to originate the mortgage, servicing fees for ongoing administration of the loan and interest on the money you use from the loan. There are also closing costs, which include all the usual and customary expenses associated with obtaining a mortgage, for example, the appraisal, title searches and insurance. HECMs also include a fee for
FHA mortgage insurance.

Impact on Tax/Social Service BenefitsReverse mortgage loan advances are not taxable and do not affect Social Security or Medicare benefits. However, you must be careful that any loan proceeds you retain do not exceed the monthly liquid resource limits for Supplemental Security Income (SSI) and Medicaid. Alternatives to a Reverse MortgageYour HECM counselor will also help you consider options available to meet your needs other than a reverse mortgage.

These options include: selling your home and moving to a more suitable residence, renting as well as other financial options, and support services and public benefits that may be available to you in your community.

HUD encourages you to learn as much as possible about your options, before you decide on a reverse mortgage. Listed below are resources you can access to learn more about reverse mortgages and elder care.

AARP’s web site at www.aarp.org/money/revmort provides more information on reverse mortgages and calculators that will provide general estimates of the amount of money you might receive from a reverse mortgage.

You may also contact AARP at 1 (800) 424-3410. The National Reverse Mortgage Lenders Association provides consumer information on their website at http://www.reversemortgage.org and can be reached by calling (866) 264-4466.

Your Counseling Team at Debthelper.com hecmeducation@debthelper.com1-800-920-2262 Click Here to Download Counseling Request Form

Keep the elderly in their homes

2010-09-01T08:42:00.000-04:00

Taxes and housing-related costs, combined with rising insurance costs and medical bills, have many retired households across America struggling to keep their heads above water. Without steady income streams, many senior citizens find themselves priced out of the communities in which they have spent their lives. Looking for a revenue stream to help fund their retirement years, some senior homeowners are tapping into their home equity through reverse mortgages.

A reverse mortgage can be an effective tool to achieve this goal without incurring the burden of current loan payments or moving from the home. In many cases, homeowners use reverse mortgages to pay off existing “forward” mortgages, thus eliminating burdensome payments on their current mortgages and freeing up cash for living and health-care expenses. Reverse mortgages are also increasingly being used by seniors to pay off defaulted mortgages and avoid foreclosure, thus preserving their ability to remain in their homes.

Despite the tremendous strides that the industry has made in working with government regulators and consumer advocates to improve consumer protections, lower costs and fees, and curb deceptive marketing tactics, advertising and other abuses, the reverse mortgage continues to be widely misunderstood.

Under a reverse mortgage, a lender makes available a sum of money to a borrower. The borrower can choose to withdraw the funds in a lump sum, a line of credit, fixed monthly payments, or any combination thereof, to be drawn down on terms chosen by the borrower. Over the past year, costs and fees associated with reverse mortgages have dropped considerably.

As with many traditional mortgage loans, the vast majority of reverse mortgages are insured by the federal government, specifically the Federal Housing Administration (FHA), which guarantees that borrowers receive their loan advances. Reverse mortgages are structured as “non-recourse” loans. In essence, this means that borrowers can never be liable for more than their home is worth.

As with any loan, taking out a reverse mortgage requires a modicum of responsible behavior on the part of the borrower. Reverse-mortgage borrowers, like all mortgagors, are required to stay current on their real-estate taxes and maintain a homeowner’s insurance policy. They must also keep their homes from falling into significant disrepair.

Reverse-mortgage borrowers also face one requirement peculiar to these loan vehicles: They must continually occupy the home and cannot let it sit vacant for more than 12 months at a time. Otherwise, reverse-mortgage-loan recipients may stay in their home for the rest of their lives. They are also vested with the customary rights of home ownership: They may pay off or refinance their reverse mortgage at any time, or they may sell the home, keeping any excess returns from that sale.

All prospective borrowers are required to participate in a counseling session with an exam-tested counselor at a federally approved, independent counseling agency before a lender can process a loan application. Counseling is paid for either directly by the client or by Department of Housing and Urban Development grants to the counseling agencies. Lenders are not allowed to cover any costs for counseling, nor can they have any contact with the counselors. In fact, the reverse mortgage is one of the only loan vehicles where pre-closing counseling is mandatory for all borrowers.

Reverse mortgages have proven to be a cost-effective way to help older Americans meet their financial needs in retirement, enabling them to tap the wealth in their home — without having to move out, sell or take a loan with new monthly payments.

The reverse-mortgage industry, along with federal agencies, Congress and consumer groups have done much over the past decade to ensure that these seniors-only loans are sold in straightforward fashion and fully understood by the people who buy them.

Peter Bell is president of the National Reverse Mortgage Lenders Association.

Source

Social Security Funds to Be Exhausted by 2037

2010-08-11T10:49:00.000-04:00

The Washington Times is reporting that social security will pay out more this year than it gets in payroll taxes, marking the first time since the program will be in the red since it was overhauled in 1983, according to the annual authoritative report released Thursday by the program’s actuary.

Meanwhile President Obama’s health care overhaul has given Medicare’s basic Hospital Insurance an extra 12 years of financial stability, though it did not solve all of the program’s long-term challenges.

“The financial status of the HI trust fund is substantially improved by the lower expenditures and additional tax revenues instituted by the Affordable Care Act,” the program’s actuary said in its annual report. “These changes are estimated to postpone the exhaustion of HI trust fund assets from 2017 under the prior law to 2029 under current law and to 2028 under the alternative scenario.”

But the actuary said the programs’ finances are still troubled in the near and long terms, and warned that Congress is making things worse by putting off scheduled doctor fee cuts.

The social security deficit will last through 2011, but then will become revenue positive from 2012-2014, and then permanently exceed tax revenues beginning 2015, one year earlier than estimated in last year’s report.

Other highlights from the 2010 Annual Report to Congress include:

The projected point at which the combined Trust Funds will be exhausted comes in 2037 – the same as the estimate in last year’s report. At that time, there will be sufficient tax revenue coming in to pay about 78 percent of benefits.

The projected point at which tax revenues will fall below program costs comes in 2010. Tax revenues will again exceed program costs in 2012 through 2014 before permanently falling below program costs in 2015 — one year sooner than the estimate in last year’s report.

The projected actuarial deficit over the 75-year long-range period is 1.92 percent of taxable payroll — 0.08 percentage point smaller than in last year’s report.

Over the 75-year period, the Trust Funds would require additional revenue equivalent to $5.4 trillion in present value dollars to pay all scheduled benefits.

Social Security in the red this year

Source

New Counseling Procedures Released For Reverse Mortgages

2010-07-27T10:20:00.000-04:00

The U.S. Department of Housing and Urban Development (HUD), after nearly 2 years of studying and revisions, recently published new procedures governing the process for seniors who are counseled for federally insured Home Equity Conversion Mortgages (HECMs). The new procedures provides more detailed information which must be provided ahead of the counseling session, what must be covered, who must attend and covers topics that the counselor can and cannot discuss with the prospective borrower.

Before meeting with a prospective reverse mortgage borrower, a counselor must first mail, fax or email an information packet that includes: a document titled Preparing for Your Counseling Session (attached to the protocol), copy of loan comparisons, copy of the Total Annual Loan Cost (TALC), loan amortization schedule, and a copy of NCOA’s booklet, Use Your Home to Stay at Home.

During the processing counselors must use the Financial Interview Tool, which was developed by the National Council on Aging, to gather information from the prospective reverse mortgage borrower. The tool examines a senior’s ability to meet obligations to support the reverse mortgage, including but not limited to keeping the taxes and insurance premiums up to date on the home. HUD is also permitting counselors to use NCOA’s online tool, BenefitsCheck, to identify federal, state and local programs and services that may be available to the senior.

As part of the process, counselors must ask 10 questions to ensure that a senior comprehends the reverse mortgage’s key elements and if the senior fails to answer at least five of the questions, the counselor may withhold the counseling certificate or schedule a follow up meeting. Some of the elements of the reverse mortgages that would be stressed as part of the process include:

■Client Needs and Circumstances

■Features of Reverse Mortgages

■Client Responsibilities Under a Reverse Mortgage

■Costs to Obtain a Reverse Mortgage

■Financial/Tax Implications of a Reverse Mortgage

■Financial or Social Service Alternatives to Reverse Mortgages

■Warnings About Potential Reverse Mortgage/Insurance Fraud Schemes and Elder Abuse

The guidelines released provide additional detail on some elements of the reverse mortgage counseling process which were previously implied but never formalized in written form according to industry sources.

Source

One Reverse Mortgage to Move to Detroit

2010-07-24T09:24:00.003-04:00

One Reverse Mortgage to Move to Detroit
One Reverse Mortgage LLC, the nation's third largest reverse mortgage lender, today announced it will move its Livonia, Michigan, headquarters to downtown Detroit. The company, and 110 team members, will move to the Compuware Building and share space with its sister companies, Quicken Loans Inc., Fathead and In-House Realty. The move is expected to take place sometime late this summer.

"It is a great time to move to the city, and to be part of a budding group of new-economy, technology-focused companies that are looking to call Detroit home along the new 'WEBward Avenue'," said Jay Farner, CEO of One Reverse Mortgage, which conducts its business primarily over the Internet.

The majority of One Reverse Mortgage's team members will relocate to Detroit, others will remain in the company's San Diego, California, offices. Those making the move include mortgage bankers, as well as operations, technology and marketing team members.

Growing in popularity in recent years, reverse mortgages offer homeowners over the age of 62 the opportunity to convert a portion of the equity in their home to tax-free cash, while also eliminating the need for monthly mortgage payments. The program has been particularly helpful to those who have seen their retirement investments shrink as a result of the economy, are at risk of losing their homes due to an inability to make monthly payments or are looking to defer taking Social Security benefits early in their retirement.

"The focus on reverse mortgages is at an all-time high, and as baby boomers continue to reach retirement age, the market is expected to grow dramatically," Farner added.

"Our move allows us to begin transforming Detroit into a high-tech hub of business and ingenuity," said Dan Gilbert, Founder and Chairman of Quicken Loans Inc. "We expect additional businesses within our family of companies, as well as other technology companies, to join us in the WEBward Avenue corridor in the near future."

Companies that have previously announced their move to downtown's new economy, technology corridor, WEBward Avenue, (transforming Woodward Avenue into WEBward Avenue) later this summer include:

-- Quicken Loans Inc.
-- Fathead
-- In-House Realty
-- One Reverse Mortgage

To learn more about One Reverse Mortgage, please visit http://www.onereversemortgage.com.
About One Reverse Mortgage LLC

One Reverse Mortgage LLC is the nation's third largest retail provider of reverse mortgage products allowing homeowners age 62 and older to convert some of their home equity into tax-free cash without having to sell their home. One Reverse Mortgage was founded in 2001, operates in 43 states across the U.S. and is a Quicken Loans company.
About Quicken Loans Inc.
Quicken Loans Inc. is the nation's largest online retail mortgage lender and the fourth largest overall retail home lender in the United States. The company closed more than $25 billion in retail home loan volume across all 50 states in 2009. Quicken Loans employs more than 3,000 full-time team members and generates loan production from five web centers located in Michigan, Ohio and Arizona.

Quicken Loans also operates a centralized loan processing facility in Michigan as well as its San Diego-based One Reverse Mortgage unit. "QuickenLoans.com" has been named "Best of the Web" by Forbes and Money magazines. Quicken Loans has been named to Fortune magazine's list of the country's "100 Best Companies To Work For" seven consecutive years, ranking as high as #2.

Quicken Loans has also been named in the top 15 of Computer World magazine's "100 Best Places To Work In Technology" for six years in a row. Quicken Loans will be moving its headquarters and 1,700 full-time team members to downtown Detroit in the summer of 2010. For more information about Quicken Loans, please visit www.quickenloans.com.
About Rock Holdings Inc.
Rock Holdings Inc. is the parent company for several financial services related businesses. These client-focused and technologically-driven companies include Quicken Loans, the nation's largest online home lender and its One Reverse Mortgage unit, the fastest growing reverse mortgage lender in America; Title Source, a nationwide leader of title insurance and settlement services;

Quicken Loans Mortgage Services (QLMS), a mortgage origination platform servicing community banks and credit unions across the country; In-House Realty, the preferred real estate partner of Quicken Loans that matches clients with trusted real estate agents in all 50 states. Rock Holdings, Inc. employs more than 3,500 team members and will be headquartered in downtown Detroit beginning in the summer of 2010.
Source: One Reverse Mortgage LLC

Reverse Mortgage Not Just a Home Mortgage

2010-07-08T14:29:00.002-04:00

If you need the counseling required for reverse mortgages (HECM), Call us. We can help! 800-920-2262.
Reverse mortgage is different from a home mortgage loan in that it allows the homeowner to actually receive monthly payments instead of pay monthly payments on a mortgage loan. You don’t have to go through all the trouble of mortgage refinancing and finding the lowest mortgage rates or interest rates like you would to get a regular home mortgage. If you have equity in your home you can use that to get a reverse mortgage.

Reverse mortgages are becoming very popular in the U.S. The Federal Housing Administration (FHA) actually created one of the first mortgage loans of this type. The FHA’s Home Equity Conversion Mortgage (HECM) program enables homeowners to withdraw some of the equity they have in their home to use for home improvements, medical expenses and more.

The homeowner must be 62 years old or older, own their house outright, or have a mortgage balance that is low enough that it can be paid off at the closing with some of the proceeds of the reverse loan. The homeowner also must live in the home that has the reverse mortgage.

Unlike a second mortgage or home equity loan there is no repayment unless the borrower no longer lives in the home as their principal residence. So if you need some help in retirement to help pay your monthly bills and you do have a lot of equity in your home then a reverse mortgage instead of just another home mortgage may be just what you are looking for.

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The Benefits You Didn't Know...

2010-07-01T14:50:00.003-04:00

Taking out a reverse mortgage may have its pros and cons, but lately it’s hard to argue that the pros don’t hold more weight. Recent challenges that have been faced by perspective clients have simply been taking the time to compare the best companies and rates!

It used to be that the reverse mortgage process was known for its fees and confusion, but there have been positive noticeable changes. Now, many companies are willing to waive the upfront fees or at least lower them. Be careful with these offers, however, because sometimes the companies that waive the upfront fees may raise the interest rates they charge.

Another favorable part of reverse mortgage is that it is low risk. Due to the fact that the Federal Housing Authority, or FHA, insures these mortgages, it makes the risk of loss much lower, and therefore offering some peace of mind. An additional benefit to having the mortgage be backed by the government comes when the loan is due. In a reverse mortgage the amount owed on the loan will never exceed the worth of the home.

A reverse mortgage does come with some requirements, but not all these requirements should be associated with negative connotations. The first requirement is that the homeowner(s) applying for the reverse mortgage must be 62 years of age or older. The next requirement is that the homeowner(s) must be living in the home they are applying for for at least six months and one day out of the year.

An additional requirement when the reverse mortgage process in underway is that a counseling session must be set up. This counseling session allows the homeowner(s) to speak with a certified housing counselor about the reverse mortgage and alternatives that might be better suited for them. An important fact that the homeowner(s) should be aware of is that the counselor should not be associated with any bank or mortgage company; this makes them a neutral party and helps when it comes to having your best interest.

For questions on reverse mortgage feel free to call the counselors from debthelper.com, toll free, at 1-800-920-2262. There are certified housing counselors ready to answer your questions, helping make this process a little easier.

For more information on reverse mortgage, check out: http://reversemortgagedaily.com/

and http://online.wsj.com/article/SB127760222909210967.html?

Source: http://online.wsj.com/article/SB127760222909210967.html?

Reverse Mortgages and Life Insurance

2010-06-07T10:13:00.000-04:00

One reason some people hesitate to get a reverse mortgage is because they don’t want to cut into the amount of inheritance they want to leave to their kids. Once a homeowner dies, reverse mortgage heirs may be left with the task of selling a home to pay off the debt, or letting the mortgage lender sell the home.

Will There Be a Profit?

Depending upon how much equity is in the home, reverse mortgage heirs may end up pocketing a profit on the sale of a home with a reverse mortgage. In other cases, there may be nothing left over after the reverse loan is paid off.

Who Wants Your Home?

A big question you have to consider is whether or not your kids want to keep the home after you pass away. Take the time to discuss your reverse home mortgage with your kids and how it might affect your estate. If you believe that your heirs really want to keep the house, there are a couple of steps you may want to take.

Buy Life Insurance

A common concern people have about getting a reverse mortgage is whether or not their heirs may have enough money to pay off a reverse loan if they want to keep the home. Purchasing a life insurance policy that covers the cost of a reverse loan is one way to ensure that your kids can keep the property. The life insurance policy should name your heirs as beneficiaries and should be a long-term policy.

There are many pieces to the reverse mortgage puzzle. Spend some time looking at websites about these loans and familiarizing yourself with reverse mortgage guidelines. Then consult with a housing counselor who has passed a HECM exam approved by the Department of Housing and Urban Development (HUD).

Source

Home

2010-05-14T11:14:00.000-04:00

Call in a pro to help cut your energy bills
For a rigorous evaluation of your home's energy use and specific recommendations for improving its efficiency, call an energy auditor. You can cut your energy use by as much as half and reap federal tax credits and state rebates for qualified home improvements.
Ingredients:
• Internet access.
• 12 months of utility bills or a summary of your usage.
Instructions:
• To find an auditor, visit EnergyStar.gov's Home Performance with Energy Star section, or visit the Residential Energy Services Network's site to find a certified rater.
An audit typically takes three to four hours and costs $250 to $600.
Total time: 15 minutes for gathering the bills, consulting websites and making a call.

Equip you home with new safety devices
Guard against accidents, and keep your family safe.
Ingredients:
• Smoke detector.
• Fire extinguisher.
• Carbon monoxide detector.
Instructions:
• Head to a big-box store, where you'll usually find the three essential pieces of hardware in the same aisle. Expect to pay about $15 for a smoke alarm, $40 for a heavy-duty fire extinguisher and $30 for a carbon-monoxide detector. For $20 more, you can get a CO detector that also detects explosive gases, which is not a bad idea if you heat or cook with natural gas.
• Detectors should be placed near bedrooms (because fires and CO accidents occur most often when residents are asleep) and near an attached garage.
Total time: 13 minutes, not including travel time to a store.
Source

Is it time to refinance your mortgage?

2010-05-13T11:10:00.001-04:00

With the Federal Reserve out of the mortgage market and the economy gaining strength, some economists are warning that mortgage rates, still near historic lows, will soon start rising.
That presents a tough choice for borrowers with adjustable-rate mortgages or home-equity lines of credit: Should they trade their low-rate loans for more-expensive fixed-rate loans? Or should they stick with a cheap rate and gamble that it won't adjust sharply higher?
The answer depends on how long borrowers plan to live in their homes and how much interest rates are going to rise. Those who plan to move in a few years probably don't need to lock in a fixed rate unless they think rates are bound to jump.
Mortgage rates ticked up in the days after the Fed ended its purchases of mortgage-backed securities, at the end of April. But several big banks cut residential mortgage rates as coverage of the Greek debt crisis intensified and investors moved money into Treasuries and other safe havens. The Mortgage Bankers Association recently forecast that rates would rise to 5.8% by the end of the year, a level unseen since November 2008.
Adjustable-rate mortgages, or ARMs, have been hovering around 4% or lower. Many offer fixed rates for an initial three-, five-, or seven-year period before resetting annually. ARMs are tied to short-term interest rates, and rise when the Fed increases the federal-funds rate. The financial markets are betting on the Fed to start raising rates by the end of this year. The question is how high those rates will go. No one knows.
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Four Factors Seniors Should Keep In Mind Before Applying For A Reverse Mortgage

2010-05-07T15:57:00.000-04:00

A reverse mortgage is a loan offered to elderly homeowners who are in need of extra cash. This allows an older homeowner to take out a new loan based off the amount of equity they have acquired in their home. In this article we will explain a few crucial factors senior homeowners should keep in mind before obtaining this new mortgage.

1. Why are you interested in this type of loan and is it truly necessary you obtain one? Are the high costs of this loan worth it? What would you do with the funds if approved for this loan? If you are looking to obtain a reverse mortgage to pay for the vacation of your dreams, this loan is probably not the best idea and will be a very costly way to pay for it.
Many mortgage professionals also advise that investing the funds you receive from this loan may put you in a worse predicament later down the line. If someone is trying to sell you something and suggests that you take out a reverse mortgage to cover the costs, be very wary to do so. Remember that this is not free money.

Reverse mortgage use the amount of equity one has obtained to secure this loan, much like that of a home equity line of credit. Most people spend many years of their life building equity in their property so it is important to use these funds when the time is right. If you have an unexpected serious emergency that comes up or you need the funds to pay off other debts then a reverse mortgage may be they key.

2. Can you afford to take on a reverse mortgage? Generally, these mortgage are quite expensive and the amount owed only grows as time goes on. The younger a person is when they take on this loan, the more they will owe as time goes on and interest starts compiling up. This is especially true for homeowners who decide to sell their home just after a few years of obtaining this loan. Its said that the older the borrower is, the better terms and better chance they will have to repay the debt.

3. Do you really want to use up your equity now? Once you secure a reverse mortgage you will typically use up a significant amount of the equity you have obtained. This means that if later down the line an emergency arrives you cannot turn to your equity to pay for the event. Emergencies come up all the time, especially with elderly homeowners. These may include such factors as medical bills, health care, other debts, and everyday living expenses. If you do not need the extra funds now it would be wise to wait until you absolutely need this assistance.

4. Are there any less costly options other than a reverse mortgage? Are there any other financial resources you may have to secure extra funds besides taking out a new loan? For those of you that do not have any other way to secure funds and have the means to make monthly payments on a new loan you may want to consider a home equity loan or home equity line of credit (HELOC). These alternatives are typically much cheaper than that of a reverse mortgage.

Always do intense research to ensure you are getting the best deal available for your situation. Even though there may be some disadvantages to this loan there are also some great benefits as well. This loan is generally very easy to obtain because there is no income or credit requirements involved. Reverse mortgage can benefit older folks who are in desperate need of extra funds, but always make sure you have the means to afford this new debt.

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5 Questions To Ask Before Considering a Reverse Mortgage

2010-04-27T10:11:00.000-04:00

1.Do you really need a reverse mortgage? Why are you interested in these loans? What would you do with the money you would get from one? Are the needs you intend to meet really worth the high total cost of these loans? If you want to take a dream vacation, a reverse mortgage is a very expensive way to pay for it. Investing the money from these loans is an especially bad idea, because the loan is highly likely to cost more than you could safely earn. If anyone is trying to sell you something and recommending you use a reverse mortgage to pay for it, that’s generally a good sign that you don’t need it and shouldn’t be buying it.

2. Can you afford a reverse mortgage? These loans are very expensive, and the amount you owe grows larger every month. The younger you are when you take out a reverse mortgage the more the compound interest will grow, and the more you will owe. On the other hand, due to high up-front costs, these loans can be especially costly if you sell and move just a few years after taking one out.

3.Can you afford to start using up your home equity now? The more you use now, the less you will have later when you may need it more, for example, to pay for future emergencies, health care needs, or everyday living expenses. This is especially so if your needs suddenly grow or your income does not keep pace with inflation. You may also need your equity to pay for future home repairs or a move to assisted living. If you are not facing a financial emergency now, then consider postponing a reverse mortgage. Homeowners who decide to wait have “a reasonable expectation of securing a better product at a lower cost in the not-too-distant future,” according to a report by the Fidelity Research Institute.

4. Do you have less costly options? Do you have other financial resources that you could use instead of taking out a loan? If you don’t, and if you could easily make the monthly repayments on a home equity loan or home equity line-of-credit, these alternatives are much less costly than a reverse mortgage. Many state and local governments offer very low-cost loans for paying your property taxes or making home repairs. Have you seriously looked into the costs and benefits of selling your home and moving to a less expensive one?

5. Do you fully understand how these loans work? Reverse mortgages are quite different from any other loans, and the risks to borrowers are unique. Before considering one, you need to do your homework carefully and thoroughly.

Source

FHA Raises Net Worth Requirements, Eliminates Correspondent Approval

2010-04-06T11:21:00.000-04:00

The Federal Housing Administration (FHA) announced it will issue a final rule in the next few days to reduce and manage counterparty risks to its insurance funds as it continues to play a critical role in today’s housing market. The new regulations will increase net worth requirements of FHA-approved lenders (including reverse mortgage lenders), strengthen lender approval criteria, and make lenders liable for the oversight of mortgage brokers.
“These changes support quality mortgage lenders while excluding organizations that are ill-equipped to handle the risk associated with market variations,” said FHA Commissioner David H. Stevens. “That is particularly important now when a robust, competitive mortgage finance market is a crucial element in rebuilding the American economy. Lenders bear the overall risk of FHA-endorsed loans, therefore it makes sense for them to approve their counterparties and have sufficient capital to operate.”
The final rule permits FHA to more effectively focus its resources on lenders that pose the greatest potential threat to its insurance funds and to ensure that lenders possess the resources appropriate for the financial services they deliver. FHA solicited public comments and on this new regulation and considered those comments in the development of the final rule said the agency.
According to FHA, the final rule will raise net worth requirements of FHA approved lenders from $250,000 to a minimum of $ 1 million. FHA said it will provide current lenders one year following the enactment to increase net worth. Effective three years after the enactment of the provision:
• Approved lenders and applicants to FHA single-family programs must have a net worth of $1 million plus 1% of total loan volume in excess of $25 million. 
• Approved lenders and applicants to FHA multifamily programs must have a minimum net worth of $1 million. 
• Multifamily lenders that also engage in mortgage servicing must have an additional 1% of total volume in excess of $25 million.
• Multifamily lenders that do not perform mortgage servicing must have an additional 0.5% of total loan volume in excess of $25 million.
In addition, FHA is eliminating the approval of reverse mortgage correspondents as of January 1, 2011.
According to FHA, “these changes align FHA with Fannie Mae and Freddie Mac and have potential to increase the number of mortgage brokers eligible to originate FHA-insured loans while providing for more effective oversight of brokers by FHA-approved lenders. “
Mortgage brokers or other third-party originators, already approved by FHA, will be authorized to continue to originate FHA-insured loans through the end of the calendar year without sponsorship of an FHA-approved lender.
Source

One Way To Avoid Becoming Delinquent on Mortgage

2010-04-05T16:17:00.000-04:00

About 14% of U.S. homeowners were delinquent on mortgages at the end of the fourth quarter of 2009, according to a report by the Office of the Comptroller of the Currency and the Office of Thrift Supervision. There was a 21.1% rise in mortgage loans that were 90 or more days behind on mortgage payments. Also prime borrowers increasingly fell behind, with almost 17% of them seriously delinquent.
So what steps can you take to avoid delinquency or turn things around if you are already behind on mortgage payments? You could investigate the government’s mortgage loan modification program or consider getting a reverse mortgage loan.

Reverse Mortgage FAQ

If you are delinquent on a mortgage you can’t afford to waste time doing nothing. Check out a variety of options, but if you think a reverse mortgage might help consider the following reverse mortgage FAQ:

• Can I apply for a reverse loan if I am still paying on my mortgage? Yes, you can. But the amount of money you might be able to borrow depends upon how much equity you have in your home, as well as your age.

• When do I have to pay back a reverse home mortgage? You won’t have to repay a reverse mortgage until you move or die. If you are concerned about how your estate may be impacted by a reverse loan, talk with an estate planner and a reverse mortgage counselor.

• Can I get a reverse mortgage even though I don’t have the best credit? Yes, you can. Reverse mortgage lenders do not require credit checks. However, if you are having trouble managing your finances, consider getting help from a credit counselor even if you choose not to get a reverse mortgage.

Source

Now is the Time to Finance With a Reverse Mortgage!

2010-03-31T13:04:00.000-04:00

A reverse mortgage is a great financial solution for homeowners who are seeking ways to keep their home, pay all their expenses and still maintain their financial independence. Now is the best time for homeowners to take advantage of this type of financing. Soon, certain changes will take place within the reverse mortgage program that will likely affect future applicants.

Current Administration Requests HECM Subsidy

Home equity conversion mortgages (HECMs), which are the most common type of reverse mortgage, have been successful in helping homeowners find a way out of financial predicaments. The program offers several advantages, but to continue offering these home loans and their benefits, the program needs money. The office of Management and Budget requested a $250 million subsidy for the HECM program in the 2011 budget. If this subsidy is not approved, major changes will go into effect that will likely reduce the effectiveness of the home equity conversion mortgage.

The principal limit factors (or PLFs), which determine the amount of money a homeowner can receive from his or her loan based on age and interest rates, were already reduced at the beginning of this year. David H. Stevens, assistant secretary of Housing for the Federal Housing Administration, said that in order for the program to successfully continue in 2011, whether the subsidy is received or not, the annual mortgage premium will have to increase from 0.5% to 1.25% and the principal limit factors will have to be reduced at least another 1-5%, depending on the homeowner’s age.

What Does This Mean for HECMs?

If the $250 million subsidy is not granted, even more changes will have to take place. Without the necessary money, the principal limit factors would have to be reduced another 21% in 2011, which is unpleasant news for those in the process of obtaining reverse mortgages. Reducing the principal limit means seniors will receive significantly less money from their loan, specifically about 30% less, which equals about $23,000 to $27,000. Stevens fears that, if this change occurs, fewer homeowners will be able to take out these loans because there will not be enough to finance their homes.

Act Now to Reap the Benefits of this Loan

This type of financing is different than other home loans. Unlike most loans, homeowners do not have to pay a monthly mortgage payment. As long as the loan requirements are met, the homeowner will not owe anything on the loan until he or she no longer resides in the home. If there is sufficient equity in the home, the equity can be converted into cash that the homeowner can use for any expense. The amount the homeowner can receive depends on his or her age, home value and interest rates, and the homeowner can choose how his or her money is disbursed.

Stevens discussed how crucial the HECM program is because of the various financial setbacks seniors encounter today, including high medical bills and declines in income and savings. If all of these changes take place, it will eliminate this loan as a financial solution for many homeowners. Homeowners who want to enjoy the current benefits offered by this type of financing should speak with a loan specialist to learn more about their options.

Victoria Belle-Miller is the newest member of the Senior Reverse Mortgage writing staff. Her background in journalistic writing and ability to evaluate the issues that Americans face in daily life make her a strong addition to the team and a valuable source of sound mortgage advice.

Source

Top 10 Things to Know

2010-03-22T10:41:00.000-04:00

Reverse mortgages are becoming popular in America. HUD's Federal Housing Administration (FHA) created one of the first. The Home Equity Conversion Mortgage (HECM) is FHA's reverse mortgage program which enables you to withdraw some of the equity in your home. The HECM is a safe plan that can give older Americans greater financial security. Many seniors use it to supplement social security, meet unexpected medical expenses, make home improvements and more.
1. What is a reverse mortgage?
A reverse mortgage is a special type of home loan that lets you convert a portion of the equity in your home into cash. The equity that built up over years of home mortgage payments can be paid to you. But unlike a traditional home equity loan or second mortgage, no repayment is required until the borrower(s) no longer use the home as their principal residence. FHA's HECM provides these benefits. You can also use a HECM to purchase a primary residence if you are able to use cash on hand to pay the difference between the HECM proceeds and the sales price plus closing costs for the property you are purchasing.
2. Can I qualify for FHA's HECM reverse mortgage?
To be eligible for a FHA HECM, the FHA requires that you be a homeowner 62 years of age or older, own your home outright, or have a low mortgage balance that can be paid off at closing with proceeds from the reverse loan, and you must live in the home. You are also required to receive consumer information free or at very low cost from a HECM counselor prior to obtaining the loan. You can find a HECM counselor online or by phoning (800) 569-4287.
3. Can I apply if I didn't buy my present house with FHA mortgage insurance?
Yes. It doesn't matter if you didn't buy it with an FHA-insured mortgage. Your new FHA HECM will be FHA-insured.
4. What types of homes are eligible?
To be eligible for the FHA HECM, your home must be a single family home or a 1-4 unit home with one unit occupied by the borrower. HUD-approved condominiums and manufactured homes that meet FHA requirements are also eligible.
5. What's the difference between a reverse mortgage and a bank home equity loan?
With a traditional second mortgage, or a home equity line of credit, you must have sufficient income versus debt ratio to qualify for the loan, and you are required to make monthly mortgage payments. The reverse mortgage is different in that it pays you, and is available regardless of your current income. The amount you can borrow depends on your age, the current interest rate, and the appraised value of your home or FHA's mortgage limits for your area, whichever is less. Generally, the more valuable your home is, the older you are, the lower the interest, the more you can borrow.
You don't make payments, because the loan is not due as long as the house is your principal residence. Like all homeowners, you still are required to pay your real estate taxes, insurance and other conventional payments like utilities. With an FHA HECM you cannot be foreclosed or forced to vacate your house because you "missed your mortgage payment."
6. Can the lender take my home away if I outlive the loan?
No. You do not need to repay the loan as long as you or one of the borrowers continues to live in the house and keeps the taxes and insurance current and maintains the property.
7. Will I still have an estate that I can leave to my heirs?
When you sell your home, you or your estate will repay the cash you received from the reverse mortgage plus interest and other fees, to the lender. The remaining equity in your home, if any, belongs to you or to your heirs.
8. How much money can I get from my home?
The amount you can borrow depends on your age, the current interest rate, and the appraised value of your home or FHA's mortgage limits for your area, whichever is less. Generally, the more valuable your home is, the older you are, the lower the interest, the more you can borrow. You can use an online calculator like the one on the AARP website to get an idea of what you may be able to borrow.
9. Should I use an estate planning service to find a reverse mortgage?
FHA does NOT recommend using any service that charges a fee for referring a borrower to an FHA lender. FHA provides this information free, and HECM housing counselors are available for free or at very low cost, to provide information, counseling, and a free referral to a list of FHA-approved lenders. Search online or call (800) 569-4287 toll-free, for the name and location of a HUD-approved housing counseling agency near you.
10. How do I receive my payments?
You have five options:
• Tenure - equal monthly payments as long as at least one borrower lives and continues to occupy the property as a principal residence.
• Term - equal monthly payments for a fixed period of months selected.
• Line of Credit - unscheduled payments or installments, at times and in amounts of your choosing until the line of credit is exhausted.
• Modified Tenure - combination of line of credit with monthly payments for as long as you remain in the home.
• Modified Term - combination of line of credit plus monthly payments for a fixed period of months selected by the borrower.
Source

The Best Way to Take Reverse Mortgage Proceeds

2010-03-17T10:20:00.000-04:00

Home Equity Conversion Mortgages (HECMs), or reverse mortgages, can be structured in several ways--you can take a lump sum, monthly payments, a line of credit, or some combination of the three. Each choice has its implications; learn what to consider when you choose your reverse mortgage payout.

Reverse mortgages can help senior homeowners accomplish many different objectives. You can use them to replenish depleted retirement funds, start new businesses, enhance your lifestyle, provide economic security, avoid foreclosure, or even buy a new home. The way you choose to accept your funds depends on your purpose for the proceeds.

When You Need a Lump Sum

Lump-sum distributions may be appropriate for avoiding foreclosure, shoring up retirement funds, purchasing investment property, buying a new home, paying off existing medical bills or other one-time needs. Here's how it works.

•Staving off foreclosure. If you have a lot of home equity, but insufficient income to pay your current mortgage, you may be able to use some of that equity to ease your burden. A reverse mortgage with a lump-sum disbursement can help you pay off your mortgage and allow you to keep your home.

•Increasing retirement savings. In recent years, your retirement investments may have suffered a severe blow as the Dow plunged from its record high of over 14,000 in January 2007 to less than half that by March 2009. If you had to withdraw money when the markets were down, you may not be able to make up any income losses without substantial new deposits into those accounts. If that's the case, you should consider taking at least some of your reverse mortgage proceeds as a lump sum, so you can use the money as an income subsidy or re-invest it if market conditions are favorable for you to do so.

•Purchasing investment property. Since it's your money, there are no restrictions on how you use the proceeds of your Home Equity Conversion Mortgage (HECM). Since you don't need good credit or a healthy income to qualify for a HECM, it may be much easier to get money for purchasing rental property with a reverse mortgage than with an investment property loan. Just make sure that the property is a good enough investment to make it worth incurring the mortgage lenders' fees and interest charges of an HECM.

•Buying a second home. Want a new home with no mortgage and some cash left over? Then consider the HECM for a home purchase. This is a good method to use if you are interested in "snowbirding," where you have a northern home for summer months and a winter condo in a warm, sunny location (or vise versa). If you have sufficient equity, using an HECM can allow you to pay cash for that second home and have no mortgage payments to worry about. If the equity stake in your existing home is deep enough, you can even draw a pool of additional cash out and stash it in a bank account to cover taxes and any maintenance expenses, annual travel expenses, or other practical uses.

When Regular Monthly Disbursements Are Best

Reverse mortgage lump sum payments can affect your eligibility for certain government programs, including Medicaid. Generally, money you get from your HECM isn't counted as income as long it's spent within the same month it's received. If you don't spend it all, however, it could push your asset totals beyond the allowable limits for Medicaid or SSI eligibility. Ask your reverse mortgage counselor or consult with a lawyer who specializes in elder care if you are concerned about eligibility for state or federal benefits. In addition, monthly disbursements are a better idea if you don't plan to spend all of your proceeds at once, because you only accrue interest on what has been disbursed. Your monthly payments can be used to supplement your lifestyle. You can opt to receive them for a set period (term) or for as long as you live in your home (tenure). The shorter the term, the higher the amount.

The Advantages of a Line of Credit

An HECM structured as a line of credit can be used on its own or added to any other payout option -- for example, you could take smaller monthly payments and have the line available in case of emergency. A credit line can also be used to start a new business if you get tired of retirement, to fund college tuition for a relative, or for an annual vacation. The beauty of the line of credit is that you only pay for what you use, and it can even grow over time as your property appreciates.

HECMs Offer Custom Solutions

The way you choose to take your money depends on your needs and financial situation. HUD reverse mortgage counseling, which is required before you take out your HECM, can help you sort them out and choose your best option.

Gina Pogol has been writing about mortgage and finance since 1994. In addition to a decade in mortgage lending, she has worked as a business credit systems consultant for Experian and as an accountant for Deloitte.

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Some retirees use reverse mortgages to pay for affluent lifestyle

2010-03-03T08:52:00.000-05:00

What many people have now — house, lifestyle, neighborhood, friends, church, club — is exactly what they’d like to keep.

Unfortunately many older folks simply don’t know how or where to look to find the funds that would allow them to do so. The immediate need for seniors now is supplementing the income to provide the standard of living they desire.

In the past, the typical reverse mortgage was taken out by a single woman, age 75, who needed funds to fix up her home so she could comfortably age in place. But reverse mortgages are now also being used to support a more well-to-do routine.

For example, former Puget Sound-area residents Frank Williams, 77, and his wife, Carla, own 35 weeks of time shares each year in five different systems. They work points, bonus time and favored status like some people work airline miles. They know how to successfully maneuver through each different organization to gain the maximum overall benefit. They are now actively filling in their timeshare schedule into calendar year 2022.

That’s organization.

The Williamses took out a reverse mortgage on their principal residence in New Mexico not to buy more timeshare weeks, but to make sure they didn’t have to skimp getting to them or cut back on activities once they arrived.

“I know a lot of people are skeptical about reverse mortgages, but it worked for us,” Frank Williams said. “Our friends want to leave everything they have to their kids, and that’s OK. Our kids are doing fine, they own their own homes, and would rather see us enjoy the rest of our lives.”

Consumers can choose how to receive the money from a reverse mortgage. The options include a lump sum, fixed monthly payments (for life), a line of credit or a combination of the above. The most popular option — chosen by more than 60 percent of borrowers — is the line of credit, which allows consumers to draw on the loan proceeds at any time.

The size of the reverse mortgage depends on age at application, the loan type and home value. In general, the older the consumer and the more valuable the home (and the less amount owed), the larger the reverse mortgage.

A reverse mortgage can be viewed similar to a home equity loan but without a monthly payment. Owners do not repay the loan as long as the home remains the principal residence. Income and credit rating are not considered when qualifying for the loan. There is no requirement that owners requalify during the term of the reverse mortgage, but property taxes and home insurance must remain current.

With a home equity loan, borrowers must make regular payments to repay the loan. These payments begin as soon as the loan is originated. To qualify for such a loan, the borrower must earn a monthly income great enough to make those payments. If payments are not made, the lender can foreclose, forcing the sale of the home.

The Williamses took out a home equity loan to do a major remodel on their home. He repaid most of the debt by selling off some lackluster bonds, then paid off the remainder with a reverse mortgage from Golden Gateway Financial. The couple also receives $1,500 a month, tax free, for the next 20 years from funds remaining in the reverse mortgage.

“I had some assets that I didn’t really want to sell because I thought they would rebound and do quite well,” Frank Williams said. “So, I look at the reverse mortgage as a way of buying us some time for those assets to come back. The bonds that I did sell were not yielding anything close to the interest rate we were paying on the home equity loan, so I sold them and paid it down.”

In winter, the Williamses spend up to five consecutive weeks in the same timeshare unit on the Big Island of Hawaii. They then will hop over to Kauai for a couple of weeks and then maybe hit Palm Springs and San Diego before drifting back home to New Mexico. Northern Idaho is a favorite summer spot.

But why would they want to pay $22,000 to $23,000 in annual fees rather than simply plunk that down on a mortgage for a second home?

“I have no delusions about timesharing being a good investment. They’re a lousy investment,” Frank Williams said. “But we enjoy doing what we do, going where we go. We have no regrets and wouldn’t change anything.”

Source

HECM Can Supplement Your Income

2010-02-22T15:34:00.000-05:00

Home Equity Conversion Mortgages (HECMs) are the only reverse loans that are insured by the federal government. Only reverse mortgage lenders approved by the Federal Housing Administration (FHA) can offer HECMs, which are the most popular reverse mortgage program in the U.S. Here are some things to know about reverse loans.

Reverse Mortgage Counseling

To borrow with HECM loans you must obtain counseling from an FHA-approved agency. HECM counselors must:

•Pass a standardized exam administered by HUD;
•Complete training related to HECMs within the previous two years;
•Have access to technology that allows HUD to track the results of counseling to clients;
•Retake the HECM exam every three years.
To find a reverse loan counselor in your area you can contact the Housing Counseling Clearinghouse at (800) 569-4287, or search online. Prepare a list of your concerns and questions about reverse mortgages before your counseling session.

HECM and Home Equity

When you take out a reverse mortgage, you tap into your home equity. Unlike a traditional mortgage that requires you to make monthly payments, a reverse home mortgage pays you. The more valuable your home is, the more you may be able to borrow. The amount you can get also increases as you age.

As long as you live in the home as your principal residence and stay current with insurance and taxes, you can stay without paying back a reverse loan. Remember, proceeds from a reverse mortgage can be used to buy another home to live in as your principal residence.

Compare Reverse Mortgage Lenders

Even though reverse mortgage lenders must meet federal guidelines, it is still important to shop around to compare reverse loan quotes. Make sure you understand all the closing costs, terms, and conditions associated with any reverse mortgage you are considering.

Source

HECM Reverse Mortgage Loans! The 5 Things to Know Before You Go On

2010-02-03T10:18:00.000-05:00

Many American seniors use the reverse mortgage loans to supplement their social securities, to meet unexpected medical expenses, to buy a home for their children, to make home improvements, to travel or just to get some extra money.

1. What Are The Reverse Mortgage Loans

You can think in this way. You have paid for years for your normal mortgage loan and your home is fully paid or at least almost. Today your family relations have changed, children have moved and you live alone or with your spouse.

Usually your income have also dropped and you may have some extra expenses, like medicine costs.

You are maybe living in a house, which is too big for your purposes, but you are unwilling to move, because all your friends and memories are linked with your home. What to do? The reverse mortgage loans offer great help. You can take cash against your home without paying anything back every month.

2. Who Can Qualify?

One of the great ideas of the reverse mortgage loans is, that the qualification has been done easy.

When the loan will be taken against the equity of your home, the only thing you must have is the home, which has equity left and that you are American of age at least 62. Your monthly income, or income in general, has no meaning, nor your other assets.

3. What Home Types Are Eligible?

HECM approves either a single family home or a home of 1-4 unit, which has one unit occupied to the borrower. The manufactured homes and condominiums, if they are HUD approved, are eligible also. You can make sure, that your home fulfils these requirements, before you go on.

4. What Are The Differences Between The Normal Loans And The Reverse Mortgage Loans?

Well, actually before you can get a usual mortgage loan, you must have a certain monthly income compared with the loan sum and you must pay the loan back every month. The reverse mortgage loans work in reverse. The lender pays to the borrower.

The borrower will pay anything back until the loan will be closed down. Then all the costs, interests and the loan capital will be paid back.

If the selling price of your home does not cover the expenses, the compulsory mortgage insurance will be used, so you will never owe more than the price of your home.

The maximum amount, which you can get depends on your age, interest rates and the appraised value of your home or the limits, which FHA has for the area, where you live. We can say, that the older you are, the lower is the interest rate and the more valuable your home is, the more you can borrow.

5. Can The Lender Take My Home, If I Do Not Pay?

As long as you pay your home insurances and taxes plus keep the home in a good condition, the lender can never take your home.

As said above, in the case that you are not able to pay the expenses, the mortgage insurance will take care of them. You will never owe more than the value of your home.

Source

Earthquake Relief for Haiti

2010-01-14T10:06:00.000-05:00

In an effort to help those who have been affected by the earthquake in Haiti, and their continuing tragedies, Credit Card Management Services, Inc. d.b.a Debthelper.com is now a collection center to help those in need.

Your gift will help distribute relief supplies to children and families impacted by the earthquake and aftershocks in Haiti.

Anything you are willing to provide will be greatly appreciated and invaluable to the families you will be helping. The immediate need is dry foods such as rice, beans; can foods, tents and army type cots, blankets and medical supplies.

Where: 4611 Okeechobee Blvd. Suite 114 WPB, FL 33417
Time: Mon – Fri: 9:00am – 8pm; Sat: 12:00pm – 5:00pm
Information: (561) 472-8000

Debthelper.com

Are You Tracking Your Budget, Cash Flow, and Net Worth?

2010-01-08T14:38:00.000-05:00

Net worth, in its simplest sense, is assets less liabilities. In my opinion, it is the single-most important financial measure for us all to track (it gets the edge over cash flow since cash flow could be viewed as a subset and/or feeding into net worth). Net worth tells you whether or not your wealth is increasing and by how much. It's an accurate and (unfortunately in bad times) ruthless measure of how you're doing in growing your wealth.

There are different ways to track your net worth, but which you choose doesn't really matter. As long as you're consistent, you'll be able to determine if what you're doing is helping to grow your wealth or not. As such, tracking your net worth on some sort of regular schedule is a must for anyone serious about decreasing debt and increasing wealth.

How I Track My Net Worth
Personally, I track mine monthly. Each month in Quicken I update the performance of my investments, put in my income and spending, and run a net worth report. I then record it in a spreadsheet and compare it to the other months of the year as well as my status for the same month the prior year. Doing this gives me a quick report card on how I'm managing my money as well as highlights where I might need to make changes. In addition, I record my final net worth at the end of each year (and have done so since the early 90's.) That's how I know that my net worth has grown at a compounded annual rate of roughly 16% since then.

I used to update my net worth weekly, but that was simply too obsessive even for me. In addition, there were too many wild swings (up big one week, down big another) as the market went up and down, big bills were paid, etc. Looking at it only once a month seems to level the swings a bit. As such, this time frame works best for me.

Now I'm not saying that monthly is how often you should review your net worth -- simply that you need to review it regularly. Whether it's monthly, quarterly, semi-annually or whatever, you simply need to check it on a regular basis and make adjustments based on what you find.

Why is Cash Flow Important?
Cash flow is simply income minus expenses. It's the amount you have left over after you earn all you can and then spend all you need/want to spend. The difference is then what you can save and/or invest. This is the amount that fuels the growth of your net worth. It's this difference that buys the homes, investments, and the like that drives net worth higher and higher.

This is why I talk about the two parts of creating a strong cash flow -- maximizing your income and limiting your expenses -- so often. If you can grow the former and keep the latter in check, your cash flow will skyrocket, fueling your net worth to new and glorious heights.

Setting the Budget
The budget is the method most used for tracking/setting/managing cash flow. My belief is that in the early years of managing your own money, a budget is invaluable. It will help you see where your finances are going and how they are spent. It will help you catch things that otherwise might not be noticeable. It will help you make good financial decisions. I highly recommend having a budget for people just starting out handling their money.

After you become a bit more proficient in managing your money, I think you can go to a less detailed and less frequently updated budget. If you've proven that you can manage your money, (and especially control your spending) a budget isn't needed nearly as much to ensure your cash flow remains strong.

For the first decade or so of our marriage we operated on a detailed budget that was frequently revised. We created it at the beginning of the year, tracked it through each month, and updated it at the end of each month based on the previous month's results. It took a good amount of time and effort to this, but as I detailed above, doing this had some great benefits and was well worth the effort.

But as time went on, our budget became less detailed and was updated less frequently. It started by being revised quarterly, then twice a year, then once a year. Now we're at the point where we don't have an "official" budget. Our 15+ years of spending put into Quicken is our budget. Other than unique spending each year (like buying a new couch or taking a big vacation), we pretty much spend what we spent the prior year. We've demonstrated that we can manage our spending so tracking it so closely is not needed to make sure our cash flow keeps pumping out the money.

Those are the two financial measures that I think are most important for all of us to track and manage. If you can create an ever-growing distance between what you make and what you spend and if you can convert that difference into savings, investments, and other assets, your net worth will grow like crazy. It really is that simple.

How about you -- what measures do you track? Do you agree or disagree with how I do it?

Source

Reverse Mortgages & Loan Modifications

2009-12-29T15:59:00.000-05:00

So you need help keeping up with mortgage payments but aren’t sure if you should apply for a reverse mortgage or a loan modification. Here are some things to consider when comparing the two programs.

Reverse Loans for Seniors

Only people who are 62 and up can apply for a reverse mortgage. You can apply without a credit check but do need to get an appraisal on your home. Reverse home loans pay money directly to borrowers based on age, home value, and current mortgage rates. You can use the proceeds from a reverse home mortgage for any purpose and don’t have to repay it until you move or die.

Mortgage Loan Modifications

Only distressed homeowners who meet certain qualifications can apply for a mortgage loan modification. You must be experiencing a financial hardship that is making it tough to make mortgage payments. Your mortgage payment also must be more than 31% of your monthly gross income. Even if you aren’t behind on a mortgage you could be eligible for help if you are at risk of defaulting on it.

Some Americans have received help through the government’s loan modification program and have lowered their monthly payments or gotten out of adjustable rate mortgages (ARMs). But initial loan modifications are temporary, leaving many homeowners waiting to have the changes made permanent. Having a mortgage modified also can hurt your credit score.

Closing on a Reverse Mortgage

Once you close on a reverse mortgage you’re done. There is no more paperwork or final approvals to wait for. You get your money as lump sum or in installments and can use it for whatever you want.

Get the facts on reverse mortgage pros and cons from a housing counselor approved by the Department of Housing and Urban Development (HUD). If you think the government’s loan modification program can help you, contact your loan servicer.

Source

Reverse Mortgage May Stop Foreclosure

2009-12-09T10:28:00.001-05:00

If you are facing repossession, coming up with a once a month home loan payment may appear an insurmountable problem, particularly if you are retired with limited cash coming in. The solution could be right in your house, thru the careful use of a reverse mortgage.
Unlike a regular mortgage, which demands that you pay back a bank for a loan to get a house, a reverse mortgage is a loan to you that's secured by the value of your home. The loan is usually paid back, with interest, from the proceeds when you or your heirs sell the house.

The minimum age to be accepted for a reverse mortgage is 62. But the older you are and the larger the value of your house, the more that you can borrow which might be the key to saving your house from foreclosure. A widow with a girl in college had been wrestling to maintain her home. She agreed to borrow $121,450 in a subprime mortgage, and used some of the cash for new gutters and other repairs. But the advantages of the loan were overweighed by the heavy regular payments, which gobbled up almost all of her revenue.

She slipped behind on her payments, and her home was slated for foreclosure in Apr 2008. That is when the Home Defense Program of the Atlanta Legal Help Society, stepped in. First, they swayed the mortgage servicing company to accept a payoff of $100,192, about $40,000 less than it was owed including late charges and penalties.

Then they organized a reverse mortgage on the home, which was worth $179,500, so she could make the payoff. Reverse mortgages could be a lifeline for older house owners who can't benefit from the foreclosure prevention plan expounded by the Obama administration, which, with similar plans, is focused on whittling home loan payments to about 1/3 of a borrower's gross revenue. Such plans don't help seniors on small fixed incomes who could not pay a once a month bill whether or not the interest rate were slashed.

An advocate has to help the house owner begin the process of getting a reverse mortgage, while at the same time working to stop foreclosure action and most likely convincing the bank to accept a payoff that is less than what's owed. When details of a loan are obviously illegal, violating rapacious lending laws that were in place when the loan was made, one of the first routes is to work out if a suit can be brought against the lending corporation, saving the senior's home that way. Many loans are not technically illegal, but it is apparent that they should not have been made to an older person on a fixed earnings. The second hurdle is preparing the reverse mortgage itself. Historically, these loans are used to give folks with almost no mortgage debt a one-off sum or monthly revenue to pay costs while they live in their home. The older the homeowner and the bigger the home equity, the additional money a reverse mortgage will yield. But when there is a large mortgage, mixed with today's dropping home costs, the house owner might have very little equity. In that position, a reverse mortgage can be tough to get.

Why not a reverse mortgage? Even for people that qualify, reverse mortgage loans are not always the best option. They are awfully costly because the majority of the loan fees are based primarily on the full price of the home, up to a state program limit of $625,500. In typical mortgages, costs are based mostly on a proportion of the amount you can borrow. Accumulated loan charges aren't tax-refundable till the loan is paid back totally generally at some point in the distant future. Since the loan grows bigger over time, it might be tough to leave the home debt-free to a successor. Each householder who receives a federally insured Home Equity Conversion Mortgage, the most well liked kind of reverse mortgage, must first receive support from one of the governing body or non-profit housing support agencies authorized by the U.S. Office of Housing and Urban Development. Many professionals think such analysis should be made more generally available to seniors looking at repossession.

Source

Judge blasts bad bank, erases 525G debt

2009-12-01T09:54:00.000-05:00

By KIERAN CROWLEY, RICH WILNER and DAN MANGAN

A Long Island couple is home free after an outraged judge gave them an amazing Thanksgiving present -- canceling their debt to ruthless bankers trying to toss them out on the street.

Suffolk Judge Jeffrey Spinner wiped out $525,000 in mortgage payments demanded by a California bank, blasting its "harsh, repugnant, shocking and repulsive" acts.

The bombshell decision leaves Diane Yano-Horoski and her husband, Greg Horoski, owing absolutely no money on their ranch house in East Patchogue.

Spinner pulled no punches as he smacked down the bankers at OneWest -- who took an $814.2 million federal bailout but have a record of coldbloodedly foreclosing on any homeowner owing money.

"The bank was so intransigent that he [the judge] decided to punish them," Greg Horoski, 55, said about Spinner's scathing ruling last Thursday against OneWest and its IndyMac mortgage division.

It erased up to $291,000 in principal and $235,000 in interest and penalties.

The Horoskis -- who had been paying only interest on their mortgage -- had no equity in the home.

Horoski, who had begged the bankers to let him restructure the loan, said, "I think the judge felt it was almost a personal vendetta." Dealing with the bank, he said, was "like dealing with organized crime."

OneWest said, "We respectfully disagree with the lower court's unprecedented ruling and we expect that it will be overturned on appeal."

It claimed it "has been extremely active in working with consumers on home loan modifications through the Obama administration's Home Affordable Modification Program and other loan modification initiatives."

The bank is owned by a private equity group that purchased the failed IndyMac bank.

Yano-Horoski, a college professor of English and cognitive reason, and Horoski, who sells collectible dolls online, bought their 3,400-square-foot, one-level house 15 years ago for less than $200,000.

In 2004, court records show, they refinanced, paying off their original mortgage with part of a $292,500 sub-prime loan from Deutsche Bank. They used what was left for health care and for his business.

The loan carried an initial adjustable interest rate of 10.375 percent, which soared to 12.375 percent.

It eventually ended up being either owned or serviced by IndyMac, and the bank sued the couple in July 2005 when they began having trouble making payments because of Horoski's health problems.

After a foreclosure was approved last January, Yano-Haroski successfully asked for a court settlement conference.

Spinner excoriated OneWest for repeatedly refusing to work out a deal, for misleading him about the dollar amounts at stake in the case, and for its treatment of the couple over months of hearings.

OneWest's conduct was "inequitable, unconscionable, vexatious and opprobrious," Spinner wrote.

He canceled the debt because the bank "must be appropriately sanctioned so as to deter it from imposing further mortifying abuse against [the couple]."

The bank is involved in a similar case in California, where it's trying to foreclose on an 89-year-old woman, despite two court orders telling it to stop.

kieran.crowley@nypost.com

Source: NY Post

Using Reverse Mortgage for your Next Purchase

2009-11-20T09:12:00.000-05:00

There are several regulations implemented by the federal government in order to provide financial support to those who wish to acquire their own homes. One of the most prominent is the reverse mortgage which aims to help the senior members of the society. In order to take advantage of the benefits featured by reverse mortgage for your next purchase, you need to know basic and fundamental information about this type of home mortgage.

What is reverse mortgage?

In the previous years, seniors find it hard to avail and use their home equity for the many years they have complied with their mortgage payments. With reverse mortgage, a special home loan type that enables you to convert your home equity into cash, qualified applicants can now benefit from their home equity without the usual payment requirements needed in conventional home equity loans. The benefit for this mortgage as its name implies grant cash payment for eligible borrowers instead of them complying with the monthly payment due.

How does it work?

Reverse mortgage grants borrowers the monetary support they can get out of their home equity. They have different choices for the payment they will receive which are in forms of lump sum or fixed monthly payment. No payment is obligatory as long as the borrower stays in the purchased home and makes it their primary residence. Those who opt to leave the property permanently will have to comply with the financial obligation and fees incurred for the purchase of the said property.

You can actually use your reverse mortgage payment for other financial expenditures you need to pay such as your daily expenses for your basic commodities, education and travel expenses, care insurance, medical and prescription drug bills, finances for home improvements and remodeling projects and any other needs the borrower have.

Who qualifies for reverse mortgage?

Seniors who are 62 years old and even older are eligible for the reverse mortgage incentive. As the borrowers are the ones to receive payment instead of them having monthly obligations, there are definitely no asset or credit requirements as well as income requirements needed for submission during their application. The types of home they can purchase using reverse mortgage also varies depending on the borrower’s preference and lifestyle. You can choose to acquire the conventional single-detached residence, single unit in a multi-unit building or a condominium type of residence, manufactured homes like townhouses and the like. It is imperative that the borrower or home owner stays in the house and make it his primary residence and not for any other purposes like for vacation and rentals.

Countless assistance in terms of finances are offered by the federal government which more and more home owners are entitled to avail. With reverse mortgage loan, seniors who have retired from their employment are given the chance to enjoy the fruits of their labor and still make productive investments with their money. Finding the right resources and understanding the mechanics of reverse mortgage is sure to provide opportunities for them especially in their next purchase in the real estate industry.

Source: Article base

Money Saving Tip: Deals and Steals

2009-11-19T11:17:00.000-05:00

Low on cash? In today's tough times, the phrase "every penny counts" makes more sense now then ever before. So for those who need ideas on how to save money, I've got one word for you: bartering.

For those who don't know what bartering is, it's a system in which goods or services are directly exchanged for other goods or services without a common exchange unit. This means that no money is involved.

Although the use of commercial bartering hasn't been widely used as a medium since the 1800s, its purpose does have its advantages.

Say for example you know someone who's good at fixing cars and also has kids who need looking after. And let's say your car needs some repairs and it just so happens you're good with kids. This would be a perfect scenario in which bartering would work well for both of you: they get childcare, your car runs again. You're not losing any actual money-you're just capitalizing on your own talent.

No matter who you are, you must be good at something, so why not put that ability to good use?

Some people have been known to have something called barter-parties where a group of people do favors for each other without ever exchanging money. Things get done and no one goes broke.

One time, I got a bunch of free homemade cookies at UC Berkeley by standing out in front of a club table and spending some time handing out flyers advertising their upcoming events. Admittedly, it does sound somewhat silly and unorthodox, but I didn't have to pay anything for a bunch of tasty cookies!

So just imagine instead of paying for something, you can just work it off or do someone a favor. Sounds pretty sweet and you never know what kind of benefits you may come across until you try.

Source: theskylineview.com

Neighborworks Gets Grant For Reverse Mortgage Mortgage Education Product

2009-11-17T10:50:00.000-05:00

NeighborWorks America announced that it received $4,860,802 in funding from the U.S. Department of Housing and Urban Development to help support training and certification opportunities for thousands of counselors from HUD-approved nonprofit counseling agencies.

“The grants announced by Secretary Donovan provide tremendous support for the critical housing counseling and training activities being carried out by NeighborWorks America and our affiliated NeighborWorks organizations across the country,” said Jayna Bower, director of the NeighborWorks Center Homeownership Education and Counseling (NCHEC).

NCHEC and the NeighborWorks Training Institute will use $3,240,301 of the grants to provide nationally-recognized training and certification to thousands of counselors and plans to award over 1,300 training scholarships to counselors throughout the year.

The grant also includes funding to support NCHEC in providing reverse mortgage counseling administration services nationwide, including comprehensive training, HECM Certification Exam oversight, online courses and other Web resources.

“We thank HUD and Secretary Donovan for this immense support,” said Bower. “Our ability to equip counselors around the country with the critical knowledge and skills they need to help more families understand the increasingly complicated sustainable homeownership process is greatly enhanced. ”

Earlier this year, NeighborWorks took over administering the Reverse Mortgage Education Project from AARP after it elected to focus its efforts on consumer education.

Source: Reverse Mortgage Daily

Be Skeptical of Unsolicited Mailings about Reverse Mortgages

2009-11-12T11:33:00.000-05:00

So you’ve been thinking about getting a reverse mortgage and open up your mail or email one day to find an offer from a reverse mortgage lender. The offer says you can get a lot of money if you sign the card and send your name, phone number, and age. Likewise, phone solicitations may pressure you to give out personal information on the spot. Should you pursue these offers?

Reverse Mortgage Scams

Unless you specifically requested information from a reverse mortgage lender, you are better off ignoring these offers if you aren’t sure who is sending them to you. Also, never reveal any personal information such as your social security number to companies that you know nothing about because it could be a scam.

Some reverse loan offers may come from companies with names that sound similar to legitimate companies, according to an article at AARP. Other mailings may be set up to confuse you into thinking they come from a government agency. There also are mailings designed to collect your personal information so it can be sold to various vendors of reverse mortgages.

Be skeptical of companies that claim you can get “free government money” or offer deals that sound too good to be true. Even if you want to apply for a reverse home mortgage, don’t rush into anything without first investigating any company you plan to do business with.

Compare Reverse Mortgage Lenders

Shopping for a reverse loan doesn’t have to be stressful. Get free reverse mortgage quotes from our trusted network of lenders. Take time to talk with a reverse mortgage counselor to learn more about how a one of these loans might help your situation. Put together a list of any reverse mortgage questions you have before your counseling session.

Source: Best Reverse Mortgage

House votes to expand homebuyer tax credit

2009-11-06T10:12:00.000-05:00

WASHINGTON – Buying a home is about to get cheaper for a whole new crop of homebuyers — $6,500 cheaper.

First-time homebuyers have been getting tax credits of up to $8,000 since January as part of the economic stimulus package enacted earlier this year. But with the program scheduled to expire at the end of November, the House voted 403-12 Thursday to extend and expand the tax credit to include many buyers who already own homes. The Senate approved the measure Wednesday, and the White House said President Barack Obama would sign it Friday.

Buyers who have owned their current homes at least five years would be eligible for tax credits of up to $6,500. First-time homebuyers — or anyone who hasn't owned a home in the last three years — would still get up to $8,000. To qualify, buyers in both groups have to sign a purchase agreement by April 30, 2010, and close by June 30.

"This is probably the last extension," said Sen. Johnny Isakson, R-Ga., a former real estate executive who championed the credits.

The homebuyers tax credit is one of two tax breaks totaling more than $21 billion that was included in a bill extending unemployment benefits for those without a job for more than a year. The other would let companies now losing money recoup taxes they paid on profits earned in the previous five years.

"We are still in a world of economic hurt, and Congress must continue to act boldly and creatively," said Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee. "With the right mix of tax breaks and investments we will get through this recession and get folks working again."

The real estate industry has been pushing to extend and expand the housing tax credit. About 1.4 million first-time homebuyers have qualified for the credit through August. The National Association of Realtors estimates that 350,000 of them would not have purchased their homes without the credit.

Extending and expanding the tax credit for homebuyers is projected to cost the government about $10.8 billion in lost taxes. While the measure passed the Senate by a 98-0 vote, Sen. Kit Bond, R-Mo., questioned its efficiency in stimulating home sales.

"For the vast majority of cases, the homebuyer tax credit amounted to a free gift since it did not affect their decision to purchase a home," Bond said. "And for the small minority of buyers whose decision was directly caused by the credit, this raises the question of whether we are subsidizing buyers who may not have been able to afford buying a home in the first place."

The credit is available for the purchase of principal homes costing $800,000 or less, meaning vacation homes are ineligible. The credit would be phased out for individuals with annual incomes above $125,000 and for joint filers with incomes above $225,000.

The credit would be extended an additional year, until June 30, 2011, for members of the military serving outside the United States for at least 90 days.

Expanding the tax credit for money-losing companies is projected to cost $10.4 billion.

The business tax break would allow money-losing companies to use current losses to offset taxable profits earned in the previous five years, giving them refunds of taxes paid in those years. Under current law, businesses with annual gross receipts of more than $15 million can claim losses back only two years.

The tax break would help industries suffering losses in 2008 or 2009, including retailers, homebuilders and newspapers. Congress included a scaled-back version of the tax break — for companies with revenues of $15 million or less — in the economic recovery package enacted in February. The new tax break would be available to companies of any size, providing a quick source of cash.

The U.S Chamber of Commerce has been a big backer of the tax break for money-losing companies.

"It frees up capital that they can use to maintain jobs and potentially even hire new people as the economy returns," said Caroline Harris, senior tax counsel for the U.S. Chamber of Commerce.

The tax breaks would be paid for largely by delaying a tax break for multinational companies that pay foreign taxes. It was passed in 2004 and originally was to have taken effect this year, but would now be delayed until 2018.

Source: Yahoo News

Foreclosures Have Met Their Match

2009-11-03T10:36:00.000-05:00

Foreclosure filings were reported on 2.3 million U.S. properties in 2008, an increase of 81 percent from 2007 and up 225 percent from 2006, according to the RealtyTrac U.S. Foreclosure Market ReportÂ released January 15, 2009. The soaring number of forclosures have sent ripples through the housing and banking industry with the affects being felt by millions.

According to RealtyTrac, California, Florida, Arizona posted the highest 2008 foreclosure totals. A total of 523,624 California properties received a foreclosure filing in 2008, the nation's highest state total. Foreclosure activity in the state increased nearly 110 percent from 2007 and nearly 498 percent from 2006. With 385,309 properties receiving a foreclosure filing in 2008, Florida documented the second highest state total. Florida foreclosure activity increased 133 percent from 2007 and nearly 412 percent from 2006. Arizona's 2008 total of 116,911 properties receiving a foreclosure filing was third highest among the states. Foreclosure activity in Arizona increased 203 percent from 2007 and 655 percent from 2006. Other states with Top 10 totals for 2008 were Ohio, Michigan, Illinois, Texas, Georgia, Nevada and New Jersey.

With mounting job losses and a weakening economy, forclosures and mortgage delinquencies are expected to continue to rise. The nation's unemployment rate shot up at the end of the year, reaching 7.2 percent in December its highest level since early 1993, according to a Labor Department report release January 9, 2009. That puts U.S. job losses at 2.6 million for 2008.

However, with all this doom and gloom in the housing market, there is a glimmer of hope for senior homeowners 62 years of age and older. That hope comes in the form of a HUD Home Equity Conversion Mortgage (HECM) or Reverse Mortgage. Those who have obtained a reverse mortgage need not be concerned with the increasing forclosure rates and whether or not they can make their mortgage payments. With a HECM reverse mortgage, there are no monthly payments required.

Borrowers remain in their homes for life and never have to worry about making a mortgage payment again. All they need to do is keep the property in good repair, pay their property taxes and keep their homeowners insurance current and paid.

For seniors who currently do not have a reverse mortgage, now may be the time to explore the option. It does not matter if a senior is currently late on their mortgage. They may still qualify for a reverse mortgage. To qualify all borrowers on title must be 62 years or older, occupy the property as their primary residence and not currently be in a bankruptcy. That's it!

MLS Reverse Mortgage has helped save several seniors who were months away from losing their homes.Â

So, in these tough economic times, there is still hope for seniors looking for mortgage payment relief or cash out to enjoy life's pleasures.

Source: Accescompetences.com

Why Reverse Mortgages Need Mortgage Insurance

2009-10-30T11:06:00.000-04:00

SeniorReverse mortgages have proven to be a great help to many seniors in recent years and it looks like they will continue to help many more in the future. Among other great features that they have, a reverse mortgage enables seniors to have a cash flow even when everything else is experiencing difficulties due to economic stress.

Reverse Mortgage Money Is Guaranteed to Be Available

The HUD reverse mortgage program, called Home Equity Conversion Mortgages (HECM's), offers a guarantee on these loans that most other companies do not offer. Recent days have seen many people with HELOCS find out that no more money is available to them. Their money has been frozen, even though it was supposed to be available when they wanted to withdraw it.

HUD's program, which is made available as an FHA reverse mortgage, has a guarantee on it to ensure that seniors who have a reverse mortgage through them will be able to get their money when they want it. This means that your money is secure even if the company that actually gave you the loan goes out of business.

Mortgage Insurance Fees Are Charged

The money needed to cover this expense is taken out in a upfront 2% charge - the mortgage insurance premium (MIP). It is a reverse mortgage rate that is set by the government and is 2% of the total value of your home. In addition, there will be a monthly charge of 0.5% in order to maintain the cost of your mortgage insurance.

The main reason for these charges is because the government does not subsidize the HECM program. It is the money that comes from each reverse mortage owner that covers the costs. If your home should decrease in value, or if you live longer than expected, it will be money from these charges that will make up the difference.

Mortgage Insurance Prevents You from Paying More than the Home’s Value

Besides insuring that your money will be there, it is this money that will also make sure that the amount owed when it is due is not going to cost you more than the value of your home. This protects you and your relatives - no matter what happens to the value of your home. Be aware, however, that this guarantee is only for government HECM's.

The mortgage insurance premium provides you with the assurance that your money will be there. You never need to be concerned about making a payment on it, either, because the 2% is taken out when you get the reverse mortgage, and the rest is subtracted from the total amount available. This means you never have to make a payment while you are living in your home.

Reverse Mortgages Require No Payment While You are in Your Home

The only concern that you will have while you are in the home is to make sure that the normal bills
on the home are taken care of. You are responsible to pay the utilities and taxes, and you must also maintain it, too. As long as these are taken care of, you can live in it as long as you need it.

Reverse mortgages make a lot of sense for seniors who need to ensure that they have a larger cash flow than what social security can provide. It can help you to stay in your home, too, and help you with monthly payments. To see how much you might be able to receive, a reverse mortgage calculator can give you an estimate.

A thirteen-year veteran of the mortgage industry, Robert Griffin specializes in reverse mortgages and has helped over 3000 Americans find financial security with a reverse mortgage. The owner of Griffin Financial Mortgage LLC, based in Fort Worth, Texas, his memberships include the National Association of Mortgage Brokers (NAMB), the Mortgage Bankers Association (MBA), the National Reverse Mortgage Lenders Association (NMRLA) and the Better Business Bureau (BBB). Robert Griffin is also co-author of “62 Senior Moments.” If you would like more information, please call (866) 683-3690 or visit our website to research a Reverse Mortgage Lender.

Source: Examiner

5 Ways to Ruin Your Credit

2009-10-27T11:22:00.000-04:00

Improving your credit score takes some elbow grease. Ruining it, on the other hand, is a piece of cake.

Just a few false moves, and in no time, your credit reputation starts to suffer. It doesn’t even need to be something extreme, either. Just a late bill payment here or a retail splurge there is all it takes. Woe to the consumers who make a few missteps in a row and find themselves slogging through suboptimal loans (high rates, high fees) the next time they’re shopping for credit.

The surest way to be blacklisted is to break the rules that matter most to the very folks measuring your creditworthiness. Here are the five key gotchas and some ways to stay in the lending world’s good graces.

1. Forget to put the check in the mail. Hey, it happens — you’re on the lido deck during your family getaway, and — doh! — you remember that the credit card payment was due three days ago. No big whoop, right?

Actually, you are right … to a point. Credit card companies actually do have a heart (or at least offer a little leeway), and they’re willing to let a few missteps slide, particularly in how they treat 30- and 60-day late payments that are brought up to date right away.

Still, if you make a habit of it, prepare for some brutal consequences, since one-third of your credit score — the most popular being the FICO score from Fair Isaac — is based on your bill-paying habits. According to Credit.com, a single 90-day-late payment is as damaging as a bankruptcy filing, a tax lien, a collection, a judgment, or a repossession.

The lesson here is simple: Pay your bills on time. Don’t skip any bills — and certainly not your rent or your mortgage payment. Send in just the minimum amount due, if you have to, but send it in. If you know your payment will be late, call your lender and explain, and he or she might give you a free pass, just this once.

2. Spend up to your credit limit. You’ve earned it, right? After all, a bunch of bankers in suits have deemed you worthy of a spending limit of $5,000, $10,000, $20,000, or maybe even $40,000 or more on your credit cards. Financing a Bugatti has never seemed so within reach.

Back to earth, Trump wannabe. Sure, you might have a $15,000 credit limit on your card, but that doesn’t mean that’s how much you can afford to spend. Even a temporary splurge could turn into long-term debt trouble if you’re not careful. Just ask Michael Jackson.

Keep those cards in your pockets and avoid coming anywhere near maxing out your credit cards. The measure of debt to your credit limits counts for a whopping 30% of your overall credit score. Our advice is to keep your debt to below 10% of your limit — and you are paying the bill off every month, right? If you can’t handle that, keep in mind that around 30% is “acceptable” to the banking world, and that red flags start waving when your debt-to-available-credit ratio exceeds 50%.

3. Dismiss your youthful indulgences. You may want to deny your past — that Limited Express charge card you used so often during college was so long ago.

But that’s the point. The longer your borrowing history — particularly if you’ve been a responsible, card-carrying citizen — the better your score. Too many people cancel old credit cards when spring cleaning their wallet, and then are shocked when it affects their credit score.

The length of time you’ve spent in the system determines 15% of your overall score, not to mention the impact of closing lines of available credit that factor into your debt-to-credit ratio mentioned above.

Celebrate and retain your credit history. If you’re going to cancel some credit cards, start with newer accounts, since the old ones help establish your long and illustrious credit record.

4. Sign up for a better card. And then sign up for an even better one. Given the number of credit card solicitations mailed out each year, it seems that everyone is in line to win the plastic popularity contest. Playing the field is tempting, and sometimes you should. If you’re trying to pay off debts, shopping around for the best deal makes sense. Most of the time, though, you should stick with what’s in your wallet.

Lenders like loyalty. Think about it: If you lent someone money, you’d probably get nervous if that person started asking all of his or her other friends for a loaner, too. Lenders check your credit file regularly to see whether you’re dating around. (New credit applications affect 10% of your credit score.) If they see you applying for lots of credit at once, they tighten their purse strings and fire a few warning shots at your credit score.

Also keep in mind that every line of credit you apply for will stay on your record for at least seven years, even if the account is open only for a day or two. So take great care when opening and closing accounts.

5. Grease a few palms to get ahead. Dressing to impress and picking up the happy-hour tab are classic tools to get ahead in some circles. So you may wonder whether there’s a way to buy your way to better credit.

There’s something to be said for variety. Those with perfect credit scores have a demonstrated history with a variety of loans — such as installment loans, like a car loan or mortgage, and revolving debt, such as your workaday credit card. Types of loans affect 10% of your overall score.

The problem with trying to quickly add variety to your borrowing portfolio is that doing so may put you in a worse situation than where you began. Remember, when you apply for loans, you’ll experience a short-term drop in your score. And then there’s the money — paying interest or annual fees or other costs of borrowing just to add some cards to your credit portfolio.

Don’t borrow money just to boost your score, and for heaven’s sake, don’t believe anyone who tells you that you have to carry a balance on your cards to prove your creditworthiness. That’s bunk.

There are just two things that are guaranteed to boost your credit score:

1. Time. (Remember, most bad marks fall off your report after seven years.)

2. The proper use of credit. (Responsible bill-paying habits matter most to those judging you.)

Source: Mint

Refinance Home Loan Rates – Save Money on Your Mortgage

2009-10-20T09:32:00.000-04:00

Refinance home loan rates have reached levels that many home owners are finding to be quite attractive. To save money on your mortgage, refinancing at a lower mortgage interest rates is a great option. The conventional 30 year fixed mortgage rate is well below 5% and has been below the 5% level for over a month now. By locking in at these current levels you could end up saving hundreds of dollars on your mortgage payment.

For much of the summer we saw mortgage interest rates above 5%. The reason that mortgage rates were above this level was because the 10 year treasury rate yield was finishing its up trend that lasted for over half the year. Once the 10 year yield rolled over and started heading lower we saw mortgage interest rates start to work their way back down to below 5%.

If you have been thinking about refinancing now might be as good of a time as any. The 10 year yield has been in a down trend but has recently hit support at the 200 day moving average and has moved higher. If this move turns into a long term trend there is a chance that mortgage rates could see higher levels very soon.

The Federal Reserve Bank has been working very hard to keep the 10 year treasury rate yield lower which would keep interest rates low. The problem we are now facing is that the Fed is going to take their hand out of the pot and they are going to stop buying US Treasuries by the end of October. It is great the the government is allowing the market to set interest rates but they might have made it much worse by pushing down rates artificially.

With this in mind, going through the mortgage refinance process right now would be a good choice. If you continue to wait for mortgage rates to drop you might wait a little bit too long and see mortgage rates closer to 6% than 5%. There are many companies that are still advertising mortgage rates below 5% so do your homework and find out if these lenders will work out for you.

Please check out our unemployment forum where we encourage you to post comments below whether it be a strategy you used to get a job, possible tips or links to those who are unemployed or even a rant about your previous employer and how they laid you off. Anything goes as long as there are no obscenities or direct insults to other posters.

Source: Subprime Blogger

How Much Money Can I Receive from a Reverse Mortgage?

2009-10-19T16:18:00.000-04:00

When comparing reverse mortgage loans, it’s important to look at how much cash you can actually get over the life of the loan. The amount you receive depends on how you take the money.

Lump Sum Payout

You can choose to take the cash from a reverse mortgage as a lump sum payment. The money can be spent however your choose, including for household repairs, medical expenses, or travel. You also could choose to invest some of the proceeds in an interest-bearing account such as a certificate of deposit if you want the balance to grow.

Reverse Mortgage Line of Credit

If you take proceeds from a reverse home loan as a line of credit, there are a couple things to keep in mind. First, if you have a flat credit line, each time you take a cash advance the balance will decrease. Second, if you have a growing credit line and withdraw cash, the remaining balance will increase based upon the interest rate associated with the account. Let’s say you start out with a $100,000 credit line that grows 6% a year. Anytime you withdraw money from the credit line, the remaining balance can continue to earn interest at the 6% rate. So you could end up earning more money over time.

HECM Reverse Mortgages

The Home Equity Conversion Mortgage (HECM) has a credit line that continues to grow as long as there is credit left. Although the maximum loan limit is $417,000 depending upon your age and house value, being able to earn interest on a credit line could increase the overall amount you receive. But not all reverse mortgages offer growing credit lines, so ask your mortgage broker if any loans being offered have this feature before signing up.

Source: Best Reverse Mortgage

Abuses Occurring in Reverse Mortgage Market

2009-10-13T09:23:00.000-04:00

By Stephen J. Baetge
Staff Writer

A new report issued by the National Consumer Law Center (NCLC) finds that abuses and abusers from the subprime mortgage industry have made their appearance in the reverse mortgage market, raising concerns that the equity and savings of millions of seniors may be at risk by the same forces blamed for causing the current recession.

A reverse mortgage is a mortgage in which a homeowner, usually an elderly or retired person, borrows money in the form of annual payments, which are charged against the equity of the home and are used by many seniors to help ease their financial burdens.

A new NCLC report, “Subprime Revisited: How the Rise of the Reverse Mortgage Lending Industry Puts Older Homeowners at Risk,” has found that subprime lenders have entered the reverse mortgage market.

These lenders and their unscrupulous predatory practices are considered a danger to the financial well-being of America’s seniors.

“In the reverse mortgage market, seniors face some of the same aggressive lending practices that were common in the subprime lending boom,” stated the report’s author, Tara Twomey, an NCLC attorney. “Well-funded marketing campaigns and perverse incentives to brokers are targeting seniors’ home equity and using reverse mortgages as their tools.”

The reverse mortgage market is booming at a record pace despite the recession. Annual reverse mortgage volume has topped 110,000 units and $17 billion, with top banks like Wells Fargo and Bank of America and large insurance companies like Genworth and MetLife leading the way.

The increase in the reverse mortgage market combined with the slowdown in other home lending has attracted those interested in making a fast buck with other’s footing the bill.

The NCLC report states, “Many of the same players that fueled the subprime mortgage boom — ultimately with disastrous consequences — have turned their attention to the reverse market.”

Predatory lenders — including some of the nation’s largest banks — now view the reverse mortgage market as a source of profits that have dried up elsewhere.
Among the threats listed by NCLC are mortgage brokers looking for a new source of rich fees and those who once reaped profits from exotic loans who are now focused on wresting more wealth from vulnerable seniors.

Another detrimental practice found to be on the increase in the reverse mortgage market industry is securitization, which allows subprime loan originators to disassociate themselves from the downside risks of abusive lending.

The report drew an immediate response from lawmakers, who called for regulatory improvements to protect seniors against predatory practices in the reverse mortgage industry.

“We’ve seen this movie before, and it didn’t have a pretty ending. Abuses in the subprime lending market almost brought down our economy,” observed U.S. Senator Claire McCaskill, D-Miss. “Now we’re seeing similar abuses with reverse mortgage lending — something needs to be done before more lifesavings are depleted and more tax dollars are drained.”

McCaskill has authored a law to strengthen consumer protections against predatory marketing practices within the reverse mortgage industry and is introducing new legislation to improve regulations over the government’s role in reverse mortgage lending.

NCLC’s report details numerous problems resulting from the growth of an aggressive and dangerous reverse mortgage sales culture that has outstripped the limited resources and uncertain funding for the counseling agencies that current laws rely on to prevent reverse mortgage abuses.

“We urgently need stronger protections for reverse mortgage borrowers, especially a suitability standard that obligates those who arrange and profit from reverse mortgage deals to seek to avoid harming the financial interests of elderly clients,” said Twomey.

The report calls for the extension of reverse mortgage protections to all equity conversion products aimed at seniors, a prohibition on yield spread premiums and prevention of questionable broker incentives in the reverse mortgage market.

It also suggests better data collection by lenders to allow them to more effectively meet their clients’ needs.

“Reverse mortgages are complicated and expensive financial products that must be used wisely and regulated carefully, or profit and volume driven sales efforts can open the door to abuses and fraud,” said NCLC attorney Odette Williamson.

The report also found an increasing danger from the use of reverse mortgages as tools in schemes to steal the home equity of unsuspecting seniors or to fund the purchase of expensive insurance and financial products that pay high commissions to the sellers.

Source: Senior-Spectrum

Reverse Mortgage May Stop Foreclosure

2009-10-12T10:11:00.000-04:00

Sunday, October 11, 2009, 07:25 PM
Posted by Administrator

If you are facing repossession, coming up with a once a month home loan payment may appear an insurmountable problem, particularly if you are retired with limited cash coming in. The solution could be right in your house, thru the careful use of a reverse mortgage.

Unlike a regular mortgage, which demands that you pay back a bank for a loan to get a house, a reverse mortgage is a loan to you that's secured by the value of your home. The loan is usually paid back, with interest, from the proceeds when you or your heirs sell the house.

The minimum age to be accepted for a reverse mortgage is 62. But the older you are and the larger the value of your house, the more that you can borrow which might be the key to saving your house from foreclosure. A widow with a girl in college had been wrestling to maintain her home. She agreed to borrow $121,450 in a subprime mortgage, and used some of the cash for new gutters and other repairs. But the advantages of the loan were overweighed by the heavy regular payments, which gobbled up almost all of her revenue.

She slipped behind on her payments, and her home was slated for foreclosure in Apr 2008. That is when the Home Defense Program of the Atlanta Legal Help Society, stepped in. First, they swayed the mortgage servicing company to accept a payoff of $100,192, about $40,000 less than it was owed including late charges and penalties.

Then they organized a reverse mortgage on the home, which was worth $179,500, so she could make the payoff. Reverse mortgages could be a lifeline for older house owners who can't benefit from the foreclosure prevention plan expounded by the Obama administration, which, with similar plans, is focused on whittling home loan payments to about 1/3 of a borrower's gross revenue. Such plans don't help seniors on small fixed incomes who could not pay a once a month bill whether or not the interest rate were slashed.

An advocate has to help the house owner begin the process of getting a reverse mortgage, while at the same time working to stop foreclosure action and most likely convincing the bank to accept a payoff that is less than what's owed. When details of a loan are obviously illegal, violating rapacious lending laws that were in place when the loan was made, one of the first routes is to work out if a suit can be brought against the lending corporation, saving the senior's home that way. Many loans are not technically illegal, but it is apparent that they should not have been made to an older person on a fixed earnings. The second hurdle is preparing the reverse mortgage itself. Historically, these loans are used to give folks with almost no mortgage debt a one-off sum or monthly revenue to pay costs while they live in their home. The older the homeowner and the bigger the home equity, the additional money a reverse mortgage will yield. But when there is a large mortgage, mixed with today's dropping home costs, the house owner might have very little equity. In that position, a reverse mortgage can be tough to get.

Why not a reverse mortgage? Even for people that qualify, reverse mortgage loans are not always the best option. They are awfully costly because the majority of the loan fees are based primarily on the full price of the home, up to a state program limit of $625,500. In typical mortgages, costs are based mostly on a proportion of the amount you can borrow. Accumulated loan charges aren't tax-refundable till the loan is paid back totally generally at some point in the distant future. Since the loan grows bigger over time, it might be tough to leave the home debt-free to a successor. Each householder who receives a federally insured Home Equity Conversion Mortgage, the most well liked kind of reverse mortgage, must first receive support from one of the governing body or non-profit housing support agencies authorized by the U.S. Office of Housing and Urban Development. Many professionals think such analysis should be made more generally available to seniors looking at repossession.

Get a quote using our reverse mortgage calculator to see if this might be a solution for you.

Source: Reverse Mortgage 4 U

The Theory of Reversitivity: What Einstein Would Say About The HECM Reverse Mortgage

2009-10-07T15:25:00.000-04:00

The Theory of Relativity is a rather pithy statement that among other things, states that two events that appear simultaneously to one observer will not appear to be simultaneous to another observer who is in a state of motion. The focus is in the observing. There are no absolutes.

Einstein’s E=MC2 formula described the above noted relationship. The key is in the observing. However, in reverse mortgage parlance, this formula takes on a different meaning. It means that Evil results when misconceptions and misreporting (by the media, regulators, politicians and senior organizations) are constant and incessant. Although many view media reporting as biased and often one sided, these same people look to the media for viewpoints on unfamiliar topics.

Marty Bell of NRMLA recently wrote a cogent and extremely well reasoned rebuttal to the current (September)issue of Consumer Reports. He debunks the articles’ many misstatements that are presented as indisputable and immutable fact.

Inaccurate reporting is only one of the many challenges this industry faces. There are other challenges as well. I believe that the balance of 2009 will prove to be pivotal for the reverse mortgage industry. It contains the confluence of forces that could result in the denouement of a brilliant concept. Whether the forces of good (the reverse mortgage industry) will triumph apocalyptic ally over the forces of evil (biased media reporting, political demagoguery, poor GSE policy decisions, Congressional indifference toward seniors, poor state legislative initiatives, inappropriate FHA policy decisions) will soon be determined. If an attitudinal change is not in the offing, then I fear that the program could morph into something vastly different.

The number of reverse mortgage originators as grown exponentially, yet there has not been a similar growth in the program. Considering the potential market, the penetration of same has only shown a slight increase. While many older Americans could never imagine the US economy suffering from depression-like symptoms again, the current recession, has been particularly injurious to their pocket-books and wallets. Likewise, the government’s pocketbook, while resembling a bottomless pit, is facing many major challenges as well.

A parallax view of these challenges posits , on the one hand, an overwhelming need for the program while the latter challenge suggests that political hegemony and political expediency will decide the viability of the HECM program.

Recently (9/4/09), a front page article in the Wall Street Journal title Loan Losses Spark Concern Over FHA, discusses the rising losses at FHA. In 2 years, FHA’s market share has increased from 2.7% to 23%. Rising defaults have eaten away at FHA’s cash cushion. In 2007 FHA has had a cash cushion of just over 6%. Last year the percentage was down to 3 percent. The question must be asked. How will the overall FHA picture affect the HECM reverse mortgage program? Then of course , FHA is projecting a loss of close to 800 million dollars for the next fiscal year. The House of Representatives already told FHA to drop dead. The Senate said we’ll help a little. Maintaining a subsidy neutral position means that senior homeowner HECM borrowers will see substantially less money.

Recently there have also been suggestions out of Washington that the GSE’s will need to be revamped. The Housing and Economic Recovery Act (HERA) mandates that Fannie reduce its portfolio. Accordingly, the HECM program has taken it on the chin. Rising margins have definitely hurt. Eliminating the use of the CMT could turn out to be a bad decision if the worldwide banking community loses confidence- particularly over the geo-political situations in eastern Europe.

The various states need to dispense with the histrionics that reverse mortgage bills are designed to save seniors from unscrupulous individuals and companies serving this market. Often the bills make little sense and serve to drive lenders out of the state. What we need are bills that make sense. There is one main thing that states can do. If they do this 99% of their fears will be assuages. Require separate licensing for reverse mortgage originators and companies.

Over the past 20 years HUD has done quite a remarkable job overseeing a nascent and burgeoning industry. An example of this ongoing effort is evidenced by HUD ’s attempt to standardize counseling and to create a counseling roster(24 CFR Part 206). I would urge HUD to require separate licensing for individual originators as well. States, likewise should create separate licenses for those that participate in this industry. Make it so that only those that care about seniors and about serving their needs are able to serve.

Albert Einstein was able to develop his breakthrough formula because his creativity had no sentimental attachment to the prevailing conventional wisdom. Likewise, the reverse mortgage industry needs to look at this program differently. The goal of maintaining appropriate funding levels for those in need is key. Creativity, with the great minds that make up the industry , is not in short supply. I am confident that Washington working hand in hand with this industry can find a better way. E=mc2 represented a whole new way of regarding reality.

Einstein became a United States citizen because he loved what this country stood for. The United States represented the tradition of "moral strength". Accordingly he would urge that the incessant pressure our elders face must be assuaged with a reverse mortgage reality that continues to meet the needs of seniors across the country. A politically expedient solution is no solution at all. Ignoring this pressing need places senior homeowners in a very precarious position. He would never believe that such a great country could treat elder Americans this way.

SOurce: Dennis Haber

Reverse Mortgage Guidelines Issued

2009-10-06T11:10:00.000-04:00

The U.S. Office of the Comptroller of the Currency has issued guidelines warning financial advisors and consumers what to consider before entering into reverse mortgage contracts.

Reverse mortgages, available to anyone who owns a home or substantial equity in a home and is 62 years of age or older, are complex contracts secured by the borrower’s home, according to the guidelines. They are expected to be marketed more heavily as the population ages.

A standard mortgage or home equity line of credit may be more advantageous to the client who wants more retirement income or needs to pay health bills or other large expenses, says the comptroller guidelines. That’s because reverse mortgages have high upfront costs, making the first years of the loan expensive.

“For this reason, it is very important to have a realistic understanding of, not just your life expectancy, but also how long you can afford to pay the expenses related to your home, including utilities, property taxes, insurance, maintenance and repairs, and condominium fees, and how long you are physically able to keep living there,” the guidelines warn.

The average reverse mortgage borrower stays in a home for only six years, but it is most advantageous to remain in a home at least 10 years, according to the guidelines.

Advisors should warn clients that they may be the target of “aggressive sales pitches for expensive and inappropriate products or services” because of the large sum of money they receive from a reverse mortgage.

Most, but not all, reverse mortgages are made under a Federal Housing Administration program and are known as Home Equity Conversion Mortgages. The FHA provides protections for the borrower and the lender. The terms of reverse mortgages vary depending upon costs, payout options and repayment plans. Clients or their heirs want to pay it off and keep the home, says the comptroller, creating a web of options that need to be explored.

Additional information can be found at the U.S.Department of Housing and Urban Development (www.hud.gov/offices/hsg/sfh/hecm/hecmlist.cfm); NeighborWorks America (www.nw.org/network/home.asp); the AARP (www.aarp.org/revmort); the National Association of Reverse Mortgage Lenders (www.reversemortgage.org); and the National Council on Aging (http://www.benefitscheckup.org/).

Source: Financial Advisor

When a rebate isn't a rebate -- it's a ripoff

2009-10-02T10:45:00.000-04:00

They call them "rebate" cards. But they're hardly a rebate. Instead, they are a mechanism to take millions of dollars due to consumers and give them back to the companies.

"Rebate cards are a colossal ripoff because sellers who long ago figured out how to make rebates difficult to obtain have now found a clever way to make them difficult to spend too," said consumer advocate Edgar Dworsky, who runs the web site ConsumerWorld.org. "These are just inherently deceptive the way they are advertised."

They are considered so deceptive that Canada recently issued guidelines to stop companies from using the word rebate when issuing consumers a card instead of a check.

Use of rebate cards is growing rapidly. In 2008, more than $4 billion worth were issued -- up more than 50 percent over 2007, according to CreditCards.com.

Not only are these cards not actual rebates -- although a handful of companies allow consumers to draw cash from them at ATMs -- they come with hurdles that will keep all but the most industrious users from spending the full amount.

"The consumer has to go to the web site of the issuer and put in the password and find out how much money is left. If you go to the retailer without knowing the exact amount on the card they can't take the card," said Barbara Anthony, undersecretary of the Massachusetts Office of Consumer Affairs and Business Regulation.. "We are leaving money on the table that belongs to us because some retailers make it very difficult to find out what's left on the cards. Millions of people across the country have these cards."

Little government action has been taken so far about the cards in the U.S. partly because of how silently the money is drained away from the consumer and back to the company.

Mitch Katz, a spokesman for the FTC said, said his agency is aware of the issue and welcomes any consumer complaints about problems with the cards.

AT&T, which issues the cards in certain offers with its wireless phones, took a hit earlier this year when New York Attorney General Andrew M. Cuomo announced he had reached a $2.63 million agreement with the company over "a misleading and deceptive sales promotion involving rebate offers that were fulfilled with onerous and condition-laden rebate cards."

Massachusetts' Anthony is particularly concerned, because of the growth in the use of these cards at the expense of the time-honored rebate -- the actual return of money by check or deduction at the register. At first glance, these cards might seem like a reasonable alternate way to get back the promised money, but once you get one it's pretty clear it isn't.

Anthony has been hearing increasing complaints from consumers about these cards. Unlike store gift cards, which show you a balance remaining on your receipt, the balances on these cards cannot be seen or determined at the store.

So, if you have $25 left and try to spend $25.01 the card will be rejected. No mechanism is offered to allow the $25 to go through and the consumer pay the penny difference. To add insult to the insult, the cards often carry fees that can be drawn from them without the consumer's knowledge and can expire in as little as 120 days, as AT&T's do.

"It's hard to take a lot of money from people – but it's very easy to take small amounts of money from millions of people," Anthony said.

WalletPop used one of the cards and found just the situation Anthony described. It is nearly impossible to drain the card of its full value. Two other consumer officials told WalletPop that they, too, were stuck with these cards in their wallets. The trick to using them is going to a store, such as Target, that allows so-called split tender transactions. You need to know the value of what's left on the card and apply that first, then pay whatever else is left by another method. Otherwise, the transaction will get rejected.

" When most people think about rebates they don't really think about a debit card," Anthony said. "They're thinking cash. This is something that has been fixed in our minds for generations."

That same sort of thinking led the Canadian government this month to let companies know that they don't consider the cards to be rebates and should not be marketed as such.

"We felt that gift cards couldn't be considered to be a rebate because they were not applicable to the end price of the product for which the rebate is being offered," said Madeleine Dussault, an assistant deputy commissioner in Canada's Competition Bureau -- similar to the U.S. Federal Trade Commission.

The issue over the cards in Canada stemmed mostly from trying to protect consumers from being misled, she said. A rebate, Dussault said, should involve the reduction of the price of a product either at the register or later by check. Companies can issue the cards, she said, they just can't call them a rebate. They are gift cards, she said, and should be called that.

Some companies, such as Cooper Tire, explain in their rebate ads that Canadians will be issued checks, and U.S. customers will get the cards.

WalletPop

Fixed Rates..Will They Help?

2009-09-28T10:52:00.000-04:00

Genworth’s new fixed rate reverse mortgage product, featuring an interest rate of 5.625%, should speed the turn-around of Reverse Mortgages. However, industry analysts still feel that slow processing speed is a difficult element of the reverse process to avoid and perhaps it could be time for the community as a whole to find a new solution.

However, Pete Engleken, President of Genworth Financial Home Equity Acces, is very confident that the new product will be a valuable asset to their stake in the Reverse Market:

“There’s never been a better time to get a Reverse Mortgage: seniors can get more money faster, thanks to our streamlined loan processes – and they now have the security of knowing that their low interest rate will remain constant,”

The new product is available for both wholesale and retail broker clients and is positioned to add to the steady increase in business that Genworth has experienced over the last several months.

Source: Reverse Review

HUD Changes October 1, 2009

2009-09-25T15:19:00.000-04:00

HUD is decreasing the amount they will lend to clients for HECM by 10% for all new applications on or after October 1, 2009.

Deals And Steals (act quick)!

2009-09-25T09:36:00.000-04:00

I got up at 5:00 for this week’s Amazon Friday Sale, so it’d better be good. (I’m lying. I got up at 5:00 for the dog. And she’s cute and all, but she has yet to save me any money. Sooooo….)

And… hey, does anyone else notice that the Friday Sale seems to be missing several categories? And, um, anything good…? Yeesh. I mean, there’s some good deals on Bond movies on Blu-ray in the Gold Box, but other than that, unless you want some tools, meh.

I guess I’m going to have to get my bargain fix elsewhere, today.

The daily deals at 6pm.com feature Two Lips, Vaneli, and DC. Plus there’s still some good weekly deal stuff (hello, Nine West!).

I wouldn’t recommend the (cheap) knife set featured in today’s Target Daily Deals, but I’m kind of loving those Rocket Dog shoes. And that Chinese Laundry tote is adorable.

You’ve got just a few days left to shop the Fall Sale at Banana Republic, and through Saturday you can use coupon code BRSAVE20 to save $20 on your $75+ order. Alternatively, shop Old Navy and use code ONPLUS15 for 15% off and free shipping with your $75+ order.

Sorry for the slim pickings. I totally would’ve made the dog wait if I’d had any idea what a lackluster deal day it was going to be….

Source: Want Not

Best Places To Retire

2009-09-24T10:58:00.000-04:00

Kiplinger’s has published a retiree map that might be helpful for you if you’re nearing retirement. It gives you a visual representation of states with favorable tax (or unfavorable) tax situations for retirees. It will show you:

7 states with no income tax
4 states with no sales tax
5 states with the lowest overall sales tax (including averages for county/city sales taxes)
5 states with the lowest median real-estate taxes
Most pension-friendly states
The states that don’t tax social security benefits
Not a bad map to check out if you’re nearing retirement and looking to make a move.

Source: My Retirment Blog

Top Ten Things to Know if You're Interested in a Reverse Mortgage

2009-09-23T09:53:00.000-04:00

Reverse mortgages are becoming popular in America. HUD's Federal Housing Administration (FHA) created one of the first. The Home Equity Conversion Mortgage (HECM) is FHA's reverse mortgage program which enables you to withdraw some of the equity in your home. The HECM is a safe plan that can give older Americans greater financial security. Many seniors use it to supplement social security, meet unexpected medical expenses, make home improvements and more. You can receive free information about reverse mortgages in general by calling AARP toll free at (800) 209-8085. Since your home is probably your largest single investment, it's smart to know more about reverse mortgages, and decide if one is right for you!

1. What is a reverse mortgage?

A reverse mortgage is a special type of home loan that lets you convert a portion of the equity in your home into cash. The equity that built up over years of home mortgage payments can be paid to you. But unlike a traditional home equity loan or second mortgage, no repayment is required until the borrower(s) no longer use the home as their principal residence. FHA's HECM provides these benefits. You can also use a HECM to purchase a primary residence if you are able to use cash on hand to pay the difference between the HECM proceeds and the sales price plus closing costs for the property you are purchasing.

2. Can I qualify for FHA's HECM reverse mortgage?

To be eligible for a FHA HECM, the FHA requires that you be a homeowner 62 years of age or older, own your home outright, or have a low mortgage balance that can be paid off at closing with proceeds from the reverse loan, and you must live in the home. You are further required to receive consumer information from an approved HECM counselor prior to obtaining the loan. You can contact the Housing Counseling Clearinghouse on (800) 569-4287 for the name and telephone number of a HUD-approved counseling agency and a list of FHA-approved lenders within your area.

3. Can I apply if I didn't buy my present house with FHA mortgage insurance?

Yes. It doesn't matter if you didn't buy it with an FHA-insured mortgage. Your new FHA HECM will be FHA-insured.

4. What types of homes are eligible?

To be eligible for the FHA HECM, your home must be a single family home or a 1-4 unit home with one unit occupied by the borrower. HUD-approved condominiums and manufactured homes that meet FHA requirements are also eligible.

5. What's the difference between a reverse mortgage and a bank home equity loan?

With a traditional second mortgage, or a home equity line of credit, you must have sufficient income versus debt ratio to qualify for the loan, and you are required to make monthly mortgage payments. The reverse mortgage is different in that it pays you, and is available regardless of your current income. The amount you can borrow depends on your age, the current interest rate, and the appraised value of your home or FHA's mortgage limits for your area, whichever is less. Generally, the more valuable your home is, the older you are, the lower the interest, the more you can borrow.

You don't make payments, because the loan is not due as long as the house is your principal residence. Like all homeowners, you still are required to pay your real estate taxes, insurance and other conventional payments like utilities. With an FHA HECM you cannot be foreclosed or forced to vacate your house because you "missed your mortgage payment."

6. Can the lender take my home away if I outlive the loan?

No. You do not need to repay the loan as long as you or one of the borrowers continues to live in the house and keeps the taxes and insurance current. You can never owe more than the value of your home at the time you or your heirs sell the home.

7. Will I still have an estate that I can leave to my heirs?

When you sell your home, you or your estate will repay the cash you received from the reverse mortgage plus interest and other fees, to the lender. The remaining equity in your home, if any, belongs to you or to your heirs.

8. How much money can I get from my home?

The amount you can borrow depends on your age, the current interest rate, and the appraised value of your home or FHA's mortgage limits for your area, whichever is less. Generally, the more valuable your home is, the older you are, the lower the interest, the more you can borrow. You can use an online calculator like the one on the AARP website to get an idea of what you may be able to borrow.

9. Should I use an estate planning service to find a reverse mortgage?

FHA does NOT recommend using any service that charges a fee for referring a borrower to an FHA lender. FHA provides this information free, and HUD-approved housing counseling agencies are available for free or at very low cost, to provide information, counseling, and a free referral to a list of FHA-approved lenders. Search online or call (800) 569-4287 toll-free, for the name and location of a HUD-approved housing counseling agency near you.

10. How do I receive my payments?

You have five options:

Tenure - equal monthly payments as long as at least one borrower lives and continues to occupy the property as a principal residence.

Term - equal monthly payments for a fixed period of months selected.

Line of Credit - unscheduled payments or installments, at times and in amounts of your choosing until the line of credit is exhausted.

Modified Tenure - combination of line of credit with monthly payments for as long as you remain in the home.

Modified Term - combination of line of credit plus monthly payments for a fixed period of months selected by the borrower.

Source: HUD

Senate Passes Bill....Here Come The Negotiations

2009-09-22T09:08:00.000-04:00

Late last week the Senate passed its version of the Department of Transportation Appropriations Act of 2010 (H.R. 3288) by a vote of 73-25. Since the bills each have their differences, both versions to go a conference committee where House and Senate members iron out the differences and return a compromised version to both the House and Senate for final approval.

Each of the bills handled HUD’s $798 million subsidy request for the Home Equity Conversion Mortgage (HECM) differently. We went into more detail on the differences last week, but clearly the most important part of the bill is the principal limits.

Both bills adjust the principal limits for the HECM, but the House bill would do more damage compared to the Senate version which includes $288 million to cover part of HUD’s subsidy request.

Many question why the government would lower the principal limits during a time when seniors are facing so many hardships.

While most in the industry agree that adjusting the limits on HECMs is a step that HUD needs to take, many feel now is not the time. The National Reverse Mortgage Lenders Association has suggested that HUD could reduce the upfront mortgage premium on HECMs and increase the annual premium to deal with shortfall.

keep reading on Reverse Mortgage Daily

On Spending Money: How Do You Buy Stuff?

2009-09-21T11:38:00.000-04:00

Is there such a thing as a “frugal spender”? My rambling reflections on frugality, saving and our spending habits.

How Do You “Buy Stuff”?
The story of Sam Walton has always fascinated me. Here was a guy who was worth a huge load of money yet who was reputed to live a simple life. Then there are those folks with these interesting spending and saving profiles:

those who buy things because they’re on sale, hoarding stuff and hoping they’ll have use for them someday, or
those who hardly buy anything but then save up for that big purchase. And when they finally buy something, price isn’t much of a factor.
Then of course, there’s everyone else in between. I do think that spending habits are fascinating to study, as it may reveal something about ourselves at a deeper level, maybe even revealing something about our level of happiness.

Thoughts On Saving and Spending Habits
A long while back, I talked about how I balance my efforts to spend and save money. I’d written a post that covered the science behind money behaviors, discussing how frugality is tied to happiness. The key finding was that spendthrifts (those who can’t stop spending) and tightwads (those who can’t spend at all) weren’t as happy as those who were deemed frugal.

Why so? The experts say it’s because frugal people are considered more “balanced” in the way they view money and while cost conscious, they are free from compulsions that may overwhelm those who have more restrictive or even obsessive relationships with money.

I am familiar with a few people who fall in the extreme ends of what I call “the frugality spectrum” and I’ve seen how negative money behaviors and tendencies have harmed someone’s pocket book and personal relationships with other people. Their inherent attitude towards money has made them miserable — because wanting to fight the urge to constantly spend or save can be frustrating in its own right.

Keep reading here on the Digeratilife

Avoid Overdraft Fees With a “Balance Buffer”

2009-09-18T14:05:00.000-04:00

As a followup to my recent post on the dark side of debit cards, I wanted to highlight a simple strategy for avoiding those nasty $30+ overdraft fees…

Instead of letting your account balance run down near zero, create a “virtual zero” by depositing what might be referred to as a “balance buffer” of (say) an extra $100 or $500 in your account. The trick here is to treat that number as your new zero balance point.

If you think it might help, you can go so far as to ignore this amount in your checkbook register, Quicken, etc. That way, it will look you’re really approaching zero as you get close to your “virtual zero.”

Now… If you slip up and accidentally dip below “virtual zero,” respond as if you’ve truly overdrafted, and immediately bring your balance back into positive territory.

Admittedly, this is a bit like setting your clock ahead by a few minutes to avoid being late. Such tricks don’t work for everyone, but if they work for you, then run with it.

Source: Five Cent Nickel

The Party's Over For Wells Fargo Exec

2009-09-17T09:37:00.000-04:00

So I told you all last Friday about the Wells Fargo [WFC 29.25 -0.16 (-0.54%) ] Exec hanging out and partying down in a fancy foreclosure.

Today - I heard back from Wells and it sounds like there is in fact some justice left in today's housing market:

LOS ANGELES, Sept. 14, 2009 – Wells Fargo & Company said today that its internal investigation into alleged team member misconduct at a bank-owned residential property in Malibu, Calif., has concluded and that the employment of the team member involved in the incident has been terminated for violation of the company’s policies.

Wells Fargo took possession of the property, located on Malibu Colony Drive, last May as part of a private agreement with the prior owner. Under the terms of the agreement with the owner, the property was withheld from the market for an agreed-upon period of time.

In a statement, the company said: “Our investigation concluded a single team member was responsible for violating our company policies. As a result, employment of this individual has been terminated. We deeply regret the activities that have taken place as they do not reflect the conduct we expect of our team members. We continue to place the highest value on honesty, trust and integrity to guide our team members in making business decisions each day.”

Wells Fargo & Company is a diversified financial services company with $1.3 trillion in assets, providing banking, insurance, investments, mortgage and consumer finance through more than 10,000 stores and 12,000 ATMs and the internet (wellsfargo.com) across North America and internationally.

Source: CNBC

The Theory of Reversitivity: What Einstein Would Say About The HECM Reverse Mortgage

2009-09-16T08:48:00.000-04:00

FDIC pushes mortgage help for jobless

2009-09-15T09:54:00.000-04:00

NEW YORK (CNNMoney.com) -- Some unemployed homeowners at risk for foreclosure could get a temporary break on their mortgage payments under a plan being pushed by the FDIC.

The Federal Deposit Insurance Corp. said on Friday it is encouraging certain banks to reduce mortgage payments for the unemployed or underemployed for at least six months.

Overall, relatively few of the unemployed will benefit from this recommendation because the effort would only apply to a handful of institutions. Specifically, it would affect those that bought failed banks and participate in loss-share agreements with the FDIC. In such deals, the agency covers some of the losses incurred on the assets of the failed banks. Some 53 institutions, mainly regional or community banks, have entered into such arrangements since January 2008.

"With more Americans suffering through unemployment or cuts in their paychecks, we believe it is crucial to offer a helping hand to avoid unnecessary and costly foreclosures," said Sheila Bair, FDIC chairman, who has led the efforts to have loan modifications be based on income.

The expanding unemployment rolls have long vexed policymakers focused on stabilizing the housing market. Existing foreclosure-prevention programs, including the president's loan modification plan, generally do not help the jobless because they don't have enough income to sustain even reduced monthly payments.

keep reading here

Source: CNNMoney.com

Changes To CA Reverse Mortgage Law

2009-09-14T09:35:00.000-04:00

The California Assembly passed a bill earlier this week, which is meant to provide an additional level of protection to senior citizens considering reverse mortgages.

Passed by a vote of 49-29, SB 660 requires that a checklist be provided to the consumer prior to the mandatory counseling session and states that any person who recommends a reverse mortgage, with anticipation of financial gain, owes a duty of honesty, good faith, and fair dealing to the consumer.

Senator Lois Wolk, D-Davis, told the Daily Democrat that, "These loans, while appropriate in some instances, can have devastating financial consequences. Because the amount due can fairly quickly exceed the value of the home, borrowers get trapped. They lose their equity and their ability to move into assisted living or other supportive housing, or otherwise provide for long-term care. This measure ensures that seniors have the information they need when making important financial decisions involving their homes."

Continue reading on Reverse Mortgage Daily

August Filings Hold Steady

2009-09-11T09:46:00.000-04:00

It is September 8, and I never did my monthly post about the latest U.S. bankruptcy filing figures. Hopefully, late is better than never. According to data from Automated Access to Court Electronic Records (AACER), there were slightly more than 124,000 bankruptcy filings in August. Spread over the twenty-one business days in August, there were 5,914 filings per day. That represents a negligible 0.6 decline from the July rate of 5,948 filings per day.

The bankruptcy filing rate has moved sideways since March when the filing rate was 6,000 filings per day. Since then, May and July showed increases, while April, June, and now August showed declines. The gains have offset the declines such that we are only 1.4% lower than the bankruptcy filing rate in March. None of this is out of the ordinary. In recent years, the bankruptcy filing rate holds steady over the summer months. The real indication of whether we have reached a new equilibrium in bankruptcy filings rates will come in the winter and then especially again after the start of the new year.

In terms of projections and with only four months left in the year, it looks like the U.S. will not go over 1.5 million bankruptcy filings for the 2009 calendar year. The projections now look like the final number will be somewhere between 1.45 and 1.50 million bankruptcy filings. For the record, 2009 bankruptcy filings will be:

1,426,000 filings if bankruptcy filings continue for the rest of the year at the same daily rate (5,684 per day) as they have averaged for the first eight months of 2009

1,449,000 filings if bankruptcy filings continue at the same daily rate (5,914 per day) as they averaged for August

1,488,000 filings if bankruptcy filings for the remaining four months of 2009 constitute the same proportion of total filings as the last four months of 2008 constituted for total filings that year (about 35.8%)

Source: Credit Slips

4 Tricks to Save Money on Groceries

2009-09-10T09:09:00.000-04:00

Tired of gathering sales flyers to save money with coupons? Tired of going to 4 grocery stores weekly in hopes of reducing your grocery expenses? I have made a major effort to save money on food but I am still a bit lazy. I found a few tricks to cut my grocery bill without making much effort. Being frugal by being lazy; this is what I call working on the 20%! So here are 4 tricks to save money on your total grocery bill:

#1 Buy in bulk and cut your grocery bill

All right, don’t skip my first trick because it is too obvious that buying the 48 pounds of peanut butter at Costco will help you save money on your groceries over the long run, I have something different to offer!

One of my friends was telling me that he was able to save so much money on groceries that I wouldn’t even believe it: he spends about $100 a week to feed 2 adults and 2 children aged 5 and 3. How did he cut his expenses? He buys what is on sale at the grocery store… and multiplies the items by 10; adding them to his basket. You can’t save money on fruit or vegetables with this trick, but you can still save money on a lot of staples such as:

- Cereals

- Cans

- Pasta

- Meat and fish (put it in your freezer)

- Frozen food (meal, vegetables, fruits, etc.)

- Chips & chocolate (not recommended though )

- Household products

All you need is a big freezer in your basement and a place where you can stash the cans By buying 10 items at 40% rebate, you not only save money on your grocery bill immediately but chances are that the items will go on sale again before you run out of supplies. Grocers and other retailers run their specials and rebates on a regular cycle. At one point, half your grocery basket will be on sale every week!

#2 Buy bio food and save money on groceries

I have always thought that bio food from local farmers was quite expensive. In fact, I was 100% sure that I wouldn’t save money on my grocery bill while buying bio. Well I was wrong! There are 2 major reasons why you can save money on local fruit and vegetables fresh from the farm:

#1 You cut out the intermediaries (you don’t have to buy them at the grocery store since they now deliver food to your home or at the local distribution center).

#2 Your food lasts longer! How many times have you bought a basket of peaches and they rot within the first 3 days? It happened to me two weeks in a row this summer. I didn’t save much money by buying at the grocery store! One of my colleagues at work buys all her produce from local farmers and the items usually last 15 to 20 days… amazing!

#3 Save money on groceries by not wasting anything

Throwing your spoiled food in the garbage can is like putting a $20 bill in the shredder every Monday morning. If you are already using trick #2 to save money, you will have more time to eat everything hiding in your kitchen. However, you can use some other easy tricks to avoid wasting your food & cash:

- Make sure you rotate your fresh food (put the new fruit & vegetables in the back and bring the old ones to the front ensuring to eat them first).

- Make a list of what meals will be prepared this week (basic but it will help you save a lot of money!).

- Use “catch-all” recipes to use the maximum number of “older” items at the same time. Salads, soups, rice meals are good examples that will include lots of good stuff, like vegetables.

- Notice what you are throwing away. If it is always the same thing, simply cut your grocery bill by buying less of these items!

So why not eat all your food and use this $20 bill to buy lattes for the week instead??

#4 Cut your grocery bill by cutting out the junk food

Junk food is relatively cheap and we are under the impression that we save money when buying it on sale. In fact, junk food contains little or no nutrition, which is not only bad for your health but will also ensure you eat more. If you eat more, you will spend more on food! As a result, buying healthy food will help you save money and could prevent a heart attack at 52

So I hope you save as much money as I do by using these 4 tricks! However, I must confess that I still have a major flaw: I buy my ice cream in bulk as well… and try to make it last

image source: PetitPlat

Failing to Be Frugal Again; a Grocery Store Story
5 Tricks To Save Money On Christmas Gifts
3 Tips On How To Save Money On Baby Clothes
5 Tricks To Find Money To Invest
How Credit Cards Can Save You Money

Source: The Financial Blogger

Are Baby Boomers Unlucky, Moneywise?

2009-09-09T08:35:00.000-04:00

We boomers had all last week (the anniversary of Woodstock) to remind ourselves how lucky we were to have come of age during the era of sex, drugs and rock n roll. Now that our nostalgia-induced buzz has faded, though, it’s back to reality: recession, swollen college bills, blasted home values and shriveled 401(k)s-and reflections on how unlucky we’ve been, moneywise, ever since Woodstock.

How unlucky? If you were born in the 1950s, as most boomers were, you entered financial adulthood in the 1980s. Which means you started saving just in time to catch the greatest bull market of the 20th century-except you had no money to take part. You reached your peak earning and saving years just as the fin de siècle bull tipped over into two successive world-class bear markets. As Generation X might put it, our timing sucked. And this T. Rowe Price study shows the consequences.

The chart shows how much money a typical saver would have at the end of two 20-year periods, a bearish decade followed by a bullish one, and vice versa. Then it reverses the decades to make this point: It’s far better to have a bear occur early in your career, when less money is at stake. And you want any bull markets to come toward the end of your career.

In other words, we boomers got our timing precisely wrong. The T. Rowe study goes on to show what would have happened to two otherwise identical workers, one of who started investing in 1970 (the boomers’ twin older sibling) and the other in 1980 (the boomer). While the older worker lost money early on, he or she caught the wave of the 1980s and 1990s bull markets and exited at just the right time in 2000. As a result, the hypothetical 1970s saver would have retired with $1.7 million. For the typical boomer, on the other hand, the tally at retirement comes to a mere $400,000. Remember, this is the same person, same lifetime salary, same amount of savings-but they’re separated at retirement by a more than four-fold difference in wealth just because of when they were born.

When I noted this inequity to John Ameriks, the head of Vanguard’s Investment Counseling and Research think tank, he pointed out that trying to gauge a generation’s lifelong “luck” at any moment in the financial cycle starts you down a pretty slippery philosophical slope. Boomers have done poorly in the financial cycle lottery, to be sure, but we’ve had our compensations (even without counting the sex, drugs and rock n roll):

Except for the oldest boomers, some of whom went to VietNam, we’ve never had to fight a war.

We’ll get a better deal from Social Security than our kids will. No doubt, some benefit cuts will be needed to keep the program solvent, but boomers will be grandfathered or phased in. Our kids, meanwhile, will be stuck supporting us.
Whatever happens, you won’t lose as much as software mogul John McAfee.
The bottom line: More than you like to think, financial success is due to forces beyond your control, such as when in your life the financial cycles play out. All you can do is focus on what you can control-save as much as you possibly can, stay out of debt, diversify widely, protect yourself with life and disability insurance, and nurture your human capital. As for the misfortune of having reached your peak earning years just at the beginning of the Great Recession, boomer, there’s only one thing to do. In the words of retirement expert Alicia Munnell: “Suck it up.”

Source: CBS MoneyWatch

Boomed Out

2009-09-08T08:56:00.000-04:00

The Pensacola News Journal. “The recession has dealt a whopping blow to Florida. Unemployment is soaring. The state is second to California in the number of foreclosures. Earlier this month came the most jaw-dropping announcement of all: The state that had made population growth the linchpin of its economy for more than 60 years lost a net 58,000 people in the 12 months ending April 1. ‘It’s the end of an era,’ says Robert Lang, director of the Metropolitan Institute at Virginia Tech. ‘Florida represents an entire postwar vision of the good life, palm trees, low cost and no taxes, just easy living. They could turn it around, but in the short haul, it’s paradise lost.’”

“‘The time is long past when Florida’s economy can be based on waiting at the Welcome Center with a glass of free orange juice and a real estate map,’ says state Sen. Don Gaetz, R-Crestview. ‘We have to do far better than that. We are learning a great deal from the difficulties we’re undergoing.’”

The Herald Tribune. “During the real estate boom, Marc and Erica Ayala began promising careers. When they were still in their 20s, just a few years out of Bayshore High School, she sold homes and condos while he became a construction superintendent. Then the boom went bust and their jobs disappeared. Now Marc works as a cable TV installer, while Erica studies to become a dental assistant.”

“‘This is a big change,’ said Erica, 29. ‘We’re cutting back, downsizing from two cars to one, moving from a house to an apartment.’”

“Their egos were bruised along with their pocketbooks. ‘It was all on the upside and then, all of a sudden, it was like the world just stopped,’ said Marc, 31. ‘I had to put my pride on the side.’”

The Orlando Sentinel. “Sylvia Roig, a 38-year-old single mom, lived in Buenaventura Lakes for nine years. An accountant, she became a mortgage broker six years ago in order to work from home and spend more time with her two young children. When the housing market went bust, she struggled to keep a roof over their head.”

“In April, Roig rented out her BVL home and moved in with her 84-year-old grandmother, who lived alone in her three-bedroom home in Arecibo. She’s been freelancing as an accountant and has started a home-based cake-making business. She wants to return to Central Florida if things here improve. ‘Schools are better [in Central Florida] than here, government agencies are not so chaotic and crime is not such a big worry,’ Roig said. ‘But right now, it’s about keeping our heads above water.’”

The Las Vegas Sun. “Nevada ranks third in the nation in unemployment, with Clark County feeling the bulk of the pain. The jobless rate here is more than 13 percent. Two decades of explosive growth have slammed to a halt and the region is reeling. The consensus among workers is clear: Las Vegas, as they put it, is ‘boomed out.’”

“Steve Ross, head of the Southern Nevada Building and Construction Trades Council, acknowledged the slowing economy has caught workers off guard. ‘Las Vegas is not like other cities. The boom has gone on so long, for so many years, that we’ve gotten very used to that,’ he said. ‘We have been spoiled here.’”

“Construction workers, in particular, see a dim future here. Jennifer Todd, an ironworker steward at CityCenter, is supporting a family of five on her salary. Her husband, James Brunty, was laid off at Fontainebleau in October and hasn’t been able to find work since — here or elsewhere. The couple bought a house last year and are struggling to pay the mortgage.”

“‘People are losing their houses,’ Todd said. ‘They can’t pay their bills. And if they’re lucky enough to have a job, there’s daily worry about layoffs.’”

The East Valley Tribune. “As the nation’s unemployment rate hits a more than quarter-century high of 9.7 percent, a top Arizona labor union leader expressed concern that the recession hasn’t bottomed out quite yet in the state. ‘It’s rough out there and it’s across the board,’ said Rebekah Friend, executive director of Arizona AFL-CIO. ‘We hear of people whose wages are already low and then for them to be forced to take one day a month off or a week off unpaid puts them in a downward spiral.’”

“The future in Luiz Zepeda’s eyes looks pretty grim. The 44-year-old Gilbert resident, a merchandise stocker at Target, used to work 50 to 60 hours, but is now down to 32 hours a week. He’s making about $300 less a month these days. On top of that, his wife, a hairstylist, also is making about that much less.”

“Zepeda was one of those whose adjustable rate mortgage loans more than doubled when the economy dipped, going from $866 to $1,966. He’s trying to modify his home loan right now, to lower the mortgage. He hasn’t made a house payment in two months.”

Zepeda was one of those whose adjustable rate mortgage loans more than doubled when the economy dipped, going from $866 to $1,966. He said he’d invested the money he saved because of the lower initial payments. But to take that out right now would mean being forced to pay about $2,000 in fees, which is just not worth it. He’s considering taking on another part-time job.”

“‘We’ve used up our savings,’ he said. ‘I’m hoping the loan modification works, but if it doesn’t, you gotta do what you gotta do.’”

The Ventura County Star. “On Labor Day 2009, what Californians need most is a lot more labor. In its annual report on the state of working Californians, released today, the nonpartisan California Budget Project reports the job losses suffered during what is being called the ‘Great Recession’ wiped out all the gains of the previous recovery and that the total number of jobs in the state is now roughly what it was nine years ago when there were 3.3 million fewer working-age adults.”

“California has been hit more severely by the recession than most states — its unemployment rate is now the fourth-highest in the nation — and the reason, the report says, is the state is paying the price for a housing market that was hyper-inflated before the real estate bust. Job losses since the beginning of the recession have been most severe in the housing sector. Employment in the construction industry is down nearly 30 percent, and jobs in financial services associated with mortgages, escrows and other housing-related transactions are off 11 percent.”

“‘During the last recovery, housing and housing-related industries contributed about 60 percent of the job growth,’ said Executive Director Jean Ross. ‘Housing during the early years of this decade just drove the California economy. It is hard to overstate the importance of housing over the last decade.’”

The Desert Sun. “Sandi Lott has tried to retire — several times. After 30 years as a real estate agent, Lott said she retired as she approached age 60 but soon went into the network-marketing business before trying to retire again. Now, the 74-year-old Palm Springs resident works part-time as the Mizell Senior Center’s volunteer coordinator and front desk manager.”

“‘While I’m a published writer, staying home and writing, I was going to the malls and spending money that wasn’t coming in,’ she said. ‘I wasn’t staying busy enough.’”

From Fox 40. “A report found that two of five working-age Californians do not have a job, underscoring the challenges in one of the toughest job markets in decades. The last time employment levels among this group were this low was February 1977, according to a study by the California Budget Project. Stephen Levy, director and senior economist for the Center for Continuing Study of the California Economy, said what’s different this Labor Day is that it’s not just the unemployed who are worried. There also is widespread fear and unease among those who still have jobs.”

“‘It’s a very disappointing Labor Day weekend,’ said Levy, who is not connected to the report by the California Budget Project. ‘We have record unemployment. But more than that, people who still have a job have seen their home values and retirement savings decrease.’”

The Modesto Bee. “With the unemployment rate hovering in the high teens in most valley counties, economic forecasters can offer only cold comfort with predictions of several more months of job losses before the trend starts to gradually turn around. ‘I think a year from now we’re going to be talking about unemployment rates similar to what we have now,’ said Jeff Michael, director of the Business Forecasting Center at the University of the Pacific. ‘In terms of really getting back to where we were before the recession, we’re looking at years — maybe 2013, 2014.’”

“‘One position I applied for had 140 applicants and I’m finding that typical wherever I go,’ said Ceres resident Mike Martin, while looking for work at a recent Modesto job fair. ‘It’s really frustrating. I look at the stock market and I see some things recovering. But from a grass-roots level, I don’t see any recovery yet.’”

“Michael, with UOP’s Business Forecasting Center, said the region could be burdened with double-digit unemployment for five years. He said any indicators of recovery will come from signs of stabilization in the housing market, slowdowns of store closures, loosening of credits market and increases in consumer confidence.”

“While painful, Michael said, this recession may alter personal and corporate spending habits to such an extent as to prevent another boom-and-bust recession of this magnitude. ‘In some ways, this is making things more normal,’ he said. ‘We had almost a 15-year erosion of savings and more spending. … So some of this is healthy. We want a recovery that is sustainable and not one that is artificially propped up by a new, nonsustainable thing.’”

The Press Democrat. “He had his own Boeing 737 jet, a $385,000 Mercedes-Benz, homes in Hawaii and a $16 million estate being built on a hill in Santa Rosa’s exclusive Shiloh Ridge neighborhood — all by the time he was 45. Robert W. O’Neel III was living large, brokering real estate deals across two continents with the financial backing of Wall Street and from Sonoma County lenders, including a $3.5 million loan from Clem Carinalli, the county’s largest individual landowner. And then about two years ago, it all began to fall apart.”

“As a result of hubris, the collapse of the financial markets or some combination of both, O’Neel’s empire is in ruins, with his partially built dream estate overlooking the Mayacama Golf Club wrapped in protective seal and abandoned.”

“‘I crashed and burned,’ O’Neel, 46, said recently while seated in the conference room of his attorney’s office in downtown Santa Rosa. ‘I can’t blame anybody but myself. Why did I start that house? Why didn’t I wait until a certain … You know, I can look back at all kinds of things and say I never should have done it. But I can’t. Those were decisions I made at the time.’”

The Union. “He watched the housing market ebb and flow, cresting sometime in 2006, when the median price for a Nevada County home topped at $465,000. Scott Stephan simply wanted to stay close to home. But the 35-year-old heating and air conditioning project manager knew that he would have to wait for the housing market to cool before he could turn up the heat on his own effort to buy a house.”

“He was going through a divorce when prices were at their zenith, which complicated matters, he said. ‘I thought for sure we’d never be able to buy a home in Nevada County,’ said Stephan. ‘But eventually, the timing was right and the prices were cheap.’”

“In April, Stephan married Delia. In June, the couple and Stephan’s two young children moved into a $250,000, three-bedroom, two-bath home on five acres in Rough and Ready, not far from his parents. Though Stephan pays about $550 more a month for a mortgage, the home and patch of land are his. The home, which Stephan said he believes was rebuilt after the devastating 49er Fire in 1988, needs some new windows, siding and ventilation upgrades, which he will pay for with the $8,000 federal tax credit.”

“‘I just wanted to have my own house, so I can do whatever I want, whenever I want,’ he said.”

“That’s part of the appeal, Stephan said — making the house his own. He pays more than he did to rent a place, but there’s nothing like coming home to a place that’s yours, he said. ‘We made some budget adjustments and didn’t even notice the difference,’ said Stephan, who has an $1,800 monthly mortgage payment. ‘As long as you have decent credit and you know your job is stable, you have nothing to lose.’”

Source: The Housing Bubble Blog

Ask the Dolans: How much money do I need to retire?

2009-09-04T10:03:00.000-04:00

Ken and Daria Dolan, America's first family of personal finance, answer your questions every Friday.

Click here to ask Ken and Daria your question.

Americans have lost trillions -- with a "T" -- of dollars in the stock and housing market collapses. The average person with a 401(k) plan has lost five years worth of their savings! No wonder people are nervous about whether they have enough money saved for retirement. Today, Ken and Daria Dolan of Dolans.com have a surprising answer to the question "How much money do I need in retirement." The conventional wisdom is dead wrong, they say -- listen to it and your retirement dream could become a nightmare.

Dear Ken and Daria,

How can i figure out if I have enough money to retire?

Click here for the answer

--Mary

Source: WalletPop

US Taxpayers Pay Less Taxes Than Citizens In Other Countries.

2009-09-03T08:43:00.000-04:00

You think your taxes are bad? I don’t necessarily think I pay too much in taxes (although I would like to see waste cut back on, for sure, so the taxes I do pay actually go further than they do), but when you look at the tax rates for the rest of the world, the people of the United States actually pay less taxes per person than most other countries. In the US, the tax rates for mostnormally falls between 15% and 35% of income, but if you look around the globe at some other countries, even the 35% doesn’t sound all that bad…

Australia: 17-45%
Austria: 21%-50%
Belgium: 25-50%
China: 5-45%
Denmark: 38-59%
France: 5.5-40%
Germany: 14-45%
Greece: 0-40%
Ireland: 20-41%
Israel: 10-46%
Italy: 23%-43%
Japan: 5-50%
Morocco: 0-41.5%
Netherlands: 0-52%
New Zealand: 0-39%
Norway: 28-49%
Portugal: 0-42%
Slovenia: 16%-41%
South Africa: 0-40%
Spain: 24-43%
Sweden: 0-57%
Taiwan: 6-40%
U.K.: 0-40%

What do you think about this list?

Source: My Two Dollars

Reverse Mortgages: Get the Facts

2009-09-02T10:24:00.000-04:00

If you’re 62 or older – and looking for money to finance a home improvement, pay off your current mortgage, supplement your retirement income, or pay for healthcare expenses – you may be considering a reverse mortgage. It’s a product that allows you to convert part of the equity in your home into cash without having to sell your home or pay additional monthly bills.

The Federal Trade Commission (FTC), the nation’s consumer protection agency, wants you to understand how reverse mortgages work, the types of reverse mortgages available, and how to get the best deal.

In a “regular” mortgage, you make monthly payments to the lender. In a “reverse” mortgage, you receive money from the lender, and generally don’t have to pay it back for as long as you live in your home. The loan is repaid when you die, sell your home, or when your home is no longer your primary residence. The proceeds of a reverse mortgage generally are tax-free, and many reverse mortgages have no income restrictions.

Types of Reverse Mortgages
There are three types of reverse mortgages:

single-purpose reverse mortgages, offered by some state and local government agencies and nonprofit organizations

federally-insured reverse mortgages, known as Home Equity Conversion Mortgages (HECMs) and backed by the U. S. Department of Housing and Urban Development (HUD)

proprietary reverse mortgages, private loans that are backed by the companies that develop them

keep reading here

Source: FTC

10 Things Your Reverse Mortgage Counselor Helps You With

2009-09-01T08:37:00.000-04:00

RetiringWise had this very helpful post:

While reverse mortgages are beneficial to families and relieve many stressful financial situations, it is important to get the facts straight on how it works. Reverse Mortgage Counseling can help walk you through the process and responsibilities of borrowing.

Counseling is intended to ensure you understand the HECM loan and all its opportunities and implications. All property owners and borrowers are required to receive counseling. Here are some things your reverse mortgage counselor will cover with you.

Reverse Mortgage Counselors will:

Discuss the financial advantages and disadvantages of each payment plan.
Provide information on the steps in determining your principal limit, including loan costs and set-asides.
Explain how increase an in loan balance means a likely decrease in your equity over time.
Discuss growth in the HECM line of credit.
Explain your responsibility to pay property taxes, ground rents, and insurance.
Cover questions in costs required to obtain a HECM loan.
Provide explanations on which loan costs are the same for every lender, as well as which costs vary between lenders.

Explain how the maximum HUD permits you to charge for specific loan costs.
Stress the decision is yours, and not pressure or advise you to any specific lenders or products.

Focus on your value system and opinions, not their own recommendations.
Reverse mortgage counseling purposes to educate and provide information for homeowners qualifying for a reverse mortgage. Taking out a loan against the equity of your home can be stressful and uncertain, but your reverse mortgage counselor can help take the uncertainty out. With a full understanding of how reverse mortgages work, you will be able to make the best educated decision concerning you and your family.

I Want To Live A Minimalist Life

2009-08-31T09:13:00.000-04:00

I feel like I want to be a Minimalist right now :) I know it's a lot easier said than done, but in theory it sounds awesome! Fewer things to worry about, less clutter in the house, less maintenance costs, less less less!

I've been thinking about this for over a week now since the Frugal Bachelor started hitting on it. And then even MORE when he linked over to The 100 Things Challenge by the Minimalist King himself - Leo @ Zen Habits. Damn that really got me thinking....what the hell am I doing collecting all this stuff?! Do I even *use* half of it? (answer: no)

Before I get into it all though, here's a great explanation of what minimalism is by ecollo:

"When the term minimalism is used, it often refers to art that is stripped down so it only includes the bare necessities. That same principle applies to the minimalist lifestyle. The idea is to de-clutter the area around you and to avoid accumulating more by simply not buying things you don't need."

YES! I like, I like! Now, anyone who knows me in REAL LIFE would probably tell you that I represent the opposite of minimalism ;) I have frames & art all over my walls, drawers stuffed with trinkets, collections of things I can't give up, boxes of 8th grade notes, etc etc...in fact, I wouldn't be surprised if people mistaken our place for an antique store! Or at least a thrift store. haha...So yeah, this would def. be a challenge for me. But like I said, in theory I'm all about it!
Minimalist Lifestyle = Fewer Things On Mind

As I get older, I'm realizing that the more stuff I have the more stuff I have to WORRY about. I really hate that. I could honestly say that I love 75% of the items I own, but I'm starting to wonder if it's worth the mental price tag. I mean, how could I appreciate what I really own when I'm in front of the TV or laptop all the time anyways? I dunno...

The other side of me asks me what the hell I'm talking about ;) I LOVE all the artwork and pictures watching over us as we roam the halls. They scream LIFE, HAPPINESS, CREATIVITY - so what's bad about that? Nothing I don't think, as long as I keep and appreciate *those* belongings and instead rid myself of the other junk lying around. I guess that's the first step here - dividing your stuff up into things you absolutely enjoy, and then all others under it. No real gray areas - either you love it or it's "so-so" and it's taking up space. (there's probably a 3rd category of things you *need* like tools and such too, but not sure where that fits in with this lifestyle)

Minimalist Lifestyle = Less Clutter
If the brain power wasn't enough, the physical part is. Every day we go through our front door, see 1,000+ things instantly, and then brush most of it away to concentrate on the items needed that very second. And that's just the first level! If you have 2 more (like we do), the same thing occurs every time you walk through. It's not the end of the world, but I bet your brain would feel a lot better seeing LESS stuff around the house. Or I guess less UNNECESSARY stuff as we have already determined (or at least I did with the art everywhere - if those aren't important to you they go right into YOUR so-so bin).

And guess what? The fewer things you own the less maintenance/upkeep you have to shell out money on! No more fixing unimportant (to you) gadgets, toys, collections, etc etc. I'm telling you, if you could pull it off I bet you'd be a lot happier :)

And having less clutter around the house is just the first half of it all. If you can clean things out, and STICK to it, the desire to buy more and more stuff would diminish along with it. After all, if you keep buying things they'll go right back on the shelves and drawers that you just worked so hard to freshen up, right? That means less money going out the door, and a fatter savings account. Or at least a house full of *must haves* if you subscribe to the "buy something - throw something else out" rule.

Buy Something - Throw Something Out
If you/I can pull this whole minimalist lifestyle off, I think this is a rule that would help us stay on track. Say, for example, you DO get all your belongings down to 500 (or whatever # you choose) and you want to pick up a new such & such. You have to then ask your self - "Will I enjoy, or need, this item more than any other of my 500 things?" If that answer is Yes, then go for it! And then sell/donate the item you want to replace it with. Simple :) If you were Mr/Mrs. Perfect of course.

So what do you take from all of this? Well, it all depends on how happy or not you are with your lifestyle. For me, I could use the de-cluttering. I don't think I could get my life down to only 100 items or a liter bottle full (seriously, that's hardcore), BUT I could certainly cut it in half. Perhaps a 1,000 items challenge? I dunno...I just find this whole minimalism stuff incredibly inspiring.

Source: Budgets Are Sexy

Yes Virginia, reverse mortgages are real

2009-08-28T11:08:00.001-04:00

Reverse Mortgage Loan Blog had this post the other day:

As my mother told me: if it sounds too good to be true, it probably is. I know this thought jumps into your head when you start to read about a reverse mortgage – ‘free’ money from my home with no monthly payment???? If you are 62 or over, you may have just found the goose that laid the golden egg.

A reverse mortgage is exactly what the name implies. Rather than you paying a monthly sum of money to a mortgage company, they pay you. The requirements are simple:

You must be at least 62, live in, and own your home and have a decent amount of equity in it. The lender will have your property appraised to determine its true market value and this will determine, along with your age, how much money you can receive from your house.

There are no income restrictions such as those imposed by Social Security and reverse mortgages are tax – free since they do not involve additional features like an annuity. They do not affect your social security benefits or your Medicare entitlements.

This tool called reverse mortgage is actually a loan,hence an interest rate. This means nothing is really ‘free’, it does however, allow senior citizens to convert part of their equity into cash without having to sell their home. Because it is a loan, you are receiving money and not paying a monthly payment, so long as you continue to live in your home as your primary residence. Interest is added to your balance and paid back at the end.

This loan must be repaid at some point. It is eventually repaid with interest should you sell, die, or no longer live there as your principal residence. You remain responsible to pay real estate taxes, homeowners insurance and maintenance expenses which, of course, you would have to pay with or without, any kind of a mortgage.

With this explanation, the picture becomes clearer, right? You enjoy a monthly sum, tax free and not repayable until a date sometime in the future, while remaining in your home. As close to a win-win situation as one can get in this day and age.

It is easy to see that anyone who is cash poor but house rich, should at least look into this program and see how it works for them. There is nothing to lose by asking questions.

The typical reverse mortgage is called a Home equity Conversion Mortgage or HECM (pronounced HEK-UM). The federal government insures these mortgages and they are backed by the Department of Housing and Urban Development (HUD). They have no income or credit qualifications and can be used for any purpose.

HECMs also require all applicants to meet with an independent housing counselor from a government – approved housing counseling agency. An additional benefit of a HECM mortgage is the following: should a borrower have to move out of his or her home and into a nursing home or other medical facility, they have up to 12 months before the loan starts to become due. This enhances financial planning greatly. As always, make sure you check with your trusted advisors for more information.

Found here.

Advertising Changes Are Coming!

2009-08-26T09:02:00.000-04:00

ReverseMortgageGuides.org had this post yesterday:

HUD announced that a new mortgagee letter will be coming in the next 60 days. The mortgagee letter is likely to do with advertising, as HUD is apparently not pleased with advertisements that promote borrowers using the proceeds from a reverse mortgage for a vacation or expensive personal items.

However, reverse mortgage proceeds are for the borrower to spend at their discretion. While HUD has been very suspicious of borrowers using reverse mortgage proceeds for annuities or other insurance products, there is nothing to keep them from doing so. Further, a recent article actually promoted seniors putting money from a reverse mortgage into life insurance policies so as to be able to pass the money to their heirs tax-free–an interesting way to use a reverse mortgage for estate planning.

Ads in other countries with similar reverse mortgage programs also use advertising focusing on a vacation or luxury item. The philosophy is that the money is the senior’s to use at their discretion. These are some ways a senior might choose to do so. As a result, it will be very interesting to see what (if any) guidelines on advertising HUD releases with the next round of mortgagee letters. While a reverse mortgage is a loan like any other and does need to be taken seriously as a financial investment, one hopes seniors are still free to take out a reverse mortgage– regardless of whether they take it out for something serious (medical expenses, home repairs) or something more luxurious (yacht, vacation, car).

Helping Boomers Move To The City

2009-08-25T11:31:00.000-04:00

Saw this post at Reverse Mortgage Daily

Despite the media backlash from the Consumer Reports “investigation”, Silicon Valley’s Mercury News writes about how a couple recently used the HECM for purchase to buy a home in San Francisco.

Ann Tubbs and Ehtesham Majid used the new program to help purchase a $625,000 two-bedroom condominium located downtown near the city’s waterfront. "We like city living. We like to walk around at night and look in windows," said Tubbs, who retired from a 30-year-career at Planned Parenthood. She and her husband moved into their new home in August.
"It’s a great program for people like us. We don’t have any children and want the urban lifestyle," said Majid, a retired software engineer.

According to the article, the couple drew on an some inheritance money and savings to come up with the 40 percent down payment used to help buy their condo. "You have to make a significant down payment, twice the amount of a normal down payment," said Tubbs.
"Then you are done,’ added Majid. Of course, there is still the matter of property taxes, homeowners dues and other expenses associated with owning a home