National Housing Values Plunge To Lowest Level In 35 Years

1/30/2009

posted by N. Sioris

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According to the National Association of Realtors' Home Affordability Index, "homes haven't been this affordable for the typical buyer since the early 1970s." The index takes into account the median home price, median income and mortgage rates to determine how financially fit Americans are to buy a home.

Five years ago the national median home price was $178,500. Three years ago the median price was $216,800. One year ago the median price was $197,200. And, as of December of 2008, the national median home price was $174,700.

Unfortunately, these statistics can be a double edged sword. Job losses are expected to be between 300,000 and 500,000 a month this year, according to Jeoff Hall, an economist at Thomson Reuters, which of course pulls huge numbers of potential buyers out of the market.

Patrick Newport of IHS Global Insight said; "Prices are collapsing and will probably drop another 15 percent." He does not see a bottom in home prices until the first quarter of 2010.

For all our sake, let's hope these predictions do not come to pass.

If you think you will need to tap into home equity to supplement retirement, you may wish to proceed with a reverse mortgage now, before home prices drop further. The amount of money you will be allowed to access through a reverse mortgage is heavily dependent upon the value of your home.

AARP Report Tells How Financial Crisis Impacts Older Americans

1/28/2009

posted by N. Sioris

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The AARP Public Policy Institute published a paper explaining the effects of the financial crisis on the U.S. economy and specifically on older Americans. The paper also addresses the question of what government policies should be adopted to mitigate the effects of the financial turmoil and to prevent a future re-occurrence.

AARP says "the financial crisis that has engulfed the U.S. economy is the worst since the Great Depression. It threatens the stability not only of the financial system but of the economy as a whole." "The stock market has fallen by about 40 percent since the beginning of 2008, mostly since early September; credit is both more expensive and scarce."

The net worth of American households fell sharply during the first three quarters of 2008 primarily as a result of falling housing prices and lost stock market assets. By the end of September 2008, the decline in stock market values is estimated to have wiped out two and a half Trillion dollars of household net worth. Falling house prices may have reduced households' net worth by another Trillion dollars.

According to the AARP report, "The consequences of the fall in stock market values for older Americans can vary substantially across income classes." "The most seriously affected group will be those who were planning to supplement Social Security with income from 401(k) plans, IRAs, and other savings. Many have not followed the standard advice of moving out of equities into bonds, believing that the generally low interest rates of recent years made bonds an unattractive investment."

"The decline in housing prices may cause severe difficulties for older Americans that need to tap the equity in their homes. In particular, the capital gain from the sale of a residence could be substantially reduced, as could the income from a reverse mortgage. There are reports of elderly homeowners who need to move into assisted living but are unable to sell their homes at even a deep discount."

You can read the complete AARP Report here.

Demand Increases For Reverse Mortgages

1/26/2009

posted by N. Sioris

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The Wall Street Journal reported that the demand for reverse mortgages has climbed as the credit crisis worsens. More senior homeowners are turning to federally insured reverse mortgages in order to access home equity and, in some cases, to prevent foreclosure.

As credit tightened and retirement savings plunged during 2008 the demand for reverse mortgages grew significantly. The trend is expected to continue as baby boomers with inadequate savings will be tapping home equity in order to fund retirement. Gregg McBride, senior financial analyst at Bankrate.com said "The demand for reverse mortgages is increasing by the day."

The Federal Housing Administration (FHA) approved 115,176 HECM reverse mortgage loans in 2008, up 6.4% from calendar year 2007. In addition to the financial crisis having a bearing on the increased numbers of HECM loans being originated, Congress also passed a provision that became effective in November, 2008 which increased the national loan limit to $417,000. The higher loan limit gave a greater incentive to seniors that were interested in this type of loan, because with the higher lending limit they can now access more of their equity.


The Hard Cold Facts:

The average American will spend 18 years in retirement. Only 2% of retirees are independently wealthy. Financial experts estimate that a middle income person needs about 70% of his pre-retirement income to maintain his standard of living. Low income earners need 90% or more. Social Security pays only about 40%.

Click here if you would like a reverse mortgage quote.

Stimulus Package Might Enhance Reverse Mortgage Loans

1/22/2009

posted by N. Sioris

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Discussions about the economic stimulus package have been front and center with all the media since last September when the Treasury Secretary pleaded in front of Congress for a blank check in the amount of $700 Billion dollars. Since that time we have seen several different incarnations of how best to dole out the money so that tax payers get the biggest bang for the buck. However, it appears that the first $350 Billion dollars that has been spent so far has not been the magic bullet everyone had initially hoped for, and liquidity has not yet returned to the credit markets.

In the meanwhile, millions of Americans are losing their homes and jobs at an alarming rate. With more than enough pain to go around, people are questioning why so few are being helped and why the tax payers are supposed to pick up the tab but see no personal benefit from all the so called "stimulus." Struggling Americans are starting to ask; "What's in it for me?"

Countless stories are related about how homeowners are unable to talk to an actual live person at the lenders' offices much less renegotiate or modify their mortgages. Even California Congresswoman, Maxine Waters, after more than two hours on the telephone to Bank of America could not get any relief for one of her constituents struggling to make their mortgage payments. Her ordeal was reported in a recent ABC Nightline story by Brian Ross. You can watch the Nightline video and read the complete story here:
On Hold: Even Congresswoman Gets The Runaround on Bank Help Lines.


AARP and NRMLA Make a Joint Request

To address the pressing financial needs for many senior citizens, AARP and NRMLA (National Reverse Mortgage Lenders Association) jointly requested that a provision be inserted into the Economic Recovery Bill released by the House of Representatives, that would increase the national loan limit for HECM reverse mortgages to $625,500. for 2009. This change is being suggested as a temporary measure through 2009, as part of the economic stimulus package. A permanent change would have to be enacted through a more appropriate housing bill.

The bill must get through Committee, then be brought to the House floor for debate and a vote. After that, it must pass the Senate. Obviously, there are no guarantees that the provision will make it through both the House and the Senate, but AARP and NRMLA are looking for support on this and are hopeful that senior homeowners might be able to benefit from the passage of this provision, even if it is only temporary.

Wouldn't it be nice if all of us could start to feel some benefit from all those Billions of dollars that are being tossed around in Washington?

How a Reverse Mortgage Saved a Florida Man's Home

1/20/2009

posted by N. Sioris

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In 2008 just under 120,000 FHA insured HECM reverse mortgages were closed in the U.S. With each passing year the number of new reverse mortgages has increased. The reasons that someone decides to take out this type of loan are varied. However, one of the reasons that is occurring more frequently is to save a senior citizens' home from foreclosure. The financial mess that our country is mired in today is unprecedented and is particularly harsh for many individuals on fixed incomes.

The video below is one Florida man's personal story. But unfortunately it is a story that has become more common-place in recent months. Luckily, for those that are informed about reverse mortgages and have equity in their homes, they have a tool whereby many can save their homes and live without the stress of a looming foreclosure.

"Jack The Bike Man" is a 67 year old retiree who is known and loved throughout his Florida neighborhood for the bike charity that he runs. He makes no money from his charity work and lives on Social Security income. After his mortgage payment nearly doubled last year, he found himself unable to keep up with his house payments.

View the video below to see his story and how a reverse mortgage rescued him from the brink of foreclosure.

Mortgage Meltdown Stressing Many Seniors

1/19/2009

posted by N. Sioris

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According to an Associated Press analysis of 2007 Census Bureau data, senior citizens are one of the population groups hard hit by unaffordable mortgages. Among seniors that carry a mortgage, nearly 3 in 10 spend at least 38 percent of their income on housing.

The stress is most severe in nine states: California, Washington, D.C., Florida, Massachusetts, Nevada, New Jersey, New York, Rhode Island and Vermont.
According to the survey, "inequality in America has traditionally followed familiar patterns of race, age and education. Those long-standing gaps have been magnified by the real estate boom and now the historic bust."

AARP Addresses The Same Issue

It was reported last week that due to the growing concern among middle age and older Americans about their ability to make mortgage payments, AARP has put helping people facing foreclosure near the top of its agenda for the 111th Congress.

AARP's vice president for government relations and advocacy, Elaine Ryan, said during a recent 3 month period, more than 700,000 older Americans faced foreclosure. Some of the proposals set forth by AARP for its 2009 Legislative Priorities are:

• Modifying Primary Debt: Enact legislation that would allow bankruptcy judges the discretion to modify primary mortgage debt;

• Giving a Time Out: Provide homeowners facing foreclosure with a temporary “time out,” which would allow them to negotiate a new loan using the Hope for Homeowners program or other refinancing option;

• Accessing Equity: Raise the home value limit to $625,500 for the FHA’s Home Equity Conversion Mortgage (HECM) reverse mortgage program, which provides older homeowners the option of tapping the equity in their homes to pay off mortgages that have become too costly;

• Holding Banks Accountable: Require banks receiving assistance from the Treasury Department to modify loans before foreclosing on struggling homeowners; and

• Stop Taxing Borrowers: Remove disincentives in the current tax code for struggling homeowners who renegotiate their home mortgage loans.


Ever since the housing bubble started to burst we have been blogging about the fact that many senior homeowners have saved their homes from foreclosure with the use of a reverse mortgage. Many have taken advantage of this financial tool. Unfortunately many that did not, may no longer have the opportunity to do so if their home value has declined sharply. It is even worse for those that might have a negatively amortizing loan and now they owe more on a home that is worth less. Read more here from a previous post.

If you are in danger of losing your home and want to find out if a reverse mortgage might be the salvation you are looking for, request a free reverse mortgage evaluation today.

Crisis Planning - Many More Turning To Reverse Mortgage For Help

1/07/2009

posted by N. Sioris

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The unprecedented economic crisis roaring its way through every state in the country and every sector of the economy is taking a heavy toll on retired people and those on the verge of retiring, in a particularly harsh way.

Here are a few recent articles published by well known sources that may help you sort through the mess and make a plan for 2009.

Consumer Reports Retirement Survey:
Planning Ahead May Be Just As Risky As Rewarding

In the wake of big investment losses many have turned to Plan B to strategize and rebuild their retirement nest egg, according to Consumer Reports latest retirement survey. There is a lot of ground to recover: 51 percent of retired readers and 55 percent of those just short of retirement are facing investment losses of at least 20 percent in the past 12 months.

The Consumer Reports National Research Center surveyed more than 19,000 Consumer Reports online subscribers between the ages of 55-75 and found about half have already made strides to generate more cash, including eating out less and cutting back on entertainment. About one-third have cut their credit card use and spent less on groceries and household goods.

"When bad investments happen to good people, they have to work harder to slash debt, cut spending and save more. Switching to Plan B means seizing the reins in every areas of your financial life over which you have control," said Noreen Perrotta, Consumer Reports Money editor.
Continue Reading More From This Article Here.


From The Nightly Business Report:
The Reverse Mortgage Trend

More than 9,700 reverse mortgages were written last month, a 21 percent jump from year-ago levels.

With a housing market still in the dumps and a stock market that's proven more risky than many anticipated, more seniors are weighing the pros and cons of reverse mortgages. Jeff Yastine, NIGHTLY BUSINESS REPORT, Delray Beach, Florida.

Read The Full Article Here.


From The Nightly Business Report:
The Federal Reserve Isn't Expecting Much Economic Growth in 2009

That pessimism about the economy was reinforced today by the Federal Reserve. Minutes from the central bank's December policy meeting revealed that policymakers expect a quote, prolonged contraction. They cited many issues weighing on the economy, including rising unemployment, falling consumer confidence and tight credit conditions. Plus, the Fed now says it's more worried about deflation or falling prices, than inflation. And so are many economists, as Scott Gurvey reports.
Continue Reading the Full Article Here.


Bank Rate.com:
New Rules Rev Up Reverse Mortgages

A new federal housing law has raised the ceiling on the amount of money seniors can obtain from a reverse mortgage and lowered the fees charged for the loan.

Previously, with federally backed loans, the amount a homeowner could borrow had to stay below the dollar limit the county set. But the new law, which takes effect on January 1, 2009, sets a national limit at $417,000 and up to $625,500 in high-cost areas. The previous range was $200,160 to $362,790.
Continue Reading the Full Article Here.


Cape Cod Times:
Reverse Mortgages As a Way Forward

With prices rising, the stock market falling and economic uncertainty spreading, a growing number of Cape Cod's senior citizens are looking to reverse mortgages as a potential source of stable supplemental income.

At the Housing Assistance Corp. in Hyannis, the number of households seeking reverse mortgage counseling — required by state law for those receiving such a loan — more than tripled from the second quarter of the year to the third quarter, jumping from 16 to 52.

"Some people are just trying to pay off their mortgage which will free up money that they will then have to pay off the electric bill and the gas bill," said Cheryl Kramer, the program coordinator for the Housing Assistance Corp.'s Housing Consumer Education Center.

Neither the borrower nor his or her heirs will ever have to pay back more than the value of the home. If the home sells for more than is owed, the borrower or the heirs keep the difference.
Continue Reading the Full Article Here.


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