Monthly Archives: December 2012

SENIORS – BE CAREFUL WITH REVERSE MORTGAGES!

Defaults on reverse mortgages are reaching record highs and in some cases these types of loans are being blamed for turning seniors out of their homes!! You have all probably seen the TV ads hosted by an actor, former senator, etc. promoting reverse mortgages. They sure make them look like (as my kids would say) a “sweet deal”. Maybe, maybe not.

If you are 62 years or older you can apply to borrow money against the equity in your home by executing a reverse mortgage. These loans don’t have to be repaid until you either move or you die. Typically these types of mortgages are seen as a way to fund one’s retirement by pulling the equity out of your home – equity you have worked hard to build up.

Reverse mortgages make sense for some people – BUT NOT ALL PEOPLE!! So be careful when you are considering this type of financing. Think it through and ask for the advice of others that you trust. And remember, you still have to pay taxes, insurance, and maintenance.

It seems that some lenders are advertising these types of loans as “free money”!!! NOT TRUE!! Just as with any type of loan you take out THERE ARE RISKS!!! So again, always seek others advice. One person you may want to talk to would be your attorney.

According to a report in the New York Times several widows across the country have come forward saying they are facing foreclosure and eviction following their spouse’s death because they were not included on the reverse mortgage deed – remember I said above to check with your attorney!! These widows say they have no claims to live in the home unless they purchase it outright following their spouse’s death.

The CFPB is working on a new set of rules for improving the disclosures on a reverse mortgages and the hidden risks as well as more supervision of lenders who issue these loans. Meanwhile, be careful if you are considering a reverse mortgage and again, SEEK COMPETENT ADVICE.

SEEMS LIKE EVERYONE IS IN DEBT THESE DAYS-EVEN THE FHA

The FHA was created about 78 years ago (during the great depression) to promote stability in the housing market and allow middle class families to attain the dream of “home ownership”. Have they done a good job?? – yes they have!!

However, as predicted by a number of economists, this depression-era for homeowners seems to be going broke and may have to dip into the US treasury to keep it afloat. Does that sound familiar? And “wow” an audit seems to indicate that the shortfall will be in the 16 billion range. This problem seems to be the result of the rolling housing debacle of the last decade. Think of it – it only took about 10 years to undo 78 years of great service by FHA.

I think it’s fair to say though that without the FHA the current housing crisis might have been lots worse -but not without stress. In times of crises when private financial institutions have fled the marketplace and have consistently failed to step up to the plate the FHA has remained steadfast.

It will be interesting to see what steps the FHA takes to meet their current challenges. Will they raise premiums; will they tap into the US treasury – who knows!! It will be interesting to watch.

We will try to keep you up to date.