Category Archives: Mortgage Industry

“RightSize” New Home with a Reverse Mortgage?

bigstock-Sold-Home-For-Sale-Sign-Home-1893969According to recent National Association of Realtors figures, last year over 26% of homes were sold to homebuyers over the age of 50. And as the peak bulge of the boomer generation approaches retirement, the number of older homebuyers is expected to rise dramatically until it makes up the largest homebuyer cohort in American history.

But not everyone heading into retirement is certain they want to move, and a question I am commonly asked is, “Should we refinance the home we’re in, or buy something with less upkeep?”

Obviously I don’t know – but I have accumulated quite a body of knowledge regarding what retiring boomers take into consideration. Following is a starting point for things to consider:

1.     Is your existing home safe for the long-term, including layout and accessibility to bedrooms, bathrooms, kitchen and laundry?
2.     Is the home the right configuration? How about size?
3.     Is the amount of yard and household maintenance appropriate?
4.     Is the location still right, meaning are you close to family and friends?
5.     Have traffic patterns gotten dangerous?
6.     Are you close to doctors, shopping, amenities, recreation, and your house of worship?
7.     Do you still know your neighbors?
8.     Will this still be the right house in 10 years? How about in 15?

If you answer a significant number of these “no,” moving might be a logical consideration. However, anyone who recently has applied for a home loan knows lending laws and regulations have become akin to major surgery. And for those looking to retire soon, or who have already retired, securing a loan can be very difficult.

However, FHA’s seniors’-only HECM for Purchase was specifically designed with the retired – or soon to be retired – buyer in mind. While there are qualifications that must be met, they are not as stringent as those governing “forward” lending.

A highly beneficial feature of HECM for Purchase is that you can buy your new home before you have sold your exit home. Not only does this get you into your new home in a timely fashion, but you now have time to market your exit home and wait for the next peak sales season to roll around before selling.

But perhaps best of all, rather than tying up a significant amount of your financial resources in the new house by doing an all-cash purchase, you bring to the table only a percentage of the purchase price, which allows you to keep liquid more of your savings, or more cash from the sale of your exit home.


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Following is some helpful information when you are considering an FHA HECM for your parents:

House-safe• More Americans fear running out of money in retirement than fear death. With increasing life expectancy, it is easy to understand this fear. Increasingly, long-term retirement planning includes a reverse mortgage as a means to increase cash flow and address income shortfalls in retirement. Nearly one quarter of homeowners say long-term financial planning was their reason for originating their HECM.

• Nearly half of homeowners considering a reverse mortgage are under age 70.

• About two-thirds of HECM borrowers want to extinguish monthly mortgage payments to make more money available for daily needs. Another way of saying this is that most homeowners have a traditional mortgage – which is paid in full when they close on their reverse mortgage.

• The percentage of workers aged 55 or older who are still employed is up to 40%. However, staying in the workforce can become increasingly difficult as people get older.  Proceeds from the HECM may provide provide tax-free funds and may allow older homeowners to retire


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As Housing Market Thaws, Seniors Once Again Willing to Move

bigstock-Sold-Home-For-Sale-Sign-Home-1893969A surge in consumer confidence, rising home prices and sales, and faster selling times for properties on the market are all positive signs for the senior housing industry. It’s enough to make some market analysts believe seniors have finally reached the seventh stage of recovering from housing market-related grief: acceptance and hope.

“About two years ago the market was in shock, going through the stages of grief, aligned with the housing market,” says Michael Starke, owner and managing director of senior market feasibility firm PMD Advisory Services, LLC. “They were in [the] denial, bargaining [stages]. But now the majority have moved into a period of acceptance. There is a lot more willingness on the part of the senior to start looking at moving. They’re more confident about the ability to sell their home.”

Part of that includes adjusted expectations as to what their homes are worth, he adds, and based on more than 100 focus groups PMD Advisory has conducted on about 1,500 seniors around the country, many now feel they can sell and get a fair deal—even if it’s less than what they might have gotten four to five years ago.

“It’s a trend I’m excited about,” Starke said. “Seniors seem to be in a place of acceptance about their economic situation and their home values. The activity level is starting to move, and that’s a really good sign.”

Existing home sales rose in April to the highest level since November 2009, according to the National Association of Realtors, up 9.7% from the previous year.

Properties are also selling more quickly, on the market for a median 46 days in April compared to 62 days just one month prior—the fewest days since the NAR started monitoring it in May 2011.

The slow but steady recovery of the housing market is good news for the senior living industry, and Chris McGraw, senior research analyst at the National Investment Center (NIC) for the Seniors Housing & Care Industry, noted that existing home sales are a better indicator for the independent living market than are home prices.

“At one point in time, the relationship [between housing prices and occupancy] was very strong during 2006 and 2009 when pretty much all economic data was plummeting,” said McGraw. ”Since 2009, the relationship hasn’t been quite as strong, because when you’re looking at occupancy, there are a whole lot of factors going into play.”


Chart credit: NIC—NIC MAP & Case-Shiller Home Price Indices 

Since bottoming out at 86.8% in the third quarter of 2009, independent living reached 89.3% as of the end of the first quarter of 2013, according to NIC data. Meanwhile, home prices increased 12.1% in April 2013 compared to the previous year—the most in more than seven years, according to CoreLogic.

However, independent living census is still below pre-recession peaks of 92.5%, reached in the fourth quarter of 2005 and again in the first quarter of 2007, and while there appears to be a correlation between occupancy and home prices on the recovery side, there’s more to the picture.

“Housing does play a piece, but it’s not the sole driver,” McGraw says of independent living occupancy.

The supply of new units is one piece of the puzzle, according to him, along with the performance of the stock market and its impact on seniors’ retirement portfolios, employment rates, consumer confidence, and the economy in general.

New construction for senior living stalled almost completely in the wake of the recession, but with a robust U.S. stock market spurred by low interest rates, capital is less constrained, say developers.

Another positive: consumer confidence reached a six-year high in May of 84.5 on the Thomson-Reuters/University of Michigan consumer sentiment index.

“The surge in consumer confidence is exactly the type of economic jumpstart the Federal Reserve intended to result from its aggressive policies,” said Richard Curtin, chief economist at Surveys of Consumers at Thomson-Reuters/University of Michigan, in a statement.

But there are caveats, including unemployment rates hovering at 7.6% through May 2013 and a recent report from the St. Louis Federal Reserve finding that household wealth still lags behind pre-recession levels when factoring in inflation.

“It will take actual and repeated income increases,” Curtain said, “rather than simply a renewed optimistic outlook for consumers to permanently revise their income expectations upward.”


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History Is Made: Seniors Outnumber Teens in Workforce

Senior butcher“It’s good news and bad news depending on the perspective you’re looking from,” says Mary Hladio, president of the Cincinnati-based Ember Carriers, a workplace/workforce management firm that helps mid-sized manufacturing firms with succession plans. “My clients are sticking around longer — they’re 69- and 70-years old and they’re vibrant, but they’re thinking they want to eventually retire.”

But they don’t. At least, not at the rate and age of previous generations. Government estimates show 6.6 million people over the age of 65 worked or looked for work in the first six months of 2010, compared to 5.9 million 16- to 19-year-olds.

“I think a couple of things are happening,” Hladio tells Selling to Seniors. “The Baby Boomers are getting older and we’re seeing the effects of them hitting the market in larger numbers; it also means that Americans are working longer before retiring because they’re living longer and they have the ability to live a fuller life.”

They’re also keeping their careers because “the economy took a hit on their portfolio and they have to work to supplement their income,” she says. “The good news for employers is that they’re going to have someone who is going to show up and be productive and reliable, as opposed to hiring a teenager.”

Employers are actively seeking to retain their older employees just for those reasons, says Steve Isaac, CEO of EducationDynamics. And one way they do that is to pay for higher education for seniors. EducationDynamics is a higher learning marketing company based in Hoboken, N.J.

“We’ve seen a rise in companies investing in current employees,” says Isaac, citing an EducationDynamics survey that revealed some 80 percent of New York companies are paying for employees to get advanced degrees.

“In the past we saw people jumping from job to job to pursue higher salaries and new opportunities,” he tells STS. “Tuition reimbursement not only fosters a more intelligent work force, but a more loyal one. With the support of their companies, these employees will hone their skills and remain in their current positions for longer. It is an investment.”

Teens lose jobs in 100s of thousands

Older employees “bring a wealth of history that you can’t get anywhere else,” says Hladio. “The bad news for seniors is that because they have this wealth of knowledge they tend to command higher compensation. [Employers] have to answer the question, do I bring the college student in at an entry level salary or do I pay for this 25-year history that [a senior] has?”

The competition between seniors and teens isn’t just for higher-compensating white-collar jobs. The government reports that from 2000 to 2009, teens in food preparation — typically an entry-level, minimum-wage occupation — lost 242,000 jobs while workers over 55 gained 128,000 jobs.

Similarly, in sales and related fields, teens lost 532,000 jobs while Boomers and seniors gained 822,000. And in the better-paying, more career-oriented fields of office and administrative, teens lost 553,000 jobs while seniors gained more than a million, at 1,091,000.

Info: Ember Carriers is at EducationDynamics is at To see the report from the Bureau of Labor Statistics, see

For additional senior information about retirement financing using a US Government guaranteed Reverse Mortgage, you may reach Larry Benton at 877.805.2905 or


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How Seniors Use Reverse Mortgages to Increase Cash Flow or to Pay Off an Existing Mortgage in Maryland

Money is tight for most people with the way that the economy is today, and this can be especially true for seniors. Social security doesn’t tend to be enough to get by and when there are so many bills to pay for such as medical bills and a family to provide for, there isn’t any money left over to enjoy retirement. Things can be especially tough when there is still a mortgage to pay because the interest rates and monthly payments just seem to get higher and higher. Fortunately there is a way for seniors to increase the amount of money they receive monthly and even pay off their mortgage without having to leave behind large debts for their children.

Reverse mortgages have been around since the 1980’s and have come a long way since the first one. They are now supervised by the government and there are laws that lenders and borrowers have to follow in order to complete the reverse mortgage transaction. The way that a reverse mortgage works is different than any other kind of loan because instead of needing money to purchase an item, the person has an item and needs money. In this case, the item would be the home that a person lives in.

A person must be over the age of 62 to qualify for a reverse mortgage. The older the borrower is, the more money they will get from their reverse mortgage.

Some home may not qualify for the reverse mortgage, and other types of homes such as mobile homes have to meet certain restrictions in order to be considered. Any borrower who chooses to get a reverse mortgage must go through counseling to be sure that they understand the loan and that they can afford the fees that go along with it.

Once a senior has been approved for the loan, they can do whatever they want with their money. The most common option is receiving their cash flow in monthly payments that will continue for as long as the borrower is alive, no matter how long they live. Since the borrower is taking out money against the house, when they no longer are no longer in the home, the estate will sell the home to repay the loan, or the family can choose to refinance. If the sale of the house doesn’t make enough money to cover the loan, the borrower doesn’t have to make up the difference, because all reverse mortgages are insured by the federal government.

For questions or more information regarding a Reverse Mortgage, visit an expert at!


HUD Chops 10% Off Seniors HECM Benefits!!

House-safeAlmost two months back I wrote regarding the monies being spent in the stimulus package that went to things like tunnels for turtles, guard rails for dried lakes, rehabs for airports with very not many customers, repairs to train stations closed for decades and many more, but we were appalled that our US Congress was taking into consideration Bills which would force our seniors bear the cost of the HUD reverse mortgage plan.

I felt that if Billions and Trillions of dollars can be used in support of these and other projects like skim board parks, hundred million dollar courthouse renovations, scientific grants used for laser beams and wetlands defense, that surely our Congress may possibly stumble on the money to help our seniors continue to use the HUD Home Equity Conversion Mortgage (HECM otherwise “Heck-um”) program to continue to stay in their homes. Unfortunately, it looks like we were incorrect!

Just last week a news piece came out that the US was to fire $36.7 Billion concerning foreign aid, to wealthy countries and countries who don’t like us.  That’s correct, we can discover almost $40 Billion meant for countries who are already wealthy, or would like to witness us fall into the ocean, but we don’t have the money to support a plan that helps our senior homeowners stay in their homes without slashing the benefit amount to our senior homeowners. Our mothers, fathers, grandmothers and grandfathers aren’t equally crucial as the money we will send off to North Korea, Cuba, Venezuela, Libya, Bolivia, Russia and others.

It seems that not simply do we come up with money intended for all these pet projects, but Congress is slating money for healthcare reform with the intention of by all accounts may well further slice benefits to seniors in the form of cuts to Medicare and Medicaid. This week, HUD announced with Mortgagee Letter 2009-34 that Principal Limit Factors are being subtantially reduced effective October 1, 2009 to “…assist with the viability of the program”.

It seems that the HECM program was in no way intended to function with a credit subsidy as explained by the Commissioner, David Stevens, in a call to the Reverse Mortgage Lenders Association (NRMLA).  He remained amicable to re-engineering the mortgage insurance premiums or making other changes but indicated that there was nothing HUD might do since the plan needed to function exclusive of need of a subsidy.

According to the notice issued by the NRMLA, several of the bigger reverse mortgage lenders did an analysis on the portfolios of loans they have settled to year, and that 10% reduction of benefits under the plan (this is the amount HUD intends to lessen the benefits) would have left approximately 21% of all the borrowers with too little proceeds to pay off the existing mortgages on their homes. Said a bit differently, more than one-fifth of all reverse mortgages completed would not have been able to be settled after October 1, 2009, unless the borrowers had supplementary funds they could bring to closing!

This means that all the borrowers who used the HECM Reverse Mortgage, barely paid off their liens to keep their homes throughout these exceptionally tough financial period would be NOW be forced to move; even worse, if they were now delinquent on their mortgages, the seniors may have been foreclosed upon if they didn’t have the additional money to cover the reduced benefit amount.

This year alone, 1st Metropolitan NRMC has helped over two dozen seniors homeowners, who were behind on their current mortgage due to the current economic and financial environment, and, who would have not had the additional funds needed under the proposed changes, and would not have been able to keep their homes. Approximately a dozen were presently in foreclosure and, unquestionably, would have lost their homes with these changes.

Seniors already pay a great portion of this program since the single prime fee for any reverse mortgage transaction is typically the HUD mortgage insurance. On the largest of transactions, this is in excess of $12,500 in cost paid directly to HUD to INSURE the loan.  Additionally, all borrowers also pay one half of 1% (0.5%) for monthly mortgage insurance on their loans. I have no way of knowing what claims have been paid due to the current mortgage/real estate market adjustment;  surely the HECM loans are no worse than the forward, or regular mortgage loans with the intention of HUD has insured through FHA.

The office of Management and Budget (OMB) came up with the statisticsics to determine the projected deficit in the program, and I, for one do not know how they were derived (if I did I might take exception with their numbers, and express this article differently). But to make our seniors pay yet again, while we cover the billions and trillions in spending for superfluous programs and projects while our seniors need our help and support is criminal!  This is just one added cut to the senior population while we waste for pet projects and for things few can justify… Oh, and yes, it seems they could found the money to give Congress a RAISE in budget benefits.

I ask every person, even if you are not a senior, to cal, write, fax, or email (or do all 4!) your representative at http://www.Usa.Gov/Contact/Elected.Shtml and tell them that you strongly urge them to discover a way to fully fund the HUD HECM program and instruct HUD to revert back to the existing benefits so that our seniors do not have to pay the price by way of reduced benefits.

It’s incredulous to me, that HUD or Congress would even consider such a modification at this point in time; a challenging time when our seniors need help more than ever. It is my sincere hope that the Congress hears from a millions of concerned citizens before it’s too late for many seniors.

What if… we modernize one less useless airport, leave out a a small amount of guardrails for dried lakes, build one or two fewer skateboard parks or just forward much less money to the nations who are already wealthy or otherwise postured against the US (Yemen or Jordan?)…  In the name of our parents and grandparents so that they can stay in their homes?

I for one, don’t think that’s asking too much.

Larry Benton CSA® with 1st Metropolitan Mortgage, is a Certified Senior Advisor®, and specializes in helping senior clients continue to meet their financial goals. When you or one of your family members finds yourself needing real answers and real solutions to senior finance challenges, confidentially contact Larry at 410.573.0909 or


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Making Home Affordable Plan Expected to Help 4-5 Million Homeowners Refinance

I have been inundated with calls and emails from my client base as to how the new homeowner relief program, President Obama’s Homeowner Affordability and Stability Plan can help them. I have spent many hours researching the specifics so I could coach my clients with full knowledge of their options… here’s what I found.

Like so many of the bills, proposals, proclamations, and guideline changes that have come out over the last 9 months, the official documentation that surfaces from the specific agencies (or Congress), reads much like a press release, and not a detailed prescription or recipe on how it will work and, more importantly to many, when. The answers to these very important questions are not available at the date of this post, however, the program is broken doen into two (2) areas:

  1. The Home Affordable Refinance
  2. The Home Affordable Modification

The Home Affordable Refinance

Who Qualifies:

  • In short:If the home you want to refinance is your primary residence,
  • The loan on your home is controlled by Fannie Mae or Freddie Mac (it must be a conforming loan — you can call Fannie at 1-800-7FANNIE and Freddie at 1-800-FREDDIE or submit online forms with Fannie and Freddie), and
  • If you’re current on your mortgage payments (meaning you haven’t been more than 30 days late on your mortgage in the last 12 months)
  • If you have sufficient income to support a new mortgage…

.. then, you might qualify.

It gets a little more complicated, though: You can’t be too far underwater on your mortgage (owe more than the home’s market value) to qualify for the refinance. You can owe between 80-105% of the current value of your home, but no higher than 105%. (This plan assumes that if you owe less than 80% of your home’s value, you probably can refinance without government assistance.)

What Do I Need to Provide?

If you think you might qualify to refinance, you’ll need to give the following documents to your mortgage lender:

  • Your monthly gross (before taxes) income of your household, including recent pay stubs.
  • Your last income tax return.
  • Information about any second mortgage on the house (you can only refinance your first mortgage under the plan, but having a second mortgage won’t automatically exclude you).
  • Account balances and minimum monthly payments due on all your credit cards.
  • Account balances and minimum monthly payments for all your other debts, like student loans or car loans.

How Will They Decide What My Home is Worth Today?

Official word on how your home will be valued for the refinance portion of the Obama housing plan hasn’t been released yet. It’s possible that lenders are expected to use their traditional procedures, but it hasn’t been spelled out in the documents. One lender has some ideas how they will arrive at 105%.

When Will This Help Me?

When it comes to refinancing under the Making Home Affordable plan, patience is going to be a virtue. With so many homeowners in some sort of distress (one in six American homeowners has negative equity, and foreclosures and home values fell 11.6% nationwide last year), there is likely to be a flood of applications and queries for lenders.

What If I Don’t Qualify to Refinance?

Don’t lose heart — you might qualify for a loan modification under the plan. Another blog post with the ins and outs is coming in a later post.


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