Retirees Unable to Sell Their Homes and Downsize

8/06/2009

posted by N. Sioris

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The worst economic crisis since the Great Depression is taking its' toll everywhere you look these days. One segment of the population - retirees, are finding themselves stuck in their homes. Many, had planned to sell the "large family home" for a substantial profit and downsize to a home or community that would be more suitable for their golden years' lifestyle.

One component of the retiree's previously well thought-out plan, may have been affording to live in an assisted living community or having in-home-care assistance. For many, those things are now simply unaffordable and unobtainable. Home values have declined across the country, and in some areas drastically declined, (i.e. Florida, California, Nevada, Arizona, Michigan, Ohio.)

Seniors are not able to sell their homes for anywhere near the values that their homes were just a year or two ago. Furthermore, if they are willing to list their homes at drastically reduced prices, many are still not selling or even receiving any offers. Consequently, many senior citizens are trapped in their homes. They are not able to access their home equity through a sale, and the sale if it did take place, would yield far less profit to feather their retirement nest egg than they had planned.

One thing that a senior homeowner can do is, get a reverse mortgage. A reverse mortgage home loan allows seniors, 62 years or older to tap into the equity that still remains in their homes, without ever having to make any monthly mortgage payments for as long as they live in the home. The money they get from a reverse mortgage can be used for whatever purpose they choose. So, if in-home-care is a priority, then at least through this financial tool they might be able to afford it.

Find out if you still have enough equity left for a reverse mortgage loan.

Or use our reverse mortgage calculator.

Reverse Mortgage Bill Vetoed In Minnesota

5/22/2009

posted by N. Sioris

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Yesterday, Tim Pawlenty, governor of Minnesota vetoed SF 489, which would have had unintended and detrimental consequences for senior homeowners in Minnesota that would like to take advantage of accessing home equity through the use of a reverse mortgage loan.

If passed, the bill would have increased the right to rescind (cancel) period from the current three days, to ten days on the closing of a reverse mortgage loan. It also would have imposed a suitability requirement as well as added restrictions on the cross selling of other financial or insurance products at the time a person takes out a reverse mortgage.


National Oversight Is All Ready In Place - No Need For Over-Kill

HUD in conjunction with AARP and NRMLA (National Reverse Mortgage Lenders Association) have collectively taken action to strengthen the protections for seniors on a National basis. In some cases, when states step in and try to implement additional regulations, we see that what actually happens is that the regulations become more confusing and sometimes contradict each other. The so-called "unintended consequences" of meaning well, can backfire and actually cause less availability of a much need product, like a reverse mortgage. We saw that very thing happen in the state of Washington about a year ago. It took until just a couple of weeks ago to get that "unintended consequence" amended, so that now senior citizens in Washington state have full access to competitive reverse mortgage lenders and products.

Had it not been for Governor Tim Pawlenty wisely choosing to veto this bill, something similar could have happened to senior homeowners in the state of Minnesota. Take a look at his comments about his decision below.

Minnesota_Reverse_Mortgage_Veto

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AARP Keeping an Eye on Reverse Mortgage Cross Selling

4/06/2009

posted by N. Sioris

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Even though new legislation was passed last year to prevent sales people from selling additional financial products to seniors when they take money from their homes through a reverse mortgage, AARP says they are getting reports that some people are still engaging in these tactics.

According to Bronwyn Belling, project manager for the AARP Foundation's Reverse Mortgage Education Project, "Despite the new laws, we are still hearing reports of reverse mortgage lenders selling high priced annuities and other investments to borrowers. Regulators are paying close attention to this problem, and we are going to continue to watch it very closely."


If you are interested in reading more about the legislation requiring a firewall between companies and sales people that sell reverse mortgages and sales people that sell other financial investments, such as annuities and life insurance products, you may want to read a couple of our previous blog posts that provide further details on this topic.

Changes to Reverse Mortgages

AARP Monitors Seminars

Renewed Interest In Reverse Mortgages

2/27/2009

posted by N. Sioris

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As the economy continues to unravel on every front, more retirees are turning to Reverse Mortgages to sustain their lifestyle and provide the needed cash to weather the financial storm. Even people that thought they planned well and have diversified portfolios, are having to re-think their retirement strategies.

Many seniors really don't want to touch their investments right now, and yet many cannot wait years for those investments to recover in order to draw on them. So while retirees watch in dismay as both their home values and their investments plunge to new depths, many are turning to reverse mortgages to get through these troubled times.


HECM Reverse Mortgages - New Lending Limit - $625,500.

A ray of hope emerged earlier this week when HUD announced the immediate implementation of the new higher National loan limit for FHA insured HECM reverse mortgages. The previous loan limit was $417,000. As part of the Economic Stimulus package a TEMPORARY increase for FHA/HECM reverse mortgages for the balance of 2009, is now $625,500.

The higher reverse mortgage loan limit is particularly beneficial for people that have homes with a value higher than $417,000. With the new $625,500. lending limit they can now access a much higher amount of equity.


Virtually No Other Jumbo Reverse Mortgages Available

Additionally, since the credit crunch started last fall, virtually all of the proprietary "Jumbo" reverse mortgage products that had been offered previously have dried up. The absence of any jumbo reverse mortgage loan products, left many homeowners with high value homes, disappointed by the small loan amount offered by FHA versus their equity and home value.

If you are someone that never thought you would need a reverse mortgage before or if you have a high value home and have previously been disappointed by the loan amount offered, you may want to take a second look at this option.

Request a no obligation reverse mortgage quote today!

60 Minutes Exposes World Savings' Lending Practices That Ultimately Brought Down Wachovia

2/15/2009

posted by N. Sioris

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Kudos to Scott Pelley and 60 Minutes for another great investigative report about the culprits that brought down the U.S. economy and some of the largest banks in America.

How did the mortgage industry destroy itself and set off an economic collapse that ruined the finances of millions of Americans? Executives tend to hold themselves blameless, saying that no one could have seen the disaster coming.

Well, judge for yourself after you hear the story of Paul Bishop, who worked at the nation's second largest savings and loan. World Savings Bank was among the industry's most admired mortgage lenders. But Bishop says the kind of lending practices he saw were leading to a world of trouble that would ultimately result in billions in losses and a federal investigation.

"Three years before the housing market crash, Paul Bishop says he warned his superiors at World Savings that many of the mortgages they were granting were misleading and predatory.

AARP Warns Seniors About Misleading Mail Scams

2/09/2009

posted by N. Sioris

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The latest scam alert from AARP was published in AARP Bulletin Today. AARP wants seniors to be aware of deceptive and misleading advertising mailers being sent to older homeowners. The unsolicited mailings are disguised to look like they are government sponsored or from a government agency.

The article goes on to give an example of a Reverse Mortgage mailer that masqueraded as an official government offering. The post card was sent from "National Data Research." (sounds pretty official doesn't it?) The headline read: "New Government Program for Seniors Over 62." It then goes on to say: "It is your Legal Right as a United States Taxpayer to receive all the information available to you."

According to AARP, what was not disclosed in the mailer is that it's real purpose is to collect senior's contact information so it can be sold to reverse mortgage vendors, which often times leads to more unwanted mail and telephone solicitations.

Although the current tough economic times make everyone feel a bit less secure than usual, try not to fall victim to over hyped, pie in the sky offers that after first blush are not at all what they seem to be. If you suspect an offering to be other than what it appears to be, you can always check out a bonafide government entity online.

You can also check The Privacy Rights Clearinghouse website. It offers tips on how to remove yourself from mailing lists. The Federal Trade Commission offers advice on how to recognize phone scams.


Read the complete AARP Scam Alert Article Here.

More Seniors Turn To Reverse Mortgages Due To Lost Dividend Income and Investment Assets

10/12/2008

posted by N. Sioris

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The unprecedented plunge of the U.S. stock market during the past week has unnerved every American regardless of age, or economic status. Anxiety is running high. No one seems to know what shoe will drop next. Each attempt by the Federal Reserve, the Secretary of the Treasury, the Congress, the coordinated interest rate cuts from the United States and other nations have not inspired the confidence needed to restore the paralyzed credit markets and get the cash flowing back into the banks and the economy.

Most of the talking heads on the financial news channels and most print reporters have been afraid to use the terms, "depression," "crash," or even admit that we are all ready in a recession. Some news organizations and investors have hesitated to use these words to describe Wall Street's terrifying sell off because they are afraid of causing panic.

However, by the end of the market close on Friday, October 10th, some notable statements were surfacing among analysts that were brave enough to speak frankly.


Is It A Crash?

A crash is commonly defined as a 20 percent decline in a single day or several days. The drop over the seven days ending Thursday, October 9, 2008 lopped 20.9 percent off the Dow Jones industrial average. On Friday, October 10th, after wildly whipsawing over 1000 points, finally settled down 128 points, or 1.5 percent for the day. For the eight day period the cumulative loss was 22 percent.

Howard Silverblatt, senior index analyst at Standard & Poor's, said "This quick, this amount, in these few days, obviously is a crash. The crash deals with the speed as well as the intensity of it."

CNBC host Dylan Ratigan was among those uttering the word "crash" on Thursday, calling the decline, "a cascading crash." The Wall Street Journal, the most influential publication in the financial world, hedged somewhat on Friday's front page, saying the scary drop over the past several days "amounts to a slow-motion crash."

Bob Doll, chief investment officer of BlackRock, Inc., the largest publicly traded U.S. money manager, being interviewed by CNBC anchor, Maria Bartiromo responded to her question about whether he thought this is a crash, replied: "Yeah, I guess we have to call it that, Maria. That's a lot of percents in a short period of time. We're down a bunch, and it's been relentless."

Johnathan Wald, senior vice president for business news at CNBC, said on Friday, "Anytime you do the math, when the Dow is down that much over a period of days, it's a crash. It's a word we don't like to use very often because nobody likes to see it, but when it happens, you can't avoid it."


How This Affects Seniors In Particular

If you are a senior currently in retirement or someone on the verge of retiring and have money in the stock market, pension funds and or 401K plans, you have been slamed by sharp losses in those portfolios. The total loss in the Dow over the last 12 months has been about 40 percent. Depending on your own personal diversification, your losses may be more or less than 40 percent. A top congressional budget analyst said that pension plans have lost as much as 2 Trillion dollars over the last 15 months.

Dividends which many retirees rely heavily upon for income, will be sharply lower starting right now and in the near term future. The latest quarterly statements have shocked many seniors who thought they had planned well and put in place a solid retirement strategy that would last them their lifetime. For some, the shock of seeing their lives suddenly altered regardless of careful planning is devastating.


Home Equity: A Partial Solution

Tapping home equity through the use of a reverse mortgage might become an option exercised for many who never thought they would consider using this type of financial instrument before. One of the payment options offered through a reverse mortgage allows for steady tax-free monthly supplemental income that can help offset stock market losses and keep a senior's household budget steady and manageable.

If you think a reverse mortgage might be right for your situation, you should consider looking into it sooner rather than later. A perfect storm has been brewing for quite some time now, and could get worse. What I mean by that is that home values across the entire country have been in a steady downward spiral, while market pressure has been affecting interest rates in an upward direction.

Reverse mortgage benefits are largely based upon the current market value of your home and the current interest rates. Consequently, you will receive less money from the equity in your home if housing values continue to decline and interest rates climb.

Seniors that closed a reverse mortgage a couple of years ago at the top of the housing market bubble, are sitting very pretty right now. Their monthly benefits or line of credit were locked in based upon the market value of their homes at the time they closed and the interest rates that were in effect at that time as well.

Sitting on the fence and doing nothing based upon fear and uncertainty is probably not the best decision if you are a person that feels that a reverse mortgage might benefit you.

Another thing to keep in mind is that if you get a reverse mortgage and your home increases in value in the future, you can always choose to refinance your reverse mortgage in order to access more funds at a later time. In the meanwhile, locking in a value and interest rate today, could be a lifesaver during this unprecedented economic meltdown.

Find out how much money you are eligible for by requesting a personalized reverse mortgage quote here.

Can I Be Forced To Move or Sell If I Get A Reverse Mortgage Loan?

9/07/2008

posted by N. Sioris

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You can never be forced from your home or required to sell your home if you have an FHA insured HECM reverse mortgage loan. A question that comes up frequently from folks that are considering a reverse mortgage is:

"If I live long enough to use up all the equity in my home, will I be forced to sell my home and pay off the reverse mortgage lender?"

The answer to this question is an unequivocal "NO."

As long as you continue living in your home as your primary residence, keep it properly maintained and pay your real estate taxes, you will never be forced from you home. If you live so long that all your equity has been paid out to you, or if your property value drops after the loan is in place, it is not your problem.

HECM reverse mortgages are non-recourse loans, which means that the house stands alone for the debt. When you take out a HECM reverse mortgage, one of the closing costs is the FHA insurance premium. The insurance fund is used to pay the difference to the lender, in the event of a shortfall at the time that you do leave your home permanently or sell. You or your estate are NEVER responsible for any shortfall at the end of the loan term.


HECM Reverse Mortgages Become Due:

* When the last borrower passes away.
* The borrower sells the home.
* The last borrower leaves the home for 12 consecutive months.
* The home is not properly maintained.
* Real estate taxes or property insurance are not paid.

A couple of the most attractive attributes of a HECM reverse mortgage loan is the guarantee of a payment free mortgage for as long as you live in your home.

If you elect the tenure income stream, you are guaranteed a fixed amount of money being paid to you on a monthly basis for as long as you live in your home. NO MATTER WHAT! This loan has the full faith and credit of HUD and FHA standing behind it.

Click here to read more about additional safeguards for HECM reverse mortgage loans.