September 2008

Wall Street and Seniors

Wall Street’ and it’s current BIG PROBLEM is affecting every aspect of the American economy and virtually every single person in the country is experiencing some level of fear about the future.  And if you happen to be a Senior who is relying on funds from a retirement portfolio, it is all the more disastrous.  Seniors are generally on fixed incomes and if that money disappears, it can effect their very existence.

The purposed “Bail Out” for Wall Street and the very scary and very real problems that are happening in  the economy are beyond comprehension.   If you happen to be a Senior, trying to live off of Social Security (what a “hoot”, no one can live on it.) or relying on retirement funds, the current deplorable situation is extremely terrifying for them.  They are wondering how they will survive.

They have worked hard all of their lives, been through WWII, the Korean War and Viet Nam, raised their families, paid their taxes and prepared for retirement by saving money.   You know?   Something that the current, greedy generation hasn’t done and now the “golden” egg, stinks.

The Sandwich Generation, those who are helping their Senior parents out financially or doing care giving, are really feeling the squeeze more than ever, now.   Not only is there retirement portfolio disappearing but they are still trying to assist their parents and they don’t know what they are going to do to relieve the pain.

On top of the mess, many Seniors have been living off of credit cards or a traditional line of credit where they are obligated to make mortgage payments every month and now they are running out of money.   And they’re also running out of time.

Seniors are turning to bankruptcy to relieve them of the debt and sadly many of them are losing their homes to foreclosure as well.  It’s unbelievable that after all of the efforts to protect themselves, the sacrifices that the Senior community has made in trying to plan for their future, they are in a dangerous zone of reality and an undertow of uncertainty.

Reverse Mortgages can play the “hero” to a Senior and their family.   The only concern would be that they still have enough equity to complete the loan, if not, then a Reverse Mortgage can’t save them either.  Seniors and their families need to get past their fears regarding Reverse Mortgages and find out how they can literally save the “family farm”.

Read up  on it by downloading Home Made Money from AARP.

www.aarp.org

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Reverse Mortgage Requirements

The only condition that is required by a potential applicant for a Reverse Mortgage, is that they must be not less than 62 years of age.   And if there are two applicants, the loan amount will be determined by the age of the younger borrower.

Sometimes a situation will occur when one of the borrowers isn’t 62 and in that case they both can’t apply for the loan.   What is not recommended (although some Loan Officers will tell you it’s okay), is to remove the younger borrower from the Title of the property, have the older one apply for the loan and THEN PUT THE YOUNGER PERSON BACK ON THE TITLE.

WRONG!!!!!

The problem with this reasoning, is that it’s called fraud.   And how would a senior look in jail?   And what about the shifty Loan Officer?  They got their commission and could care less about the client.  The other potential issue, is that what if the older borrower dies?

The younger survivor may not be in the position to qualify for a Reverse Mortgage that would be large enough to pay off the current balance and they would have to sell and vacate their home. 

I caution anyone against doing this in order to receive funds from a Reverse loan, as it could be a very dangerous and costly mistake and could cause heartbreak for the borrowers and potentially their children as well.

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Reverse Mortgages and the Mortgage Meltdown

 

There has been some concern by the Senior community that Reverse Mortgages are in trouble along with the rest of the Mortgage industry.  With the huge issues facing all of us at this time, some Seniors and their families are worried that a Reverse loan isn’t safe and won’t considering using one at this time to help with financial problems.

Other than the decline in the property values across the country, the Reverse Mortgage industry is a safety zone for Seniors who are struggling in these very difficult economic times.  But if a Senior is considering using the funds from a Reverse Mortgage to retire an existing loan, there might be a problem.

And that would be the appraised value of the property.   If the mortgage to be paid off is particularly large and depending on the age of the borrower(s), there’s a possibility that a Reverse loan cannot be done if there is not enough equity.

The need and value of the Reverse loan is more important than ever, given that the Senior community is trying to exist on a fixed income, which is certainly not enough these days, to cover the costs of living.  If you think that things are tough for you, consider what it must be like to be a Senior trying to stretch their dollars every month, eating less and in some cases, not able to afford their medical prescriptions.

And if a Senior has a mortgage payment to make, sometimes they just can’t do it and they find themselves in foreclosure.  Even more of them are going into bankruptcy, as they are trying to live off of credit cards and when the money is used up, they of course can’t make the payments that are owed.

The bleeding can be stopped by using a Reverse Mortgage and so can a foreclosure.   It’s ridiculous and appalling that a Senior should have to lose their home and dignity when the answer is right at hand.

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Reverse Mortgages and Adult Protective Services

In the previous post, I started to discuss the Adult Protective Services in Ventura county, CA. and being a guest speaker at their staff meeting.   In closing that post, I mentioned that in the event that a senior is in the process of a foreclosure, a Reverse mortgage can be used to pay off the existing loan and cancel the foreclosure proceeding and save the home.

It is extremely important for the public and professionals to know of this option, given the current foreclosure crisis at this time.   If a senior can’t make their mortgage payment, they have the option of doing the Reverse mortgage, paying off their loan and being able to remain in their home.

About 15 people were at this discussion and given the significance of the day, I felt that it was very important to recognize their commitment to prevent and help seniors and dependent adults from becoming victims of individual terrorism.   I congratulated them on their work and compassion and how important their mission is to help the helpless.

As a Reverse loan consultant and representing the Reverse Mortgage industry, I am quite concerned about some individuals who may financially abuse a senior by selling them a Reverse Mortgage and then use the funds from it to purchase unnecessary insurance products or annuities with deferred payments and high surrender fees.

This has occured and I have come across two situations where a senior had done a Reverse mortgage and then purchased this type of an annuity.   Purchasing any type of insurance product is not a condition to completing a Reverse mortgage and it is very unfortunate when something like this happens.

A Reverse mortgage is in of itself, a built-in annuity without any prepayment penalties or income taxes and it allows the borrower the ability to access the funds anytime whenever they should need  additional money.   To use the funds to purchase an annuity simply does not make any sense.

As a Board member of the Ventura County Adult Abuse Prevention Council (VCAAPC) , I have learned quite a bit  more about abuse in general and the unfortunate ways that it can occur.   Sometimes it is a family member who is the only caregiver to their parent and is overwhelmed by the responsibility and not able to handle the stress or it’s a “trusted” advisor.

And at this time, there are approximately 20 million adult children of seniors throughout the United States who find themselves in this situation, causing enormous emotional stress, physical problems and financial loss.

Funds from a Reverse Mortgage could eliminate this problem and bring relief to the senior and the family members.

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Reverse Loans & Senior Abuse

On September 11th. last week, I was the guest speaker at Adult Protective Services, a division of the Human Services Agency in the County of Ventura, CA.   Because I am a Reverse loan consultant and I meet with seniors regularly, I have made it a point to become better informed as to the issue of senior abuse.

 

The Adult Protective Services (APS) provides information and protection not only for the senior community but also for children and dependent adults that may have physical or mental limitations and could experience financial or physical abuse.  Their services are free of charge to the community and are mandated by law.

 

Originally I was to speak only about 30 minutes on Reverse loans but there were so many questions that the time ran over and I still wasn’t able to cover all of the important information and benefits that can be gained from using a Reverse loan and how it can have a positive impact on a senior’s quality of life.

 

Many of the questions concerned loan amounts, interest rates, costs and how the money could be used, MediCal and the heirs.   I answered these questions as throughly as possible but there were more areas that we didn’t get to.

 

One of those being the issues of seniors losing their homes through foreclosures.   It’s very important to know that if they are in the process of a foreclosure, a Reverse loan can be used to pay off the existing mortgage debt and save the homeowner from losing their home.

 

I will continue this topic in the next post.

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