Thursday, February 26, 2015

Keep Your Home California helps seniors with reverse mortgages

 Keep Your Home California has created a new pilot program to help low- and moderate-income senior homeowners with reverse mortgages avoid foreclosure.

Under the Reverse Mortgage Assistance Pilot Program, homeowners age 62 and older who have a Federal Housing Administration Home Equity Conversion Mortgage, also known as a HECM, could qualify for as much as $25,000 in assistance.

The money could be used to pay property taxes and homeowner’s insurance and help with future expenses to make sure homeowners get back on their feet.

“There are many senior homeowners who need a helping hand in order to get back on track with their reverse mortgage-related expenses,” said Tia Boatman Patterson, executive director of the California Housing Finance Agency which oversees Keep Your Home California. “We don’t want these seniors, many of whom live on a fixed income, to lose their homes because of some missed payments caused by a financial hardship beyond their control.”

The Central Valley, the Chico and Redding region, and the High Desert area have high concentrations of homeowners with reverse mortgages, the agency said. The group does not know how many people are affected, but estimate that its $25 million program can help 1,400 homeowners.

To qualify, homeowners must live in the house, must meet county income limits and must have endured a financial hardship such as a reduction of income, a divorce, a death in the family or extraordinary medical bills.

Six mortgage companies currently participate in the program. Homeowners whose mortgages are held by the following companies can apply: Champion, Financial Freedom, James B. Nutter, Residential Mortgage Solutions, SunWest and Wells Fargo.

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Monday, February 23, 2015

What to know about reverse mortgages

WASHINGTON —  When you have most of your wealth tied up in your home, it's referred to as being "house rich, cash poor."

Many seniors who find themselves in this position may be enticed by the commercials offering salvation. They are wooed by a chance to tap into their home's equity with a reverse mortgage. Smooth television ads make it appear to be a no-brainer. It's actually much more complicated.

The most appealing quality of this type of loan is that, unlike a traditional mortgage, you don't have to make monthly payments. The lender doesn't collect until the homeowner moves, sells or dies. Once the home is sold, any equity that remains after the loan is repaid is distributed to the person's estate.

To qualify, you have to be 62 or older. The reverse mortgage market isn't huge — about 1 percent of all mortgages — but reverse mortgage lenders are likely to pump up the volume in coming years as more seniors retire. For a lot of people, the only source of big money for them is the equity in their homes, says the Consumer Financial Protection Bureau.

In 2013, a typical household had only $111,000 in 401(k) or IRA savings, according to the Center for Retirement Research at Boston College. The center found that too many people are dipping into their retirement accounts during their working years, causing what is called a "leakage."

But a lot of seniors have equity in their homes — about $3.84 trillion, according to one mortgage industry survey. They can tap into that equity by selling or taking out a home equity loan or line of credit. But selling isn't an option if they want to stay put, and they would have to make payments on the line of credit or loan. Given those options, it's no wonder a reverse mortgage can be appealing.

The CFPB, in a report analyzing 1,200 reverse mortgage complaints received from 2011 to the end of last year, found that many people are confused about this type of loan.

The fact that counseling is required from a government-approved agency for loans made through the Federal Housing Administration's Home Equity Conversion Mortgage (HECM) program is an indication of the complexity of this financial product. Still, many seniors don't understand what they are getting into.

People complained to the CFPB about their loan terms, the loan servicing companies, and not being able to add a borrower. Adult children complained that lenders refused to add them as an additional borrower or allow them to "assume" the loan for an aging or deceased parent, the report said.

To help, the CFPB has issued some tips about reverse mortgages. Here are the three important things the agency says you or your relatives should know:

• Double check that your loan records accurately reflect who is on the mortgage.

• Be sure to understand the risks of not including a spouse on the loan. Often an older spouse will take out a reverse mortgage in his or her name only because older homeowners are able to borrow against a greater percentage of the home's equity.

"Non-borrowing spouses submit complaints distraught that they are facing foreclosure and about to lose their home after their husband or wife dies," according to the report. "Other non-borrowing spouses submit complaints worried about their ability to remain in their home should the older spouse die first."

If you decide it's financially better for just one spouse to take out a reverse mortgage, be sure to have a plan for the non-borrowing spouse. Can a surviving spouse stay in the home? The Department of Housing and Urban Development has attempted to address the issue of non-borrowing spouses. Under certain conditions, some spouses may be able to stay but others may not get that protection.

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Friday, February 20, 2015

4 Ways Foothill CU Provides Guidance to Home Buyers in Arcadia

Buying a home in Arcadia, Calif. is not only a major milestone, but a big leap for your personal finances, taxable income and credit history. Ensuring you take the proper steps to set yourself up for success for the long term is easier with Foothill Credit Union as your guide, from applying for mortgage financing to closing on the home. Whether this is your first home or a vacation property, Foothill is able to give personal service and expert advice on how to get the best Arcadia home loan rates and speed up the closing process.

Each home loan should be decided on a case-by-case basis of what will benefit your goals for homeownership and your budgetary needs. For example, fixed-rate mortgages are often ideal for people with good credit who plan to stay in the same home for more than 10 years. Adjustable-rate mortgages, which have fixed rates and payments for a set time (typically five, seven or 10 years), might be better for someone who plans to move after a while or could handle the variable increases for the remainder of the loan term.

Various home loan options can be confusing and complicated, so Foothill offers four ways for people to get help with buying a home. You won’t be left guessing which mortgage option is best for your personal finance needs thanks to the following expert guidance for home buyers in Arcadia.

1. Get Your Mortgage Questions Answered by a Foothill Representative

Wading through home loan paperwork can be overwhelming. Foothill’s expert loan officers are there to ensure all of your pertinent issues are handled in a timely manner. You shouldn’t have to dig through an online forum or wait on a helpline to get all your mortgage questions answered. Members can consult with mortgage loan representatives from Foothill to ask all their mortgage questions and gain individualized advice.
2. Attend an Arcadia Home-Buying Seminar by Credit Union Specialists

Foothill’s mortgage specialists provide home-buying seminars in Arcadia every quarter to explain market conditions and home-buying basics. Seminars are a great way to understand the market before you go searching for a new home in Arcadia and use that information to make sure you’re getting a good mortgage deal and the best value for your money. Experts can even help you with filling out an application. Most events are first come, first serve, but you can reserve a seat by calling 626-445-0950, ext.4000 if you are interested for the spring session.
3. Gain a HomeBenefitsPlus Professional Realtor

The HomeBenefitsPlus program offers you personal service with a professional home-buying counselor who can help you find the right real estate agent for your needs, as well as provide advice and a second opinion throughout the process. You won’t be left to struggle through any step thanks to your counselor, who will stay in touch with you as you work toward buying a home. You will have an advocate to answer any questions that might come up along the way.
4. Explore Foothill’s Online Mortgage Information Tools

The credit union’s online tools include home-buying tips, selling tips, listings and consumer resources to be prepared for the Arcadia housing market. Online resources will walk you through the home-buying process and provide answers to common questions for new home buyers. You can also use the Foothill mortgage calculator to see how much you could save by increasing your monthly payments.

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Thursday, February 19, 2015

Mortgage rates hit high for 2015 so far

Mortgage rates edged higher for the second week in a row, reaching their highest levels this year as investors reacted to the latest developments in Greece while keeping their eyes on the Fed.

    The benchmark 30-year fixed-rate mortgage rose to 3.96 from 3.9 percent last week, according to the national survey of large lenders. One year ago, that rate was 4.49 percent. Four weeks ago, it was 3.81 percent. The mortgages in this week's survey had an average total of 0.3 discount and origination points. Over the past 52 weeks, the 30-year fixed has averaged 4.21 percent. This week's rate is 0.25 percentage points lower than that 52-week average.
    The benchmark 15-year fixed-rate mortgage rose to 3.21 percent from 3.17 percent.
    The benchmark 5/1 adjustable-rate mortgage fell to 3.31 percent from 3.32 percent.
    The benchmark 30-year fixed-rate jumbo rose to 4.11 percent from 4.1 percent.

Rates had risen slightly since the January employment report was released, showing that the labor market continues to grow.

"That got things rolling, but everything has snowballed since then," says Michael Becker, branch manager for Sierra Pacific Mortgage in White Marsh, Maryland, referring to other events that have put upward pressure on rates.
Blame Greece and watch Yellen

European stocks rallied on Feb. 18 as investors reacted to news that Greece was working on a potential agreement with its creditors. Hopeful investors seemed more willing to take their money out of safer investments such as U.S. Treasuries to bet on riskier investments. Whenever there is less demand for U.S. Treasury bonds, yields rise and mortgage rates tend to follow.

The yield on the 10-year Treasury note reached a high of 2.16 percent on Feb. 18, after staying below 2 percent for several weeks.

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Monday, February 16, 2015

30-Year FHA Mortgage Rates Climb, But Still Historically Low

FHA mortgage rates rose a bit this week, according to the latest survey conducted by Freddie Mac. But they’re still hovering at historic lows, well below the 4% mark. Borrowers with excellent credit are currently locking in 30-year rates as low as 3.55%. Here’s an update on FHA mortgage rates past and present, and with an eye to the future.
30-Year FHA Mortgage Rates Averaged 3.69% This Week

The average rate for a 30-year fixed mortgage fell to 3.69% this week, according to the long-running industry survey conducted by Freddie Mac. This average applies to both FHA and conventional home loans within the 30-year category.

The current rate averages in the 15-year fixed and the 5-year ARM categories are hovering just below 3%, and have been in that range for several weeks now.

So how do these current rate averages compared to last month, and to this time last year? Here’s a retrospective comparison:
Still Lower Than Last Month, and Last Year

FHA mortgage rates have come down a bit since the beginning of 2015, and they are significantly lower today than this time last year. This is the exact opposite of what Freddie Mac’s economists were predicting to happen last year at this time.

In December 2014, Freddie Mac’s chief economist Frank Nothaft published an article entitled “A Look Back at Five Predictions for 2014.” In it, he said the following:

    “As we entered 2014, mortgage rates [in all loan categories] had been inching higher and were expected to continue gradually rising throughout 2014. What happened? Quite the opposite happened.”

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Friday, February 6, 2015

Obama's housing recovery plan could bring another Great Recession

When President Obama announced two weeks ago that he was going to lower the insurance premium for risky FHA mortgages,  the country reacted with a yawn. Americans seemed to be asking: What’s that got to do with me?

A whole lot, it turns out.

The American people might snap to attention if they understood that the president is proposing to go back to the same policies that brought on the 2008 financial crisis.

That’s the problem we face today. The American people — after being told for years that the financial crisis was caused by Wall Street greed and the failure to regulate banks and other financial institutions — simply do not know that it was government housing policy that caused the financial calamity that shook the nation seven years ago.

The stark facts are these: in 2008, there were 55 million mortgages in the U.S., of which 31 million were subprime or otherwise risky because they had low or no downpayments and other bad features.

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Wednesday, February 4, 2015

Have We Learned From Past Mortgage Mistakes or Not?

Edward Pinto believes that the mortgage lending risk is unacceptably high (“Building Toward Another Mortgage Meltdown,” op-ed, Jan. 29). On the contrary, because of the lessons we have learned, and the restrictions imposed by Dodd-Frank-driven regulations enacted since 2008, mortgage credit availability remains tight today, and mortgage credit quality is quite strong.

However, Mr. Pinto does make an important and valid point: Private companies, not taxpayers, should bear the bulk of the credit risk in the housing market. The most effective way to do that would be for government-sponsored enterprises Fannie Mae and Freddie Mac to allow private companies to assume more risk on the front end of the mortgage transaction in exchange for a lowering of the guarantee fees charged to lenders. This solution effectively “de-risks” the mortgages before they ever reach the GSEs and significantly reduces taxpayer exposure. Upfront risk sharing brings more private capital to bear without resorting to stifling increases in guarantee fees and promotes competition among private lenders, credit enhancers and investors, thus driving down costs for borrowers.

The practices and products that caused the mortgage crisis are long gone. Policy makers should focus on policies and reforms that can build sustainable access to credit for qualified borrowers through market competition, while lessening taxpayer risk exposure.

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