Reverse Mortgage FHA lending limits increase

During the last few months I have been thinking about how this economy is going to move forward. With tea parties and tax day it hit like a ton bricks. but the good news finally dropped by to say hi. As of my last post the FHA reverse mortgage limit was increased to 417,000 from the mid 350’s. Well not too long ago the Congress stepped up and raised the limit to $625,000. So I think the government is seeing this as a need for the relief for some who could not qualify in the normal sense for a FHA backed reverse mortgage. So i am happy to announce this especially for some of California’s residents. new reverse mortgage limits

2008 Reverse Mortgage Trends

I may have forgotten in my last post to address one of the questions I posed. Why did the FHA raise it’s limit on lending to $417,000 in 2008? Well, I know congress had this on their plate for some time, and had been thinking about raising the limit from then $326,000 in early 2008. If you read my last post it goes pretty deep into the economy and house prices in California. The question remains, if house prices may have gone down taking away some of the gains over the last years why the increase in the limit? In keeping true to our goal of giving you the truth about the market, I wanted to explain why the rate increase still helped California’s seniors. Before the credit crunch the median home price in California was above 500k. As a result, many of the senior homeowners who got a reverse mortgage, had to get what is called a Jumbo Reverse Mortgage. Whereas these were not bad loans, the options available to them were limited. (Think back to IndyMac bank who failed this year, they stopped many of the Jumbo packages from being sold) there are still options for Jumbos…

In the mean time the mean house price remains at $380,000, today, 40% off the high of $642,000 from only 18 months ago.- Chuck Ponzi
having the rate increase to 417k while mean home prices in California remain at 380k the window of opportunity has opened for some seniors who would not have qualified for HECM’s before. Call for more details (800) 681-3340

Seniors in line At Recession

I know we have all heard around our coffee shops, at the dinner table and even at the doctor’s office. America is on the road to depression. It seems like there is no end to the trouble we have gotten into with repackaged loans, credit problems and job insecurity.

1. So why are Reverse Mortgage Lenders still in business, while other banks have been failing?
2. Another good question, why did the FHA raise the maximum home value they will lend  to 417,000k in October 2008?
3. Just what are house prices looking like today?

The three questions I have been asking myself, lately.

I was jut reading a blog called Calculated Risk where the projected numbers for California and Florida certainly do show a drop form last years highs. Yes its true, all of those 8 quarter gains of 7-20% have been widdled down a bit. Looking at the numbers, by about 44% to be exact.

Yet the trend is that even this month this spike in declines has leveled to about 10% of the High to Low Price of 2008.

2008 reverse mortgage

The author uses the house price appreciation index, taking the highest recorded average to the lowest, we are comparing highs and the lows here. So we see a cooling off of declines at a possible 10% if the economy can get back on its feet fully.

So what does this mean for California? Well, given that the low average of price increase over the last 8 quarters before this perfect storm was 7%we see that the average price of a home raised 56% from the time over 2005. So what we have seen is, a dramatic turn of much of the average communitiies. In some cases house prices increased over 100% in that same time and they are still holding on to 50% gains.

I think the main takeaway is to count on having to be thrifty (smart, not frugal) in the next year, but if you are 62 and older you can still find a way to financial independence with your home’s value. Again I am not advocating that you get a reverse mortgage at any time – unless its the right decision for you and your family. I just have been thinking very long hours about how the economy is shaping up, and what seniors can do to protect their assets with a reverse mortgage.

If you look further, the price to income ratio of homes was so dramatically high in 2006 and 2007 that we saw a great spike in the normal rate at which incomes are reflected to house prices. Normally as inflation rises so should wages and therefore prices… So we see that houses become more “expensive” over time but they are usually set to inflation, (in an earlier post we calculated a house in 1950 to cost around 20,000, and that same house costing 250,000 today which is close to the same price for the smae house).

What is noted about the market turning around the ratio of income to house prices is this current index, it may fall to below 1. It has not been made abundantly clear when this might happen. (What it would mean is a ratio of new home buyers driving the market back up as the economy slings back or investments drying out until the ratio is leveled again.) -please see your Financial Advisor or other source for correct interpretation of this ratio.

If the markets are not stabilized by next quarter you might be looking for your saftey net. Yet even in these times, as we have seen in other crisis throughout the last 60 years, the Government is not pulling out the carpet from below us. In fact they are investing in the economy more than any other time since the 1930’s. Right now might seem turbulent but there are still options for those who qualify.

1-800-681-3340
I look forward to any comments about the current situation and would like to help anyone figure out their options if they need to stop payments and receive guaranteed $ in these stressful times.

Keeping it real with California Seniors

I work with seniors to get Reverse Mortgages.

Its time to stay honest about the current economic situation and how it affects those seeking to stave off foreclosure or to stop paying their mortgage alltogether, it has been difficult to paint a rosey picture during the economic times we are in. The main audience of this blog and their interested caretakers may be well aware of the Great Depression and its dynamic on the entire economy and the world.  In the 30’s it was ‘bad news bears’ for so many investors watching the stock market close in fear of further meltdown.  But not all of us back then even invested in Wall Street.

Here are 4 points that make this current market even different.

1. This time around we see that the stock market has not been closed for any amount of time.
2. With technology we have seen a concerted effort by the Central Banks to stave off persistent meltdown.
3. The congress passed the one of many (international) bailout programs to take control of bad securities.
4. Even though banks like WAMU have been bought out they have not stopped their unique services and it was a particular good deal for the buyers.

With things like these it seems that although our market has spun around (down 800 for a record, up 900 for a record)

We are seeing things go quickly. Which brings me to the point of house prices once again. Being a mortgage lender I hate to see house prices fall. In fact, in my field of Reverse Mortgages it is even harder to swallow. But this time were looking at record home prices falling into a more of a national average than a complete slump.

I began to think what the following comment really means for our economy….and our seniors.

Home price declines are already approaching those in the Great Depression, when they plunged 30% during the 1930s. With prices already down almost 20% from 2007, what’s next.

If we look at the average home price in 1930:$ 7,145.00 multiply this by the inflation of $100 ($1204.42)….We see that the same house would cost $86,055.80 today.  But it does not, average house prices are still over this figure by far, try $200,000.

Why do house prices not reflect avg. inflation rates?

To figure this out we have to look at a few market pressures; the level of population vs. the availability of homes; the centralization of habitation; the average job availability of your area. All of this still greatly affects the current prices of homes.

So we have a new era, and those of us who are worried about falling prices in the market should also figure out what a 20% in home value means to you.

In terms of real value you must see that the recent boom inflated the price of homes sometimes 14% every quarter for tha last 2 years. So does a 20% decrease really mean the bottom of your home value has fallen out?

I ask this because the congress just passed a bill to keep the conventional loan at 417,000 it also included reverse mortgages to cover up to this amount.

This is an interesting, if not well needed to raise to the maximum from say 300k to 417k  they will guarantee more people with Reverse Mortgages. Many of the homes we service for seniors have between 280-415 thousand in value. The interesting fact is that most fall between the FHA’s past limit and the new limit of 417k. So this opens up the Reverse mortgage market to many.

Finally, the new law also brings those who have seen their home price go from 500 thousand to 417thousand  (-20%) to qualify for a reverse mortgage with no special loans being needed. So in effect, many more people qualify for the benefits of the reverse mortgage.  They can stop paying their mortgage bill every month and have non-taxed, secure income for whatever comes their way in the future slowdown and regaining of the market.

Just think what you could invest in>>>>Look at the banks. They bought the entire kit and kaboodle (WAMU for example) for pennies on the dollar and it seems JP Morgan and Chase could not have been happier!

Why we are in the top ten.

Reverse Mortgage Info

For baby boomers in the next 2 years you may wonder will you still read your daily dose of world news at the table or on the monitor?

As technology continues to evolve, so do our brains.

In today’s day and age it seems that the promise of a retirement should be realized. We may finally be catching up with the industrial giant that we have all created and participated in for the last 200 years.

• During the last 50 years we have seen some amazing generational transferrence through the entire process.

This has to do with so many factors including the spreading of new ideas
as simple as::

• bee bop
• massive concerts (with big sound)
• cell phone calls with our newly “independent” children

And as complex as:

• propoganda,
• mass demonstration
• strikes, walkouts, sit-ins
• nanotechnology
• spreading of news through the internet (the World Wide Web)

There are countless advancements and some good traditions that have been brought up, swept away and then carried on back like a torch, through the ages of the 20-21st centuries.

Despite a major financial ringer in mid 2008 and the subsequent fallout, a changing political landscape, and record levels of debt- we all look forward to a positive technologically savvy, and wholesome human approach.

Now today, Seniors have many new roads to take as an estimated 4.3 million Californians join the almost 4 million current retirees in California by 2010. We know that some of you may decide to stay in your country villa in San Francisco or Orange county. Some of you may have visited the Lucas Ranch in Marin County and would like to wire your house for heart palpitating entertainment purposes. Others are just looking for the security to preserve their health while Americans just 60 years ago carried out their daily routine often until they were 75 and could no longer work.

Well today is the day to talk to someone if you would like just the facts on Reverse Mortgages. I am writing this because I want people to know why we are a top 10 California Reverse Mortgage Lender. In looking at the years 2001-2008 we rank in the top 50 of all companies to sell a reverse mortgage. We’re proud of this because we know what we do helps people who need the service the government offers to its citizens. But we are far prouder of being in the top 10 of reverse mortgage producers today. As the rules of the Government backed FHA loan has changed for many new home buyers (Predisent Bush declared all new programs ending for First-time-Homebuyers October 1, 2008).

The FHA reverse mortgage program for SENIORS is mandated and is not affected by this decision which takes place for all new loans after (October 1). This does not affect reverse Mortgages we still have our HECM 300 and HECM 150 and a several banks who offer Jumbo Loans even through the government has lowered some of the FHA limits recently. All of the details are available to you if you wish to order information or speak to us directly. Just click on the link below for more information.

Thank you,

Joe.

Los Angeles Reverse Mortgage CA Forclosures + HOPE Assistance

Just last week I was reading the Los Angeles Times and my interest was peaked when I read an associated press article about California forclosure rates in June 2008. The article states that over 40% or 14,749 homes sold in June in CA were as a result of foreclosures. So I began to wonder where is the HOPE Program when you need it most??? Well, it looks like Under the legislation, the HOPE program could start as early as Oct. 1. You can read about the `HOPE for Homeowners Act of 2008′ or H.R.3221 here.

The issue for Reverse Mortgage eligible Seniors in California

is that there are strings attached to this program so its no free lunch as “homeowner beneficiaries share any appreciation profits or equity gains from sales of their houses in subsequent years. ” as Kenneth R. Harney with the Washington Post explains. Furthermore, the bill points out that a second lien (refinance) can not be made on the property for 5 years after the assistance is granted. This means anyone in trouble who is a Senior Citizen eligible for a Reverse Mortgage in California would waive their right to tax-free income if they take the assistance. Here’s why:
Up to 1 year the Government would gain 100% of the proceeds of the loan if refinanced. After 2 years 90% and so on.

So while some of us are waiting for the HOPE bill to go though our congress (we all want assistance for Californian’s in trouble) it is the California Senior in need who needs to consider that their options are not only to wait for help and to default on their loans strapped in Mortgage payments for another 5 years. For example, if you are a qualified senior and a home owner, and lets say you have bad credit as a result of an expensive or missive loan: You can qualify for a reverse mortgage, eliminate your monthly payments and realize any equity in your home you currently have stored up.

Again the issue is that as a senior you still have options. You shoud always consult your financial advisor, or your tax person regarding your decision to move forward with a reverse mortgage or other financially impacting decision. If you are in a tight spot and are 62 years or older bring up a REVERSE MORTGAGE if its the first time you’ve thought about one. If you’ve looked extensively and know your best option is to move forward with a reverse mortgage in los angeles or anywhere in California, Arizona, Washington, Florida or Oregon. Give us a call and mention the ‘Living in Revere’ blog and Joe Rizzo will give you a discounted rate. (800) 681-3340
We’re here 7 days a week.

LIVING in REVERSE

Welcome to Living in Reverse

We all need accountability when it comes to dealing with our nations aging population. Today, the world is moving at such a fast speed we seem to forget sometimes that life is really a precious thing. When it comes to my parents, I want them to be happy in their older years as much as I was when I was a child with them. Now there really is no way to make that happen if I can’t be with them enough to even say hi or pick up the phone on a daily or weekly basis. Being as busy as we are on any given day, it seems we are negligent of our duties as children to our senior parents. They did raise us after all. Now that we are starting to see what that is really all about (some of us anyways), then we can see right away they spent a lot of time raising us. Now its time to take care of them.

My parents need a reverse mortgage. I am an agent who happens to do reverse mortgages. So I know about all of the “up” and “down” talk that goes on about these loans. One evening my dad called me and asked what I knew about the reverse mortgage process. I told him about the major banks that lend the money to cover the value of his home while he lived there. I also mentioned that there are smaller lenders who can sometimes make a loan work (within the FHA guidelines). I broke down the way a bank insures his loan and charges interest back to the loan. Finally we agreed that with a thousand dollar mortgage payment and a house that was worth over 6 hundred thousand, he would be able to get about 170 thousand from his home considering his age, and would not have to payback the amount he owed on the house. Being and agent who knows about these loans and knowing my mother and father needed some cash in reserves and could use $1000 a month I signed them up for a consultation with an FHA representative thinking they would come in to my office the following week.They did’nt show up right away. So the following weekend I went home to my parents (about 2 hours away) and I discussed at length the idea that this was their home and their lives we were talking about and not what they would “leave behind”.

Of course they would leave all that was here “behind” so I told them it is time now to be at one with “nature and each other.”

What I meant was, in this day and age the least I could do for my parents is assure them that it was going to be ok and that they were not selfish for taking the value of their house and turning it into a ‘new way of life’. Why would I, someone who had signed hundreds of people up for a reverse mortgage tell them I wouldn’t approve of their decision? I already had my fair share of conversations with people my age about the decision to take out a loan that would accrue interest. The fact was, I and my parents were no different than all those I helped through the process before. We were never ‘rich’ by the means of any standard. My parents both had jobs their whole lives and took care of every infraction or decision to better myself or our well being. So to me it was a simple decision. My father a savvy enough with his finances in his older years would make my mother happy with what ever she wanted while still having enough to plan their trips and buy his fishing outfit. This sense of freedom and happiness was overwhelming to me and for my parents it was enough to go out and “celebrate” together with my family. My father said to me six months later that this was what he was dreaming about when they called me from a gas station on the way to Moab.

This was really what I hoped for my parents and was glad to be of service in pointing out the cost/benefit analysis was on their side.

House Prices. Sustain in first Quarter 2008?

We all know that there were record house price increases especially in California from 2001 until now in 2008 we finally may dip a little bit as we did in the mid 90’s. Even then, we will not see levels of a decade ago, our house prices have shot up almost 55% since 1998 (average home values). So where does this leave us today if we want to cash in on the value of our homes? Straight into the horses mouth: we are on the edge of seeing substantial gains in the last 50 years equalizing again.

Looking back at the decade between 1980 and 1990: Over that period,  we had a relatively good economy with a housing slump in the 90’s and only a 4% gain was seen in average home prices with price drops seen for several years. Remember when we bought homes for under 25,000 in 1968? We see that the value of our homes has gone up by 19 times that amount since. What this says to me is that… going into a bear economy with full gail force in 2008 means we are at the tipping point and it looks like our 41 year projection, is a cooling effect. Now, inflation has been on the down turn for 15 years. If this increases like it did after Katrina in 2006 we might need to recalculate our current spending for our retirement.

What can one do in this economy to protect their worth? One may not want to infuse a lot of money in the stock market unless they know some good information about whats going to stick around or become the next wave, but it has been said that buying low is the key to success. Other investors go in for the long haul protecting their investments versus inflation and sometimes gaining on those figures with their own interest bearing accounts. The best way to secure yourself if you are 62 or older is to make sure you weather the storm so to speak in the next decade by sheltering your net assets. There are many traditional ways one can do this.

But not all of us have thought traditionally when it comes to our retirement, and in order to make it we have to find alternate forms of income or live by our bootstraps. But there is no need for this right now in California. Those of us with debt in our houses and who live on fixed income can still turn their houses around to make life sweeter all the way through the next decade. Ima talking once again about reverse mortgages and the important thing to know is that you still have the option to cash in on our home and take all or some of the proceeds to protect like the tigers do.

So why not wait it out? It appears we have increases in all 10 year spans and some significant drops. So it looks like the banks are covered on their investments. I know we can never tell exactly which way the proverbial wind blows in times like these so sometimes its better t get a sense and others its time to act. Ask yourself about what the market has done and imagine not having to sell your house on the market for months, or living but always paying out of your pocket for your home, Imagine even if you have your house paid off, you have money that can become available at any time with the California Senior Lenders.

If you have questions, send them to info@seniorlendersreversemortgage.com

FHA Gets a Review

Back in May of 2007 H.R. 1852 was passed by the House Financial Services Committee. See Press Release

Changing HECM or Home Equity Conversion Mortgages. Waiting until the bill gets passed the Federal Housing Authority and Financial Services Committee will be sending this through to the full Appropriations Committee by September. What is to come for the Annually reviewed HECM program? Lets take a look.

Why did the House of Representatives approve a bill that costs the average family $34.06 per year?

1. Number one it extends the program which is usually under review within every year. The bill does not put a limit on the number of mortgages the FHA can insure.
2. Second, it opens up the the FHA to cover larger equity homes in places like California allowing the lending limit be increased to the conventional limit currently $417,000.
3. Third, the amount of Origination Fees for the loan will be recalculated to either of two measures. Either the fee will be calculated on 1.5% of the total loan instead of 2% of $362,790 current capped figure, or the fee will be calculated against what a borrower qualifies for at 2% of that amount.

If these changes take place, keeping the HECM vital to our nation’s seniors the Government has done our parent’s a service to offer financial stability. This is what the bill is designed to do. No one wants to see their parents struggle in their retirement. If the candidate fits all of the requirements then the FHA may have your back. Of course, if you own your home outright and do not need to a large sum of cash then Reverse Mortgages might not make sense. The point is there is a level of struggle and love for our homes that need to be weighted against the options we have today.

Reverse Your First. Talk to an Expert today. 1 (800)-681-3340 SLRM