September, 2015 | Reverse Loan Consultant

September 2015

September 30, 2015 Financial Planning and Retirement No Comments

Can Baby Boomers’ Retire?

Bankrate.com recently completed a survey that was quite comprehensive in it’s scope of learning what Americans have to say about their finances.

Part of it uncovered that a large percentage of citizens over the age of 50+ are worried about running out of money as they age. It is already a “given” that many seniors will have to continue to work because most do not have adequate funds in a retirement plan to retire in the future.

Baby Boomers’ Retirement Situation is ‘Troubling’
Posted ByJason OlivaOn September 28, 2015 @ 5:22 pm In News,Retirement,Reverse Mortgage

“About 30 million Americans tapped into their retirement savings for an emergency within the past year, according to a new report from Bankrate.com. And the numbers tell a “troubling” story for older adults nearing retirement.

Although Americans are increasingly upbeat about their personal finances, optimism for one’s financial situation diminishes with age, according to the September reading of Bankrate’s Financial Security Index.

In September, the Index hit its strongest reading since June at 102.6. While the measure showed improvement in all five components (job security, savings, debt, net worth and overall financial situation), more than a quarter (26%) of those nearing retirement age (50-64) said their situation is worse now than it was last year.

This could largely be due to emergency expenses cutting into retirement savings, which 17% of 50-64 year-olds said happened over the past year.”

I will share the reminder of the article in my next post.

September 22, 2015 Reverse Mortgages No Comments

Reverse Loans and Financial Planning

In the previous post, I shared part of an short synopsis that talked about a recent study conducted by the Brookings Institute as to the benefits of using a Reverse loan as part of a retirement plan.

What is crucial to understand is that in the last few years there is more regulation in place to protect the senior and many more Financial Advisors and other professionals are recommending the loan for their clients, but the general public is still holding on to a lot of misunderstandings and old myths about the FHA loan and find it to be confusing.

Here is the remainder of the article.

Brookings: Reverse Mortgage Can Play Viable Role in Retirement
Posted By Cassandra Dowell On August 21, 2014 @ 6:00 pm In News,Reverse Mortgage |

“And those past mistakes have made an impact on Americans’ perception of reverse mortgages. Today, roughly 10% of reverse mortgage borrowers are in default because they can’t afford to pay property taxes, insurance or maintenance fees.

However, recent legislation has put in greater protections for elderly reverse mortgage borrowers.

Other financial retirement tools, such as Social Security, Medicare, insurance-like products and annuities should also be considered when retirement planning, he says.

The reaons for why workers on the cusp of retirement don’t opt for these products is referred to as the “retirement puzzle,” Harris says, adding that low-interest rates and increased health spending are factors.

In fact, data show that a typical married couple on the eve of retirement needed to save roughly $250,000 to have a 90% chance of paying their medical bills.

“Americans are not perfect savers, but retirement security requires much more than just a high personal saving rate,” he says. “Contrary to public sentiment, America has a retirement spending problem, not just a saving one.”

September 15, 2015 Financial Planning and Retirement No Comments

The Brookings Institution and Reverse Loans

In August, the Brookings Institution took a look at whether or not a Reverse loans should be considered as part of a retirement plan.

Although their study recognized that initially there were problems with the HECM in the early years of it’s existence, they now acknowledge that due to recent regulatory changes, they are a very safe option that allows anyone over age 62, to continue to live in their home as they age.

Here is a synopsis of the article that I will place into two separate posts.

Brookings: Reverse Mortgage Can Play Viable Role in Retirement
Posted By Cassandra Dowell On August 21, 2014 @ 6:00 pm In News,Reverse Mortgage |

As data show how many Americans lack sufficient retirement savings, seniors should consider a reverse mortgage to turn housing equity into cash and remain in the home, says research nonprofit The Brookings Institution.

“Many retirees don’t have access to or knowledge of retirement financial products to provide security,” writes Benjamin H. Harris in a recent The Brookings Institution opinion post [1].

“While reverse mortgages showed signs of life through the Home Equity Conversion Mortgage program, which originated 400,000 reverse mortgages between the inception of the program in 1989 and 2007, the market remains plagued by reports of improper lending behavior and misunderstanding among borrowers.”

September 9, 2015 Counseling, Reverse Mortgages No Comments

Reverse Loan Counseling

HUD counseling is required for all potential borrowers prior to applying for a Reverse Loan and I think that many professionals are unaware of this requirement. The Huffington Post recently published an article discussing what takes place during the session and how informative it is in helping a senior to have a better understanding of the loan program and whether or not it’s appropriate for their personal circumstances.

Overall, the article was quite good, with the exception that the writer stated that the counseling must be done “face to face” and that is not true. If that was necessary, it would require that the applicant meet at the counselor’s office for the process, as the counselors will not go to the individual’s home. And they may not be a reasonable option for a senior, especially if they don’t drive or have a medical condition.

In California, all the counseling is completed over the telephone and usually takes about 1 hour. I always prepare my potential client for it, so that they know what to expect and what kinds of questions the counselor will be asking them. It is an excellent way to research Reverse loans with a 3rd. party who would not be part of the transaction and help them to decide if it is something that they want to pursue.

There is a charge of $125 by most of the agencies and I always provide a list of the counseling agencies that are approved with HUD.

Upon completion of the counseling, the senior will receive a HUD Counseling Certificate verifying they have done the counseling that will be viable for 6 months. If they decide to apply for the loan, I would be collecting it along with other necessary documents to begin processing their loan.

If you would like the list of the agencies, please contact me and I will send it over to you. And if you have any questions about the Financial Assessment and other recent changes to the federal program.