Let’s talk about the “F” word

Laurie MacNaughton [NMLS ID#506562] © 2020

Forbearance. It’s the hot topic of the day. It may also prove catastrophic for some homeowners who haven’t read the fine print – if they can even find fine print to read.

Social media posts state in emphatic terms, “Congress gives free money!” “Mortgage holiday!” “Don’t pay your rent!” In a time of uncertainty it feels good to think those in charge are all-wise and all-knowing, that they are looking out for us, that they have our best interests in mind. But it is well to remember the saying, “Rumor circles the world while truth is still lacing on its shoes.”

From the outset I want to make clear: if it comes down to feeding your family or making your mortgage payment, feed your family. If you truly must, ask your mortgage servicer for forbearance. Just don’t imagine for one moment your mortgage payment was forgiven, that it disappeared, or that there will be no long-term consequences.

Which leads to my second point. To date there has been little guidance regarding penalties for forbearance. But as a federally-licensed lender I can tell you this: it is highly unlikely there will be no credit implications for missed payments. Some credit blemishes last a very long time, and mortgage lates can dog homeowners’ feet for years to come.

The likeliest forbearance scenario is that if you miss three months’ worth of payments, all four payments will be due in month four. Let’s say your mortgage payment is $2,000, and you engage in a “mortgage holiday” all three months. Now you owe $8,000 in one lump sum, and you’ve just gone back to work. This would be nearly impossible for most Americans under the best of circumstances, let alone current circumstances when many have been unpaid for weeks. I fear, I deeply fear, we are going to see a foreclosure crisis that makes 2009 pale in comparison.

The punchline is this: if you can pay your mortgage, pay your mortgage. If you can only make a partial payment, call your loan servicer to see if they will accept a partial payment. If you truly cannot pay, bear in mind there will be consequences.

One last word to homeowners aged 62 or older: this time may be the right time to look more deeply into a reverse mortgage. An FHA-insured reverse mortgage is far different than most people think. You do retain title, and the home remains yours until you or your heirs sell it. The loan is not repaid on a monthly basis, but rather in reverse on the back end when the home is sold. All retained equity belongs to you or to your heirs.

Because there is never a monthly mortgage payment due, there is nothing to fall behind on when finances are tight. The FHA-insured reverse mortgage is not exotic, nor mysterious, nor even complex. It can, however, be a financial safety net when life becomes unpredictable.

Be well, stay safe, and if you have questions, give me a call. I always love hearing from you.

Can a reverse mortgage create a financial safety net?

Laurie MacNaughton © 2018

Can a reverse mortgage create a financial safety net in retirement?

In a word, yes.

This morning I received a call from a wealth manager who led off by saying he wasn’t “that familiar with reverse mortgages.” He specifically wanted to know whether a reverse mortgage could offer retirement-aged clients a measure of security during market fluctuations.

Here was my answer: the most familiar “flavor” of reverse mortgage is the line of credit. It’s an equity line that is repaid when the last person on title permanently vacates the home. Once the home is no longer the primary residence, typically it is sold and the loan is repaid; the homeowner, heirs, or estate get the remaining equity. End of story. No mystery here, nothing “too good to be true.”

Many wealth managers routinely recommend traditional equity lines. However, with a traditional line of credit, once homeowners draw funds they then have a monthly mortgage payment due. Because the retirement years can be a time when access to liquidity is crucially important, a monthly mortgage payment can create an increasingly unstable financial environment.

A reverse mortgage line of credit does not have a monthly repayment obligation. This means that if homeowners need a cash infusion, they do not pick up a monthly mortgage payment. Furthermore, the unused portion of a reverse mortgage line of credit grows larger over time, making more funds available for future use.

As is the case with other homeownership, property taxes, homeowner’s insurance, and home repairs must be kept current, and if there are condo dues or a homeowner’s association, fees must be paid on time.

The FHA-insured reverse mortgage is not exotic, mysterious, nor even particularly complex. It can be, however, a helpful financial safety net when life becomes unpredictable.

For more information on reverse mortgage, give me a call. I always love hearing from you.

 

President's Club Business Card - Updated Picture

 

America’s Self-Designed Anti-Poverty Program

During the Arab Spring we learned the term “waithood,” and following the prolonged economic stagnation in Japan, “parasaito shinguru.” In the US we have long heard much about baby-boomerangs. But from the ever-droll UK comes my personal favorite: “KIPPERS,” or “Kids in Parents’ Pockets Eroding Retirement Savings.”

As you’ve doubtless guessed, these are terms for adult children who have moved in with older parents due to economic pressures and a poor job market. And though many groan at the very thought, data suggest in many cases the trend is anything but toxic.

World-Wide Trends

Around the world pressures are much the same: too many job seekers, too few jobs, and a rising cost of living. In the United States, adult kids are moving home in huge numbers – numbers so large, in fact, that they are setting all-time records. Add to this a rapid rise in life expectancy, and you get dynamics that begin to actually change social order and long-term behavior.

Though this trend presents a big, fat target for negative press, there are interesting things to note:

  •  When two adult generations of the same family live under the same roof, the older adult is the head of the household in about three-quarters of all cases (ibid);

And despite the derogatory – but admittedly funny – term “KIPPERS,” evidence points in a largely different financial direction.

Self-Designed Anti-Poverty Program

In their study entitled Fighting Poverty in a Bad Economy, Americans Move in with Relatives, Rakesh Kochhar and D’Vera Cohn write, “Without public debate or fanfare, large numbers of Americans enacted their own anti-poverty program in the depths of the Great Recession: They moved in with relatives.” The authors go on to say, “…the rise of multi-generational households in the recession could be viewed as the American public’s self-designed anti-poverty program.”

This combined-household trend is not lost on the nation’s builders. In a PulteGroup study released October 2012, Deborah Wahl Meyer, Pulte chief marketing officer, says many new homes now offer an upstairs and a downstairs master suite to accommodate multi-generational families (http://www.prnewswire.com/news-releases/pultegroup-survey-mom-and-dad-anticipate-future-roommates-174552451.html).

At some point, however, there are only so many ways to cut costs and combine expenses.

We’re Not Getting Younger – And Things Aren’t Getting Cheaper

In Six Major Drains On Boomers’ Bank Accounts, Pamela Villarreal of the National Center for Policy Analysis says, “Housing…is typically the largest monthly consumer expenditure” (Financial Planning online journal (http://alturl.com/ionsj).

Villarreal goes on to say that for homeowners between the ages of 55 and 64, “…expenditures on principal, mortgage interest, taxes, maintenance and insurance rose 25%. The portion of income they spend on mortgage interest increased 47%, from 4.3% to 6.3%” over the past two decades (ibid).

The FHA-Insured HECM

With 10,000 baby boomers a day turning 62, and the cost of managed care skyrocketing, the trend toward multigenerational living arrangements is not likely to change in the foreseeable future. Costs are going up, wages are not, and as in other times of uncertainty, families rally together to meet needs.

Many issues surrounding aging do not go away over time. However, for the senior homeowner aged 62 or older, the concern surrounding meeting a monthly mortgage payment is one issue that can be addressed through the FHA-insured HECM. And, if there is sufficient equity in the home, the homeowner can improve cash flow by establishing a non-cancellable – and non-taxable – line of credit.

Incidentally, rates have never been lower. So if you, or someone you know, would like to look into the potential benefits of a reverse mortgage, give me a call. I always love hearing from you.

Laurie

Laurie Denker MacNaughton [NMLS# 506562] · Reverse Mortgage Consultant · Middleburg Mortgage, a Division of Middleburg Bank · 20937 Ashburn Road, Suite 115 ·Ashburn, Virginia 20147 · 703-477-1183 Direct · LMacNaughton@MiddleburgBank.com · www.middleburgmortgage.com/lauriem

Visit my Informational Blog at https://middleburgreverselady.wordpress.com/

My Retirement Goal? Get Old, Get Sick, and Move Out of my Home

How many times has this happened to you: you ask someone their goals for retirement and they say, “Get old, get sick, move out of my home, and die in a care facility”?

Can I hazard a guess as to the answer?

New Numbers, No Surprises

In a new study entitled United States of Aging, jointly sponsored by National Council on Aging, USA Today, Florida Public Television, and United Healthcare, 2,250 Americans aged 60 and older were queried on a variety of aging-related issues.

Turns out, a whopping 90% of respondents say they wish to age in place. And nearly 3 in 4, or 74%, plan to make adaptive changes to their home in order to make possible aging in place. ⁱ

I just have to ask: Does this surprise anyone?

Senior Strategies, Booming Business

Russell Glickman, Washington, D.C. area universal design specialist and winner of the National Association of Remodeling “National Remodeler of the Year” award, says:

I am seeing definite trends in remodeling. As clients make design changes they’re asking more about long-term, universal design, such as first-floor bedroom suites. Also, lot of Baby Boomers are asking about their parents. They’re not really focused on themselves yet, but they’re planning to move their parents into the home. Then later, when they are at that point, they’ll modify the space for themselves.

With many Americans projected to live well into their 90’s, staying in the home as long as possible is often the most significant cost-containment strategy available.

But containing costs is only half the equation. More available money is the other half.

Alicia Munnell, director of the Center for Retirement Research at Boston College, says, “I see a future where people in their 60s are having dinner with friends and the conversation leads to: ‘Where are you getting your reverse mortgage?’ It will be the norm. It is going to take a while, but we will have a cohort of people entering retirement who only have $100,000 in their 401(k) plans.”ⁱⁱ

New Normal = “Old” Normal

We all are used to hearing the term “the new normal.” Truth is, “old” is the new normal, and we’re all – or soon will be – facing issues of aging.

And as we age, hopefully with grace, in dignity, and with financial soundness, the FHA Reverse Mortgage is likely to play a central role in helping many Americans achieve these goals.

Give me a call with your questions. I always love hearing from you.

Laurie

Laurie Denker MacNaughton [NMLS# 506562] · Reverse Mortgage Consultant · Middleburg Mortgage, a Division of Middleburg Bank · 20937 Ashburn Road, Suite 115 ·Ashburn, Virginia 20147 · 703-477-1183 Direct · LMacNaughton@MiddleburgBank.com · www.middleburgmortgage.com/lauriem

Visit my Informational Blog at https://middleburgreverselady.wordpress.com/

ⁱhttp://www.ncoa.org/assets/files/pdf/united-states-of-aging/2012-survey/8-2-12-United-States-of-Aging-Full-Findings-FINAL.pdf
ⁱⁱ(http://reversemortgagedaily.com/2012/08/15)

The Pickle and the Pickle Jar

Today I met with two typical Washington, D.C. couples: well-educated, highly-sophisticated, both have traveled broadly and lived internationally. Both live in charming, high-end D.C. neighborhoods. And in what I can only call a rapidly emerging scenario, though well past the traditional age of retirement, both couples still work – and both have one advanced-elderly parent living with them.

What has transpired that the HECM now finds itself squarely within the retirement plans of a demographic who heretofore would not so much as have entertained the idea.

The answer?

Life expectancy.

The Pickle

We have prolonged life to a remarkable degree – but we cannot stop aging. We’re in a pickle: the old go on for decades, until the children of the advanced elderly are themselves deep into their own retirement years.

Many adult children will eventually be called upon to support their parents. The parents, no matter how independent they wish to be, cannot be left unsupervised. They need, at very least, an in-home companion, but as needs go up, costs go up. And here’s the tough part: the adult kids themselves need every penny they have to make it through retirement.

The Pickle Jar 

The graphic I often use when speaking on the HECM is one of an old fashioned pickle jar. Not the little kind where you can reach bottom with an iced tea spoon – no, the jar I’m talking about is one of the BIG ones, the kind you had to reach your whole arm down into to grab the big, fat pickle at the bottom. So that big jar, into which for 30 years homeowners have been piling pennies, is the home. Now the mortgage is paid off, the jar is full – or mostly so – but the jar lid is screwed on.

The FHA-insured HECM, when set up as a line of credit, allows seniors to reach into the jar and take out pennies – one at a time, ten at a time, or a fistful at a time – according to their need. It is a non-cancellable line of credit, waiting in reserve to be used as needs arise.

How does this help in the case of the families I met today.

As they labor to meet the needs of their advanced elderly family member, the “burn-through” rate of their income and savings is too rapid. They have done the math: if expenditures continue apace, there will be nothing left for them when they are that age.

In today’s Journal of Financial Planning, authors Dr. John Salter and Harold Evensky write, “…[t]he FHA HECM Saver offers unique and attractive features,” and then go on to say:

We find this risk management strategy improves portfolio survival rates by a significant amount. The improvement in survival rates is attributable to the mitigation of the volatility drain – the risk of having to sell investments when depreciated.

The Journal article is spot-on. Current trends suggest that within a few years, rare indeed will be the person whose older relative does not depend upon a reverse mortgage for income, for a financial safety net – and for the very preservation of dignity itself.

Give me a call. I always love hearing from you.

Laurie

Laurie Denker MacNaughton [NMLS# 506562] · Reverse Mortgage Consultant · Middleburg Mortgage, a Division of Middleburg Bank · 20937 Ashburn Road, Suite 115 ·Ashburn, Virginia 20147 · 703-477-1183 Direct · LMacNaughton@MiddleburgBank.com · www.middleburgmortgage.com/lauriem

Visit my Informational Blog at https://middleburgreverselady.wordpress.com/

Thickness, Congestion, Repugnance…And the Preservation of Dignity

This week past my friend Jean and I took a road trip from sweltering Washington, D.C. to almost as sweltering Gloucester, Massachusetts. On the way we stopped in Boston to visit Jean’s parents, where she introduced me as the “geekiest friend” she knows.

I thought this unfair: she must have at least one geekier friend.

In any event, on the trip I listened with rapt attention to a lecture by Harvard professor Alvin E. Roth, the George Gund Professor of Economics at Harvard Business School.

The lecture carries the remarkably boring title, “What We Have Learned From Market Design,” and discusses three elements that trip up markets, whether we’re talking about kidney transplants, adoption…or, presumably, the hottest new iPhone.

Basically, the three elements are as follows:

Thickness: do enough people need what you offer?

Congestion: can enough be produced to make it widely available?

Repugnance: is what you offer socially acceptable?

Now, I’m a Reverse Mortgage Specialist, a mortgage banker. Seniors – or their adult children – come to me for money. So why did Dr. Roth’s lecture captivate me? And why do you care?

One of the biggest challenges facing us is how, as a nation, we are going to keep our seniors – our parents, friends, neighbors, the older members of our communities – safe, sound, and secure as they retire, relocate, and move ever deeper into old age. And much of this revolves around their housing.

And that’s where Dr. Roth’s lecture comes in:

Thickness: In America, 10,000 – TEN THOUSAND – boomers a day turn 62. The U.S. Census Bureau defines a mid-sized town as one having 250,000 people. That means every 25 days enough people in America turn 62 to fill a city – an entire mid-sized city. We are talking about lots and lots and lots of people – 76 million, to be precise – who over the next 18 years are going retire, move…and in many cases, need additional funds to make it through retirement. People, lots of people, need, or will need, an FHA HECM, also known as a reverse mortgage.

Congestion: Under current guidelines, to qualify for a reverse mortgage a person must be at least 62 and have sufficient home equity to pay off any existing loans on the home. The reason credit score, employment, or income doesn’t matter is because the borrower does not pay back the loan; the home pays back the loan once the borrower no longer needs the home. As long as we have homeowners, we have what we need to keep those homeowners in their own home.

Repugnance: I’ll be blunt – the old, pre-FHA reverse mortgage had a wretched history. However, the new FHA HECM is federally insured, federally regulated, and very closely monitored. This is as it should be – after all, we’re talking about your parents and mine, your neighbors and mine, and, eventually, you and me. Nonetheless, despite all the meticulous oversight, addressing fear of my loan product is a big part of what I do. With the huge educational programs and advertising campaigns over the past few years, the perception has begun to change, but misunderstandings still abound.

We’re all in the same boat: day by day we get older, our parents get older, and the nation’s financial situation gets a little more strained. The fear of running out of money in retirement dogs many of our seniors. Ask seniors and they’ll tell you: reduced circumstances and the attendant loss of dignity is not far from their thoughts. Fortunately, there are options.

If you or someone you know would like to talk, give me a call. I always love hearing from you.

Laurie

Laurie MacNaughton [NMLS# 506562] · Reverse Mortgage Consultant · Middleburg Mortgage, a Division of Middleburg Bank · 20937 Ashburn Road, Suite 115 ·Ashburn, Virginia 20147 · 703-477-1183 Direct · LMacNaughton@MiddleburgBank.com · www.middleburgmortgage.com/lauriem

Visit my Informational Blog at https://middleburgreverselady.wordpress.com/

To watch Dr. Alvin E. Roth’s lecture go to:   http://www.youtube.com/watch?v=7qrYC0Ojf-o

Reversing Years’ Worth of Skepticism

Even if they don’t adhere to it, most people have at least heard of the “bucket” strategy of saving for retirement. Basically, it’s a method of asset allocation, a way to diversify investments and save for the day you’re no longer working full time.

But here’s a question you might not know the answer to: for most people, what is the biggest – and best funded – bucket?  Cash equivalents? Fixed-income securities? Pension?

Answer: No, no, and no. For most people, the single biggest “investment bucket” is their home.

You can think about it this way: you might have designated several buckets. But if you didn’t put sufficient money into them during the working years, those buckets are not going to get you through retirement. However, most Americans paid into their home, even during the past few years when times were tough.

But here’s the problem: after spending years pouring the first fruits of one’s income into the home, that money is frozen, tied up in an illiquid asset. It’s an investment, certainly. But it’s not one easily converted into an income stream for retirement.

Increasingly, however, drawing upon that bucket by means of an FHA reverse mortgage is being recommended as a way to meet seniors’ financial needs during retirement.

FHA reverse mortgages have been around since 1988. But until recently, the financial planning community viewed them as the dirty underbelly of financial products.  It was the rare financial planner who saw any legitimate use for them whatsoever, let alone who used them in a strategic way.

However, within the past few years scores of scholarly studies have shown both the near-term and long-term positive impact of reverse on standard of living, financial portfolios, and estates.

In “How Important Is Asset Allocation To Financial Security in Retirement?” authors Munnell, Orlova, and Webb with Center for Retirement Research at Boston College state:

…[F]inancial advice…tends to focus on financial assets, applying tools that give prominence to the asset allocation decision. But most people have little financial wealth, and financial tools are often silent on the levers that will have a much larger effect on retirement security for the majority of Americans. These levers include delaying retirement, tapping housing equity through a reverse mortgage, and controlling spending [emphasis added].

Of particular interest to many financial planners is that, when set up as a monthly payment option, a reverse mortgage basically annuitizes the home – and it’s a considerably bigger annuity than most people would have been able to establish in the years they were supporting their family, helping with college tuitions…and paying their mortgage.

Rick Gow, wealth manager with the independent investment firm Lara, Shull, and May in Falls Church, Virginia, cites the example of a 66-year-old with a house valued at $400,000.

After subtracting closing costs, the retiree could receive a tax-free, monthly check of $1,252 for as long as the home remains the primary residence. By the time the homeowner turns 85, disbursements would total more than $289,100; by age 95, the total payouts would be over $435,600.

If the homeowner were to take a onetime, lump sum payout, he or she would receive approximately $256,800.  A third option would set aside that amount in a line of credit, the balance of which grows over time, tax free.

There is also a newer, reduced fee FHA reverse mortgage, called the HECM Saver. The over-all payout is less with this option, but Gow points out the lower closing costs make it a good option for some.

The majority of Americans fear running out of money in retirement more than they fear death, according to a May, 2012 AARP bulletin. In an America where 10,000 boomers a day turn 62, the FHA reverse mortgage has an increasingly pivotal role to play in retirement planning.

I always love hearing from you. Call me at any time with questions.

Laurie

Laurie MacNaughton [NMLS# 506562] · Reverse Mortgage Consultant · Middleburg Mortgage, a Division of Middleburg Bank · 20937 Ashburn Road, Suite 115 ·Ashburn, Virginia 20147 · 703-477-1183 Direct · LMacNaughton@MiddleburgBank.com · www.middleburgmortgage.com/lauriem

Visit my Informational Blog at https://middleburgreverselady.wordpress.com/

Babies Don’t Have Dumb Ideas

When my daughters were teenagers I often said the biggest difference between teens and babies is that babies don’t have dumb ideas yet.

But both teens and babies have this in common: just a couple years later, both are more capable, more independent, and better able to care for themselves.

It’s tough to acknowledge, but I now have to add my mother to the comparison.

My mother is probably the most gifted person I know: brilliant, beautiful, funny, well read, extensively traveled, graceful and poised.

But she is getting old, and her proficiency in daily tasks is falling away at a relentless pace. And, unlike either babies or teens, a couple more years is not going to make the issue any better.

NPR Morning Edition’s Jessica Smith, in “Baby Boomer Money Squeeze Worsens, Multi-Gen Households Rise” (June 6, 2012), writes,

Roughly 78 million baby boomers are moving into their retirement years now. At first, they will be the “young” old. Legions of retired boomers soon will be walking around the mall, volunteering with community groups and taking grandchildren on trips.

At first, that can be good for the economy. But this immense generation, born between 1946 and 1964, will keep aging. Based on current medical outcomes, most of the people who live beyond age 85 will end up with dementia or other disabilities that require costly care.

Here’s how fast the numbers will ratchet up: In 1990, only about 3 million Americans were over the age of 85. Today, the figure is 6 million. By 2050, the United States will be home to about 19 million people older than 85, according to U.S. Census projections.(http://www.npr.org/2012/06/05/154001412/baby-boom-money-squeeze-is-set-to-get-tighter)

Almost 20 percent of advanced elderly Americans now live with their aging adult children, putting tremendous pressure on “leading edge” boomers who are hitting traditional retirement age. Boomers tended to have fewer children, later in life, which in some cases has resulted in their still having dependents at home at a time previous generations would have been saving intensively for retirement. Additionally, many middle-aged parents find themselves helping grown children who have lost jobs, homes, and businesses – the classic “sandwich generation” squeeze, made more intense by a prolonged recession.

We are a becoming a nation of the old and the older, the squeezed and the very squeezed.

Writes Ms. Smith, “For individuals, families, local government officials and federal taxpayers, this demographic shift will drain dollars and attention, and force extremely difficult decisions about living arrangements, as well as end-of-life care.”

When we have these talks about taxes and government, what kind of numbers are we talking about?  The primary number to watch is the national debt: in 1970, when boomers were young, the national debt ran about 28 percent of gross domestic product. It now stands at 70 percent.

And, as in the case of my mother, a couple more years is not going to make this issue any better.

According to Centers for Medicare and Medicaid Services, Medicare will remain solvent until 2024. Starting last year, Social Security already began paying out more than it takes in.

As former U.S. Comptroller General David Walker, a federal spending expert says, “Government has grown too big, promised too much and waited too long to restructure. It is going to spend less over time … which means that individuals will have to plan, save and invest for the future.”

Plan, save, invest…and take out a reverse mortgage, according to research put out by Boston College in May, 2012.

….but more in my next piece about several watershed reverse mortgage articles published this spring by major research institutions.

Laurie

         Laurie MacNaughton [NMLS# 506562] · Reverse Mortgage Consultant · Middleburg Mortgage, a Division of Middleburg Bank ·                   20937 Ashburn Road, Suite 115 ·Ashburn, Virginia 20147 · 703-477-1183 Direct · LMacNaughton@MiddleburgBank.com www.middleburgmortgage.com/lauriem

Visit my Informational Blog at https://middleburgreverselady.wordpress.com/

Too Much Life Left At The End Of The Money

Monday I had lunch with a Morgan Stanley wealth adviser. He is a charming conversationalist with a gift of giving animated accounts of issues he encounters.

Among the many things we discussed was the fact that, for the first time in his 27 years in the field, he has started having the following financial discussion with young couple:

  • Save for your kids’ college education
  • Save for retirement
  • Save to support your parents, not if – but when – they run out of money

Gone, according to him, are the days we could expect an inheritance from our parents. Rather, most of us will watch our parents live to deplete their own savings, and will have to step in to financially support them in their last years. I myself, as one immersed in financing for seniors, certainly see this trend playing out.

It was like reading a contrived movie script when I got back to my Middleburg Bank office after lunch and read the following Wall Street Journal headline: “Counting on an Inheritance? Count Again.” The subtitle read, “The bad news: Many baby boomers are likely to get less money from Mom and Dad than they thought. The worse news: They may have to help their parents financially instead.”

For many Americans, too much life left at the end of the money is a reality. According to the WSJ article:

…a 65-year-old man has a 60% chance of living to age 80 and a 40% chance of reaching 85. For women, the odds are 71% and 53%, respectively. All of this has made the 85-and-over age bracket the fastest-growing segment of the population. In an era of low interest rates, volatile financial markets, and rising costs for health and long-term care, finding money to cover those years isn’t always easy.

From the side of the desk I sit on, I would change this last sentence to read, “…finding money to cover those years can be nearly impossible.”

However, that picture can change dramatically if proceeds from an FHA-insured reverse mortgage (FHA HECM) are added to the equation. In fact, the Journal article goes on to say:

…there are several steps families should consider, financial planners say. Among them: Have parents recalibrate their budgets, downsize to a smaller residence, buy an annuity or longevity insurance to lock in a lifelong income, or take out a reverse mortgage.

I have often said the FHA HECM is as close to a miracle product as you are ever going to see in the world of finance. It’s not a fit for everyone, but for many, not only is it a good option, it is an excellent option. It lifts the burden on the upcoming generation, and allows seniors to live out their final years in the dignity and comfort of their own home.

A separate product, the FHA HECM for Purchase, is a purchase loan available for the senior who needs to relocate into a home better suited to aging in place.

Call any time. I always enjoy hearing from you – and I love walking you through your reverse mortgage questions. Talk to you soon.

Laurie

Laurie MacNaughton [NMLS# 506562] · Reverse Mortgage Consultant · Middleburg Mortgage, a Division of Middleburg Bank · 20937 Ashburn Road, Suite 115 ·Ashburn, Virginia 20147 · 703-477-1183 Direct · LMacNaughton@MiddleburgBank.com ·

www.middleburgmortgage.com/lauriem

Visit my Informational Blog at https://middleburgreverselady.wordpress.com/

READ THE FULL ARTICLE AT: http://alturl.com/b3cpm

FHA Weighs Rule Reversal, Boon for Condo Sales?

Daily Real Estate News | Tuesday, May 22, 2012

The Federal Housing Administration is reportedly considering revising rules that many in the real estate industry have called overly strict and that have left many condo units ineligible for FHA’s low-downpayment mortgages.

For example, one sticking point under the FHA’s rules has been that “individual condo units cannot be sold to buyers using FHA-insured mortgages unless the property as a whole has been approved for financing,” The Wall Street Journal reports. However, condo association boards are increasingly opting not to obtain recertification of their buildings for FHA loans due to its tightened regulations against condo units.

FHA’s regulations “have had an enormous impact on individuals,” says Moe Veissi, president of the National Association of REALTORS®. More condo unit residents are finding they are unable to sell their unit because the condo board hasn’t obtained approval from FHA, Veissi told The Wall Street Journal. This then can have a roll-over affect that negatively impacts the price of condo units in the buildings then.

Half of all condo buyers tend to use FHA mortgages, and it’s an important source of lending for first-time and minority home buyers, Christopher L. Gardner, managing member of FHA Pros, a consulting firm that helps condo boards obtain FHA approvals, told The Wall Street Journal.

FHA officials say they are willing to reconsider some of their rules that have raised such an outcry among condo owners, lenders, and real estate professionals. For example, one rule the FHA is reportedly reconsidering is its stance on non-owner occupancy. As of now, FHA requires that no more than 50 percent of the units in a condo building be non-owner occupies. “This rule alone has made large numbers of condominiums in hard-hit markets ineligible for FHA financing, where investors have purchased units for cash to turn into rentals,” The Wall Street Journal reports.

FHA also is reportedly revisiting its condo rules on how many owners in a building can be delinquent on their fees. As of now, FHA refuses to approve a project if more than 15 percent of the condo units are 30 days or more late on their condo association fees, The Wall Street Journal reports.

Source: “Condo Sales May Become Easier if FHA Revises Rules Governing Mortgages,” The Wall Street Journal (May 18, 2012)