May 2009

Use of the Reverse Loan has Increased!

The latest figures as of the end of April on the  number of Reverse mortgages that have been done, is already  18% over last year.  If this trend continues than this will be a banner year for the origination of the government insured loan. 

And the reasons are obvious.   Seniors need to supplement the income that they have lost in their investments and a Reverse loan is an easy solution.

Originally the HUD lending limit was determined by the average cost of housing in each county in the United States.   That tended to be unfair for many individuals if their home’s value was higher than the limit for their county and that shut out many potential Seniors from the program.

HUD changed this guideline via the Stimulus package and now there is a single limit of $625,500 throughout the country.   This has opened the “gate” so to speak, by allowing more Seniors to take advantage of the loan program and supplement their income and they are becoming less hesitant to do so.

If this trend should continue throughout this year, I feel that we will see a record number of new loans and the only issue that could prevent that from happening, would be the value of the subject property.

In some cases, Seniors opted to do Stated Income loans in order to pull cash out from the property to make their monthly expenses.   And this has tended to be a problem for some Seniors applying for a Reverse loan, because their payoff might be too large to be covered by the funds from the Reverse mortgage and they are unable to do the loan unless that have the funds to cover the shortage.

Hopefully we will start to see the market turn around and their are indications that, that is beginning to happen in certain parts of the country.  As the lower end of the market starts to see some sells, it will trickle upwards, increasing property values in communities.

If you wish to hear me discussing this on a recent radio interview, please follow these instructions:   Click on the “Locals Only” tab.   I was interviewed on May 19th and you may listen in.

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Discussion on Reverse Loans

For a second time I was a guest speaker on KVTA AM 1520 radio this morning and discussed the myths of Reverse loans that continue to circulate within the general population.   This is the second time that I have been a guest for this particular radio station as I had been previously invited by Pat Hansen of Medical Maze Solutions to be a guest on program that she hosts.

Pat’s program airs the first Saturday morning of each month; 8:30 A.M. and she and her guests discuss senior issues and provide information about services and other topics that are pertinent to aging.  Her program is very informative and a good source of information for seniors and their adult children if they are looking for answers to various concerns or problems.

I along with Corinne Berenson who is a Long Term Care Specialist, discussed the importance of Long Term Care insurance.  There will be a  very large need for it in the future as MediCal and Medicaid run out of funds to pay for long term care of older folks.  Most people haven’t planned for it (You know, “I’ll never get old”) and because of this denial the financial burden for the family and the country will be enormous.

Plus the projections for financial stability/security have become dimmer, due to the current economic environment.  It’s going to take a long time for things to turn around and they will, but not immediately.

Most people will outlive whatever they have managed to save and the financial crisis has been particularly devastating to older people. Not only are they short on money every month to meet their needs but they have become vulnerable to losing their homes as well because they are unable to make mortgage payments on their properties.

And to add to this cheery information, it is now projected that funds for Medicare will be depleted by 2017 and if you can manage to live long enough, Social Security will only be a memory by 2037.

And now back to my comment on retirement…I would have to say…what retirement?   If anyone had ( and that is the correct word) investments, they have probably seen a loss up to 60% of their portfolio, wiping out the possibility of having enough money to meet their living expenses.  And if their children were helping them financially, they may no longer be able to, due to job losses, etc.

Obviously, funds from a Reverse loan can be used to fill in this financial gap if seniors would just be open to learning more about them.  And in those cases where they are, I always refer them to AARP for the booklet called “HomeMade Money” that can be downloaded from the AARP website.    Plus it’s free.   Can’t get any better than, that!

Plus I can mail anyone a copy that wants one who doesn’t know a computer from (you fill it in) but would like to have it.   Just contact me and I will get it out to you still FREE.

It was a fun hour and because of that initial meeting with Kelli McKay who was the sound engineer, she invited me back to discuss the “myths’ surrounding Reverse Mortgages on her show, which I did this morning.

If you would like to hear it, please follow these instructions:    Click on the tab “Locals Only”, go to the Podcast page and look for me under May 19th.

Here is a photo of myself, Pat Hansen and Corinne Berenson from the previous broadcast.

I will be following up on today’s interview in the next post…

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Reverse Loans, Medicare and Social Security

Things are very rough for everyone these days and especially if you are a Senior.   And to make things just a little bit more worrisome, the Boomers probably won’t have Medicare by 2017 and if they manage to make it to 2037 Social Security will be gone as well.

These projections are based upon the current recession and not very reassuring for those who are approaching their retirement.   Well, maybe that’s a bit too optimistic, since everyone that had a retirement portifolo is looking at losses between 40 and 60 %, making it a bit difficult to even think about retiring.

In a report that was published by the NY Times, it was stated that contributing to this potential insolvency, is the obvious fact that so many people have lost their jobs and the unemployment rate is high.   Meaning that the government is collecting less money in payroll taxes which help to fund both programs.

The good news is ( And yes there is some), is that Reverse mortgages will fill in the financial void.   More people are turning to them to offset their financial losses and as a matter of fact Joseph J. Murin the President of GinnieMae, is encouraging Financial Planners to become educated about the benefits of the federal program and begin to discuss it with their clients.

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