budget cuts

Reverse loans, Regulations & Counseling

In the ten years that I have been employed as a Reverse Mortgage specialist, I have seen many changes in the the program,  resulting in more loan options with lower fees and more government regulation which is for the senior’s benefit.

Peter Bell is the President of the National Reverse Mortgage Lenders Association and recently had an article published in the magazine, “Life After 50” covering the history and initiation of Reverse loans and the changes to the government program over the last several years. The article is too long to post here, but I will share some of his comments.

“From conception, HECM’s have featured groundbreaking consumer protections including mandatory pre-application, independent counseling. They are the only financial product that mandates borrowers have independent counseling before they can apply for a loan. Counseling gives prospective borrowers the opportunity to fully understand and consider the terms and implications of a reverse mortgage loan with an independent professional before a borrower applies for a loan.”

“Reverse mortgages are a well-conceived tool in the retirement toolbox that have benefited from product innovation and evolution of consumer protections. Today’s borrowers have more choice, cheaper loans and more protection.”

Please call me with any questions that you may have about using reverse loans for LTC and retirement benefits. There are many low-cost options to chose from and the mortgage rates are at historical “lows”.

With the loss of many social programs that seniors have come to rely upon, funds from a Reverse loan can keep them in their home and assist them in paying for long-term-care and other expenses.




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Financially Insecure Seniors

These are the most difficult times I have ever seen our country experience and no one is immune to the financial and economic insecurities that our nation is struggling through at this time.   Every day it seems as though we only hear more bad news…layoff’s, mass murders, another politician being exposed for some sort of sexual impropriety, climate change and on and on it goes.

I would prefer to post something cheery and encouraging here, as we all need something to make us laugh a little and put a smile on our face.   However, we are pretty powerless over the events that are unfolding each day and it simply comes down to ourselves and our families to make the most of where we find ourselves.

Some may find having those options more unlikely, especially if you happen to be a senior citizen.   More bad news….I am going to re-post and article in two parts that discusses the latest findings regarding how many seniors find themselves very, very financially insecure.

Percentage of Economically Insecure Seniors Surges to 75% and Counting

July 26th, 2011  |  by Elizabeth Ecker Published in Data, News, Reverse Mortgage

“Circumstances for retired seniors have gone from bad to worse, according to a July 2011 Research and Policy Brief, as household budgets are increasing while household assets drain away. The Institute on Assets and Social Policy (IASP) released a brief titled From Bad to Worse: Senior Economic Insecurity on the Rise, which examines the economic security of seniors and an increasingly common fear of outliving resources.

Declining household assets, inadequate household budgets, and increasing housing costs are the three main trends driving economic insecurity, says IASP. The number of households experiencing financial burden due to increased housing expenses rose to 50% in 2008, defined by the federal standard as 30% or more of a senior’s annual income going toward housing. And although many seniors have equity in their homes, says IASP, many of those homes require extensive—and expensive—maintenance, while other seniors are renters and don’t own their own properties.

Additionally, retirement assets are no longer as substantial as they once were, especially with the shift from defined-benefit plans to defined-contribution plans, and many senior households end up with a negative balance after taking care of necessary expenses.

Overall, economic insecurity among senior households experienced a notable rise from 27% to 36% between 2004 and 2008, the IASP found through using the Senior Financial Stability Index. And, says IASP, this began to happen even before the Great Recession, leaving the concern that seniors’ future prospects may get even worse.”

I will post the remaining part of this article on 7/29/11


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Wells Fargo & Reverse Loans

In an effort to catch up on the latest news in the Reverse mortgage industry, I just found out that Wells Fargo is exiting it.   Long considered to be the leading lender for the FHA/HUD product, I was very surprised to hear this news.   Along with Bank of America who earlier stepped away from offering the loan, we see two very big players disappearing from the Reverse loan industry, along with Financial Freedom who left in March of this year.

With the continued uncertainty due to the wobbly economy and the housing market, they apparently feel that they would rather not risk originating loans when property values continue to decline, even though there is a greater need for it them now then  in previous years.  With the economic uncertainty,  concerns about Medicare and Social Security, more senors could be utilizing the funds from a Reverse loan to pay their monthly obligations and particularly any medical expenses.

The economy future is murky and my personal feelings are that we are a long ways from any recovery.  And as the need for the Reverse loan grows ( And it will), the amount of funds that a senior could receive will shrink.  The continual slide of the housing sector is directly affecting future of the government program and the financial security of  seniors financial safety net.

The housing crisis and it’s inability to recover is  mainly due to the continual foreclosure activity and is having a direct effect on Reverse mortgages.   Currently the HUD lending limit it set at $625,500 but as of this writing, they are considering reducing it back to a previous limit of $417,000 this coming October.

The immediate effect of the reduction will mean less money will be available to the senior homeowner and if anyone is “thinking” about using the loan, it’s imperative that they do so before the change in October.

The first step is to complete the counseling that is required by HUD and then meet with a Reverse Loan Consultant for further information.   Once this has been done, those who are considering the option of a Reverse mortgage will be able to make an informed decision as to whether or not to move forward on an application.

Fear, hesitancy, inertia or not making an effort to be informed only hurts ourselves.  Life will move on and it’s up to us whether or not we do too.

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National Council on Aging

A recent article by NCOA discusses Pres. Obama’s White House budget and how it will effect the senior community due to proposed cuts of 45% in the Community Service Employment Program.

For many seniors, they are using these extra funds from part-time employment to maintain their ability to survive from month to month and without them will experience severe difficulties in paying for their day to day needs.  And on top of this blow, more will come from each state as they look for ways to cut back on spending by eliminating some programs that seniors have come to rely upon.

As much as some seniors don’t want to consider using a Reverse loan to stay in their homes and self-fund their costs of living, they at least have this as an option to increase their cash flow. 

Seniors need to get past their fears about the myths concerning the loan program and take advantage of the free HUD counseling that is available as of this post & find out how a Reverse loan can help them.

Once they have done some research from reliable and credible resources, will they be in the position to decide if using one is right for them.

NOCA:  Obama Budget Slashes Jobs for Low Income Seniors

“Spending cuts included in the White House Budget released this week ”would drastically slash initiatives that empower older Americans to sustain their health and economic independence,” according to a statement from the National Council on Aging (NCOA).

The organization points to a proposed 45% cut in the Senior Community Service Employment Program, which it says is the only major jobs program targeted toward helping disadvantaged older adults who need to remain in or return to the workforce to avoid financial crisis.

The program serves the extremely low income population, and NCOA says the proposed budget cut would lead to the loss of 55,000 part-time jobs, as well as struggle among thousands within the senior demographic who need to remain employed.

“At a time when Democrats and Republicans are both talking about jobs, it just doesn’t make sense to cut the only jobs program for seniors,” said Jim Firman, president and CEO of NCOA. “The unemployment rate just went down in December as 36,000 new jobs were created and now the Administration wants to give them right back.”

Among other points in the budget aimed toward seniors, NCOA expressed disappointment in response to a proposed cut from the the Low Income Home Energy Assistance Program (LIHEAP) budget by almost half, and praise for continued funding for family caregivers under the Older Americans Act.”

NCOA is one resource for home equity and reverse mortgage counseling for seniors.

Written by Elizabeth Ecker

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