Scott Tucker's Reverse Mortgage Marketing Blog

"Report shows slight drop in negative equity for home owners..." [reverse mortgage]

CoreLogic reported that more than 24%, or 11.2 million, of all residential properties with mortgages were in negative equity at the end of the 1st quarter of 2010.

These data findings are slightly-down from the last quarter in 2009, at 11.3 million.

Additionally, 2.3 million borrowers had less than 5% equity, meaning that, nationwide, negative and near-negative equity mortgages accounted for over 28% of all residential properties with a mortgage.

Five states had the highest concentrations of negative equity.

Nevada was at the top with 70% of all its mortgaged properties in negative standings.

Arizona was second at 51%, then Florida at 48%, followed by Michigan at 39%, and California at 34%.

Phoenix, with over 550,000 negative mortgage borrowers, has the most households of any metropolitan market in the country that are “underwater.”

Riverside, California followed at 463,000, then Los Angeles with 406,000, Atlanta at 399,000, and Chicago with 365,000.

The amassed dollar value of negative equity for those upside-down in their mortgages was $656 billion.

Borrowers whose mortgage debt exceeds their property value by 25% or more was at 4.9 million or 10.4%, falling slightly from 10.6% or 5 million borrowers last quarter.

"The 2 most important triggers of default, negative equity, and unemployment, have stabilized over the last 6 months," says Mark Fleming, chief economist with CoreLogic.

"As house prices grow again and borrowers pay-down their mortgage debt, negative equity levels will begin to diminish. The typical underwater borrower is likely to regain their lost equity over the next 5 to 7 years."

The data also showed that the negative equity share for borrowers with junior liens, including closed-end seconds, and home equity lines of credit (HELOCs), was 38%, much higher than those that did not have a junior lien at 19%.

Borrowers without junior liens had a foreclosure rate of 2%, while those with a junior liens were double that amount at 4%.

"Blow-hard U.S. Senator, Clair McCaskill (D-MO), continues to scare seniors away from reverse mortgages..."

U.S. Senator Clair McCaskill (D-MO) has introduced an amendment to the "Wall Street reform" legislation to ensure increased oversight & regulation of the reverse mortgage market, and to make sure that America doesn’t face another mess similar to the sub-prime mortgage market collapse, said a statement from her office.

"While reverse mortgages are great for some seniors, too many of our greatest generation are being hoodwinked by misleading advertisements and predatory lenders looking to make a buck," McCaskill said.

McCaskill has long tried to score political points, by calling reverse mortgage professionals "misleading" and "predatory".

This sort of political grandstanding does nothing for her senior citizen constituents other than scare them away from reverse mortgages.

Reverse mortgages could be helping many more Missourians if it weren't for McCaskill's mis-information campaign.

McCaskill is either ignorant of all the facts regarding reverse mortgages, or intentionally misleading America's seniors about them.

"Because these are government-insured loans the taxpayers are on the hook when they default. If we don’t put in place some better oversight measures, we’re going to end up in a mess worse than we saw with the subprime lending collapse," said McCaskill.

McCaskill said she is concerned because reverse mortgages are federally-insured loans, they are often falsely marketed as a government entitlement program.

If the loan goes bad, the borrower-funded FHA insurance fund is on the hook for the money, not the lender.

The amendment she introduced with U.S. Senator Herb Kohl (D-WI), chair of the Aging Committee, would create standards for whether a reverse mortgage is suitable for seniors, prohibit misleading advertisements, & increase regulation and transparency of the industry. 

Specifically, the measure would amend the Restoring American Financial Stability Act of 2010 (S.3217) to require the new Consumer Financial Protection Bureau to issue rules to, that at a minimum:

• Prohibit misleading advertisements of reverse mortgage products
• Create standards for whether a reverse mortgage is suitable for a senior, with consideration for whether the borrower plans to live in the home on a long term basis, whether the borrower plans to buy an annuity or other product with the proceeds, and whether the costs of the reverse mortgage and annuity outweigh the benefits
• Whether the borrower plans to pass the home on to an heir, etc.
• Restrict the cross-selling of annuities, long-term care insurance, or other similar products with a reverse mortgage
• Provide clear disclosures of the cost of a reverse mortgage and the terms required to avoid technical default on a reverse mortgage (such as maintenance & property tax requirements).
• Require seniors to receive counseling before taking out any reverse mortgage (currently, the requirement only applies to federally-insured reverse mortgages).

"An overwhelming number of condo projects are seeking FHA-approval..." [reverse mortgage]

Reverse Mortgage Daily is reporting that due to an overwhelming number of requests to approve condo projects, HUD has said its response times are now exceeding 72 hours.

The back-up comes after new regulations eliminated spot approvals and require that all condo projects get re-certified.

The decision is causing delays in closings for consumers, say lenders.

“You’re looking at 2-4 weeks for approval turn around from FHA,” said Paul Carr, senior loan officer at Security One Lending. “I cringe whenever I talk to a senior that lives in a condo, the process is very difficult and time consuming.”

As part of the new FHA condo rules, reverse mortgage lenders have 2 condo project approval processing options.

The first is HUD’s Review & Approval Process (HRAP), which is currently taking approximately 30 days of processing to get approved, once they’re in receipt of a complete application, said Gerry Glavey of the HUD Philadelphia Homeownership Center, during the National Reverse Mortgage Lenders Association Road Show.

The second option is through the Direct Endorsement Lender Review and Approval Process (DELRAP), which allows lenders who have Direct Endorsement authority, and staff with knowledge and expertise in reviewing and approving condominium projects, to approve projects themselves.

In theory, this should be a quicker process than the HRAP, but it hasn’t been the case.

Lenders haven’t been rushing to get condo projects approved through the DELRAP process, and most have been getting conflicting information in terms of how to submit information.

In fact, many of the larger mortgage bankers have decided not to utilize the DELRAP process and are relying instead on major banks and HUD to get projects approved, which is part of the reason HUD is so overwhelmed with requests.

"This will work for reverse mortgages anywhere too..."

"Three whose houses were auctioned in Ridgefield, Connecticut still have their homes..." [reverse mortgage]

Three Ridgefield, Connecticut home owners whose houses were auctioned last September, have all paid-up on their delinquent property taxes, and will keep their homes.

  Tax Collector Jane Berendsen-Hill said all 3 homes were redeemed by the owners, as allowed during the 6-month period after the tax sale.

“They stayed in the ownership of the original owners and we got the [property] taxes,” Ms. Berendsen-Hill said.

Seven properties had been slated to be auctioned at the town’s first tax sale in years. By the time the tax sale was held, only 3 properties had yet to pay their past-due property taxes.

The Ridgefield Press reported last year that 45 Stony Hill Road, whose owners owed about $154,000 in back property taxes, went to the highest bidder for $180,000. The home was assessed at about $426,000.

Bidding on 44 Lake Road went for $85,000. The 2-bedroom home was assessed at about $485,000 and $61,700 was owed in past-due property taxes.

The owner of 80 Silver Spring Lane property, a 4-bedroom home assessed at $716,960, owed $52,000 in past due property taxes. The winning amount at the auction was $115,000.

The home owners had 6 months from the date of the auction to pay-off their debts and keep the houses.

Ms. Berendsen-Hill said the tax auction was a necessary part of property tax enforcement.

All of the home owners were several years delinquent on their property taxes.

Two of the home owners were able to get reverse mortgages to help keep the homes, Ms. Berendsen-Hill said.

“We still have people who are very delinquent [on their property taxes], but not [anywhere] near the first group [in last fall's property tax sale],” Ms. Berendsen-Hill said.

“I’m not going-after anyone who is coming-in and making an honest effort, no matter how meager, to make payments and catch-up. I think that is the only reasonable thing to do at this time.”

"Social Security to see pay-out exceed pay-in this year..." [reverse mortgage]

The bursting of the real estate bubble and the ensuing recession have hurt jobs, home prices and now Social Security, according to The New York Times.

This year, the system will pay out more in benefits than it receives in payroll taxes, an important threshold it was not expected to cross until at least 2016, according to the Congressional Budget Office.

 
Stephen C. Goss, chief actuary of the Social Security Administration, said that while the Congressional projection would probably be borne-out, the change would have no effect on benefits in 2010 and retirees would keep receiving their checks as usual.

The problem, he said, is that payments have risen more than expected during the downturn, because jobs disappeared and people applied for benefits sooner than they had planned.

At the same time, the program’s revenue has fallen sharply, because there are fewer paychecks to tax.

"2010 Retirement Confidence Survey: Americans’ confidence stabilizing, but preparations for retirement continue to erode..." [reverse mortgage]

Americans’ confidence in their ability to retire appears to be stabilizing, now that the economic volatility of the recession has abated, but their self-described preparations for retirement continue to erode, according to the 2010 Retirement Confidence Survey (RCS) released by the non-partisan Employee Benefit Research Institute (EBRI) and Mathew Greenwald and Associates, a market research firm.

 
However, the RCS also finds that a growing number of American workers are also planning to delay
retirement—which has negative implications for the U.S. job market, where unemployment is high and
lay-offs continue to grow.

As older workers stay at their jobs longer, the RCS results suggest that fewer existing jobs are likely to open up.

And Americans continue to lack confidence in institutions. They are most likely to express confidence in private employers, and least likely to express confidence in the federal government.

Both workers and retirees expressing low levels of confidence in banks and insurance companies.

“Americans’ attitudes toward retirement have clearly tracked the economy the last couple of years, and that seems to be the case in 2010,” said Jack VanDerhei, EBRI research director and co-author of the survey. “Unfortunately, while their attitudes are stabilizing, their preparation for retirement is not. A distressing number of people have no savings at all.”

The 2010 RCS marks the 20th wave of this survey, which is the longest-running public opinion study of its kind on Americans’ attitudes on retirement and savings.

The survey is co-sponsored by EBRI and Mathew Greenwald and Associates, which fielded the questions in January.

More than 30 organizations provided funding for this year’s survey.

In addition to looking at long-term trends on workers pushing back their expected retirement age—which had been steadily growing, even before the recent economic recession—this year’s RCS also reveals several other major trends that this survey has been tracking over the past two decades.

"Generation Mortgage offers new zero-origination-fee & zero-servicing-fee reverse mortgage..."

Generation Mortgage, the largest privately-owned reverse mortgage retailer & wholesaler in the U.S., has announced it's introducing a new fixed-rate reverse mortgage product with no origination fee, and no servicing fee, to provide seniors more up-front loan proceeds, at a lower cost.

The new HECM (Home Equity Conversion Mortgage) loan offering is now available in Generation Mortgage's retail & wholesale channels.

The new zero origination fee, zero servicing fee reverse mortgage applies to Generation Mortgage's FHA-insured HECM fixed-rate reverse mortgage and allows qualified borrowers, age 62 and older, to receive additional, up-front loan proceeds of up to $10,000 or more, depending on the equity in their home.

"Three seniors charged in bank robbery plot..." [reverse mortgage]

Two suspects served 13 years for gem theft in Britain.

The three senior citizens were still wearing dark burglary clothes when they stood before a federal judge, charged in their latest alleged caper: watching a suburban Chicago bank for months in preparation for a robbery as the branch took a delivery of cash from an armored car.

Federal authorities arrested the trio as they neared a Bridgeport residence of a deceased mob leader they had allegedly targeted for a home invasion.

Investigators said they earlier had tried to drill-into the home.

Authorities also suspect them in a 2007 takeover robbery of another bank that netted nearly $120,000.

Two of the suspects — Joseph "Jerry" Scalise, 73, of Clarendon Hills, and Arthur Rachel, 71, of Chicago — were reputed Chicago mob figures released from British prisons in 1993 after serving 13 years for the daylight theft of the egg-shaped, 45-carat Marlborough Diamond and other gems from a London jewelry store.

None of the gems, worth an estimated $2.6 million at the time, were recovered.

Scalise was a technical adviser on Public Enemies, the movie about John Dillinger filmed in Chicago in 2008.

According to the criminal complaint, Scalise, Rachel, and Robert "Bobby" Pullia, 69, of Plainfield, were suspected in the 2007 holdup and under investigation by the FBI when surveillance agents spotted them casing a bank in La Grange in recent months.

They paid special attention to the First National Bank in La Grange, on Thursdays, when an armored car would make a visit, authorities said.

Testing found Scalise's DNA on the steering wheel of the getaway car in the 2007 robbery, authorities said.

After planting a listening device in Scalise's van, the FBI heard he and Pullia chatting about the recent discovery of cash and jewels hidden in the home of mobster Frank Calabrese Sr.'s Oak Brook home, authorities said.

And they were heard planning the home invasion at the south side house of the late Angelo "The Hook" LaPietra.

When the men were arrested outside the home Thursday, agents allegedly found drills, tools, saw blades, a ladder, gloves and a police scanner in the van.

All three remain in custody pending a detention hearing next week.

Scalise's lawyer, Terry Gillespie, said his client told him the charges were "nonsense."

"Using a reverse mortage until your investments rebound..."

HeraldNet contributor Tom Kelly writes that many older folks don’t know how or where to look for funds which allow them to maintain the lifestyle they’re used to, but some are turning to reverse mortgages.   

In an article over the weekend, Kelly describes how a couple who owns 35 weeks of timeshares each year who took out a reverse mortgage on their home in New Mexico to ensure they wouldn’t have to skimp on or cut back on activities once they arrived.

“I know a lot of people are skeptical about reverse mortgages, but it worked for us,” Frank Williams said.

“Our friends want to leave everything they have to their kids, and that’s OK. Our kids are doing fine, they own their own homes, and would rather see us enjoy the rest of our lives.”

According to the article, Williams decided a reverse mortgage was the right choice, despite having other assets the couple could sell.

“I had some assets that I didn’t really want to sell because I thought they would rebound and do quite well,” Frank Williams said.

“So, I look at the reverse mortgage as a way of buying us some time for those assets to come back. The bonds that I did sell were not yielding anything close to the interest rate we were paying on the home equity loan, so I sold them and paid it down.”