Phil Caulfield Jumbo Loan California DRE #01030082

Reverse mortgages in California have become extremely popular. They can be a great tool to help a senior citizen increase their income. The costs of a reverse mortgage (usually 5% to 8% of the loan amount), however, make it extremely expensive to obtain.

A new reverse mortgage alternative is available for senior citizens in California. It is called Nestworth. Here is how the program works:

A homeowner that is at least 60 years old enters into an Equity Access Agreement with Nestworth. This agreement exchanges monthly payments to the homeowner in exchange for a portion of the future equity in the home. Unlike a reverse mortgage, debt does not acrue. Exchanging future equity for monthly payments is a great alternative because the California homeowner is not subject to rising interest rates, which is possible with a reverse mortgage.

How is the monthly payment determined? Nestworth has devised a formula based on age, property value, liens on the property, and how long the California senior homeowner wants payments for; anywhere from 10 years to 25 years.

The homeowner will receive more monthly income if they decide to receive income for a shorter period of time.

This program is attractive for several reasons.

There is no up-front cost, which is in stark contrast to a reverse mortgage.

Debt does not accumulate monthly. With each payment received on a reverse mortgage, the debt on the home increases.

Larger monthly payments are available than what can be received on a reverse mortgage.

This program can be used on primary residences and vacation homes in California. Reverse mortgages are available only on primary residences

If you need monthly income, are at least 60 years old, and live in California, Nestworth is a great alternative program you should give serious consideration to.

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Let's face it - it's tough to make a buck in the mortgage business right now. Property values are down, underwriting guidelines are tight, and the number of home sales are down (at least in my area).

Having a need to feed and shelter a wife and seven kids, I thought to myself,"Who needs the help of a person with my skills?" Like everyone else, I have been reading about all of the foreclosures happening. Because of this huge problem, I thought that these are the homeowners that need help right now.

I began to do research on loss mitigation and loan modifications. After performing my due diligence, I decided to affiliate mself with Freedom Foreclosure Prevention Services (FFPS).

I chose this company for several reasons. First, in their contract with the homeowner, they offer a 100% money-back guarantee if they cannot obtain a solution to the homeowner's mortgage default or pending foreclosure. This guarantee is important to me because I do not want to be in the position of asking a homeowner to pay for non-service, especially when they are financially hurting.

The second reason I chose this company was because I do not touch any money. In California, the deposit from the homeowner is placed into an escrow account. I do not want the liability incurred when funds are placed in my hands.

The third reason I chose FFPS was because the deposit from the homeowner is not collected until the mitigation department confirms that the homeowner has a mitigatable case. Time is important to everyone involved - I don't want to waste mine or anyone else's if there is no chance of achieving a good solution.

I am on a learning curve right now, but so far I have had a good experience. I have my first client in with a deposit and moving forward with the mitigation process. I will report back when I have some results!

This weekend, August 9th and 10th, the Burlingame Chamber of Commerce will be hosting its annual Art & Jazz Festival. There will be food, drink, activities, and events for people of all ages.

Come visit us in the Fox Mall right by Baskin Robbins. We'll be giving out information about our new program for seniors; a no-cost, debt-free alternative to a reverse mortgage.

I hope to see you there!

There has not been much change from last week in either the mortgage market or the stats in the local home sale market.

Rates have not moved much this week. That could change tomorrow when the Fed announces their decision regarding the Federal Funds Rate at 11:15 Pacific Time. I am going to go out on a limb and predict that they will not change rates - the consensus is that they will cut .25%.

Burlingame has 54 single familyhomes for sale with 10 listed as pending - not much change from last week. The lowest priced listing is for $659,000. The highest priced listing is for $2,995,000, which is a $100,000 increase of the highest priced home for sale from last week.

Hillsborough has 55 homes for sale with 3 listed as pending sales, according to mlslistings.com. The price range is between $1,995,000 to $18,000,000. Once again, the highest priced home for sale is in the $2,000,000 price range. We'll wait another week to see if we can draw any conclusions about what is happening in the Hillsborough home sale market.

My client recently received a letter from Washington Mutual stating that they were reducing his equity line from $939,700 to $282,000. We hear about lenders reducing the amount of available credit on equity lines every day. This case, I believe, is an example of a lender taking advantage of a customer because of their own problems.

WAMU approved my clients for a 90% CLTV equity line based on an appraised value of $2,600,000. It was a fully documented loan, and it closed in January 2007.

After receiving this letter, my client and I had a conference call with a supervisor from the WAMU consumer loan division. He stated that the decision to reduce the equity line amount was based on the results of an automated valuation model (AVM) of the home that determined that the home had declined in value from $2,600,000 to $2,398,252. My rough math tells me that the value, based on their AVM, dropped 8 to 9%.

Because of a 8% to 9% drop in value, WAMU arbitrarily decided to cut the amount available by approximately 70%! Over one year later they decide to change the CLTV from 90% to roughly 70% based on a computer model of an expensive home, not even a full appraisal!

Both myself and my client understand that WAMU has the right to cut the available balance of the equity line based on their determination of value. What we do not understand is why they cut the CLTV from 90% of the perceived value to 70% of the perceived value.

My client is paying a rate based on a 90% CLTV. Did they offer to reduce his rate based on a 70% CLTV? No.

We asked the supervisor if he could change the amount available back to the 90% CLTV that the original loan was based on. This would reduce the available line amount from $939,700 to $760,000. He said no. He said my client could provide an appraisal from an appraisal firm of WAMU's choice, or a property tax assessment. Then they would consider increasing the line.

The actions of WAMU in this case stink! I truly believe that they are cutting my client's available credit because of their problems. What do you think?