Another great article (there have been many lately) last week in The Connecticut Post. Here is the link:
http://www.connpost.com/ci_13023237
In it, an good example of someone who could not make ends meet used a Reverse to improve their lives. It also mentions that Reverse Mortgages are only a last resort. Excellent piece.
Saul Friedman wrote a great article about Reverse Mortgages in Newsday a few days ago. Here is the link:
In it, he challenge Senator Claire McKaskill about her recent hearings and negative statements about Reverse Mortgages. I think it is great. While everyone in teh business knows that there are a few bad apples, the vast majority of people working with Reverse Mortgages are honest. While there are a few unhappy borrowers, even though Senator McKaskill only found one upset daughter of a borrower to testify (and she really did not know what she was talking about) well over 90 percent of Reverse Mortgage borrowers are happy. It is important to put this into the context of other financial products that have MUCH lower satisfaction rates.
For a Senator, or any public official to talk about the "possible abuses" and problems and never mention the many positives and unique benefits, is unprofessional and wrong.
AP ran a story this morning from RealtyTrac that foreclosures were higher in July than any month since foreclosures have been statistically recorded. Here is the link:
http://m.apnews.com/ap/db_8559/contentdetail.htm?contentguid=ADn6wDlV
Does this suprise anyone? The economy is still in the toilet, despite what so many moronic economists are saying. The housing market is still deteriorating nationally despite what a few absurd indicators show(new Home sales are up! Wow, but new homes are only a ridiculously small percentage of the overall market!)
I have been posting for over a year that the foreclosure "crisis" is only beginning. This is due, in large part, simply to the length of time that it takes for a home to go through the foreclosure process in many states. This can take well over a year and as long as three years, just in New York.
Considering the rising unemployment, general malaise of the economy and continuing reduction of home values; more and more homes will enter the foreclosure process over the coming months and it will take at least until 2011 for the housing market to start to rise on a national level.
The issue is that the many foreclosed homes will have to be sold at a discount to the current market to get them short-sold (if the borrower is still there) or sold out of the bank-owned Real Estate portfolio. This will take a long time and will continue to pressure the housing market for a very long time, regardless of when exactly the economy as a whole, starts to grow again.
Yahoo Finance posted a very positive Reverse Mortgage piece that was originally in Kiplingers. There are a few issues, like where it says that Reverse Mortgages are only if you paid off your loan or have a small balance (I just paid off a $400,000 loan with a Reverse) but overall it is a positive piece.
Here is the link:
Today's Wall Street Journal has an editorial today that warns that the Federal Housing Authority (FHA) and the agency that buys their loans, Ginnie Mae (almost all Reverse Mortgages are FHA insured) is getting too risky and could eventually need taxpayer bailout like Fannie Mae and Freddie Mac.
Here is the link to the article:
http://online.wsj.com/article/SB10001424052970204908604574334662183078806.html
I agree that there may be a shortfall in the future and I have posted before that it is possible, but comparing FHA loans to subprime is not really accurate for the following reasons:
1) All FHA loans require income verification. Almost all subprime defaults were no income or no doc
2) FHA loans are only for primary residences. One loan per customer. A lot of subprime defaults were on investment properties and many had multiple loans per client.
3) FHA fraud is prosecuted federally and once you defraud or even default on a federal loan, you get put on a list and cannot borrow or even be involved in the loan process again. There were no safeguards like this for subprime loans.
4)The government does take insurance premiums at the closing and on an ongoing basis for FHA loans. Obviously the question is do they have enough in premiums to cover the claim, but only time will tell the answer to that.
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