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.
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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.

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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.
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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.
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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.
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