Posted on August 21, 2006 by Jason
Contra Costa Times, August 20th, 2006
SALLY Scott is 66 years old. Social Security and pension checks
aren’t enough. She saw an ad for a “reverse” mortgage, allowing seniors
62 or older to receive cash by borrowing against their homes, and it
does not require repayment as long as they live there. Interested, she
spoke to a mortgage broker about a $10,000 reverse mortgage.
The loan papers, however, said that the loan amount was $200,000.
The broker promised that he’d change the figure, insisting that she
sign the paperwork first.
Scott signed. A week later, she received a check for $200,000. She
immediately notified the broker who apologized for the mistake and
instructed her to wire the money back. The account that Scott returned
the money to belonged to the broker. He disappeared, leaving her with a
mortgage in default and no way to repay the loan.
Mandatory mortgage counseling, like that required in State Sen. Joe
Simitian’s Senate Bill 1609, could have helped Scott avoid falling
victim to this fraud.
Reverse mortgages are popular among seniors in California and
gaining popularity nationwide. One in every four reverses in the
country are sold in California.
Read more of this article. Learn more about Reverse Mortgages.
Posted on August 21, 2006 by Jason
The New York Times, August 20th, 2006
Every year since 1999, New
York City has reported that it has all the money it needs to pay for the
pensions that have been promised to city workers.
With the retirement plans said to be financially sound, state politicians
have happily showered city employees with generous pension enhancements — annual
cost-of-living increases, holiday bonus payments, early retirement with full
benefits — that are the envy of private-sector workers, whose pension benefits
have eroded.
But a close inspection of city pension records
shows that the funds committed to the plans may fall well short of the city’s
promises to hundreds of thousands of current and retired workers. They look
fully funded chiefly because the city has been using an unusual pension
calculation that does not comply with accepted government accounting rules. Even
the city’s chief actuary, who helps produce the annual reports, says the
official numbers are “meaningless” when it comes to showing the plans’ financial
health.
The chief actuary, Robert C. North, has prepared a little-noticed set of
alternative calculations showing that the gap in the pension funds could be as
wide as $49 billion. That is nearly the size of the city’s entire annual budget
and the equivalent of the city’s publicly disclosed outstanding debt.
Read more of this article.
Posted on August 21, 2006 by Jason
ForbesAutos.com, August 14th, 2006
“This,” Richard Adatto said, “is the premier car event in the world.”
Adatto, an automotive historian and author, should know. He’s a chief
judge at the upcoming 56th annual Pebble Beach Concours d’Elegance, a
four-day-long mostly vintage vehicle happening held Aug. 17-20 in and around
scenic, coastal Pebble Beach, Calif.
Other automotive events are scheduled to occur
concurrently with, or in the days preceding, the main program. The vehicles in
town for exhibition, competition and auction are estimated to be worth hundreds
of millions of dollars.
“There are many horse races. This is like the Kentucky Derby,” Adatto said about
the Pebble Beach event’s pop cultural significance. ”There are many kinds of
racing. This is like Formula 1. This is the cutting edge. “
Concours chairman Sandra Kasky Buttonlikewise
compares Pebble Beach to the Kentucky Derby and also to a garden party. For
Concours participants, she said, stakes are high.
Read more of this article.
Posted on August 16, 2006 by Jason
Reuters, August 15th, 2006
Many wealthy Americans with nest eggs of $1 million may not have
enough money for their golden years because they do not invest
appropriately after leaving their jobs, a poll released on Tuesday
shows.
The survey, commissioned by Bell Investment Advisors and
conducted by Opinion Research Corporation last month, found that 38
percent of the 500 60-year old high net-worth respondents said they
would invest more conservatively during retirement.
This may be a
mistake, however, because people tend to live longer and often have to
fund retirement for two or three decades, Jim Bell, founder and
president of Bell Investment Advisors said.
“If people will spend
30 years in retirement they will need enough capital to invest for the
sake of growth to keep their purchasing power intact,” Bell said.
Traditionally, retirees tend to shift their investments to safer, fixed
income investments, Bell and other financial advisers have said.
However, bond returns may not be robust enough to let portfolios grow
adequately enough to fund many years of retirement, the financial
advisers said.
Read more of this article.
Posted on August 16, 2006 by Jason
Mortgage101.com, August 15th, 2006
If you, a parent, relative or friend is a
senior-citizen homeowner who needs or wants cash to enjoy retirement,
the new book “The Reverse Mortgage Advantage” by financial columnist
Warren Boroson provides an excellent overview of the choices available.
Written in an easy-to-understand style, with lots of important facts
and real-life examples, this guidebook explains virtually all the key
reverse-mortgage considerations for senior homeowners and their heirs.
Just in case you are not familiar with a reverse mortgage, it is
available to senior-citizen homeowners who are at least age 62. It is
the opposite of a regular, or “forward,” mortgage. The reverse-mortgage
lender pays money to the borrower, and no repayment is required until
(a) the home is sold, (b) the borrower doesn’t occupy the residence at
least six months a year, or (c) dies.
Then the total payments made to the homeowner, plus accrued
interest, must be repaid, usually from the sale of the property. These
are “nonrecourse loans,” meaning the homeowner or the heirs are never
personally liable for the principal and interest owed even if the
homeowner lives to 120 and the total debt exceeds the home’s market
value.
The author is a professional business writer. This well-researched
book highlights virtually every reverse mortgage concern and explains
the pros and cons. It places primary emphasis on protecting the senior
homeowner, especially from so-called “advisers” who recommend spending
reverse mortgage proceeds on questionable high-sales-commission
products such as annuities and life insurance.
Heavy emphasis is placed on the requirement of all three nationwide
reverse mortgage lenders — FHA (HECM), Fannie Mae and Financial
Freedom Plan — for the borrower to obtain counseling from a qualified
consultant before obtaining a reverse mortgage. Although Boroson
recommends reverse mortgages for senior homeowners who plan to stay in
their homes at least three to five years, he doesn’t hesitate to point
out the pitfalls to avoid and when a reverse mortgage is not
appropriate.
Read more of this article. Learn more about Reverse Mortgages.
Posted on August 16, 2006 by Jason
The Washington Post, August 12th, 2006
Remember when you refinanced your home mortgage to get a lower interest rate and pay less every month?
How
quaint. And how utterly out of date. Now the rage is refinancing into a
higher interest rate — yes, you read that correctly — while pulling
out buckets of fresh cash.
Almost nine of 10 homeowners who refinanced during the second
quarter of this year cashed out additional money — often tens of
thousands of dollars — according to mortgage investment giant Freddie
Mac. The 88 percent cash-out refinancing rate was close to the all-time
record and could surpass it later this year.
Meanwhile, the
typical refinancer hasn’t been scouring the market for an interest rate
lower than that on his existing first mortgage. To the contrary,
according to Freddie Mac, most refinancers are opting for larger
replacement first mortgages with rates averaging about one-half of a
percentage point higher than on their old loans.
Read more of this article. Learn more about Mortgage and Mortgage Refinancing.
Posted on August 15, 2006 by Jason
Pittsburgh Tribune-Review, August 14th, 2006
If you have a 401(k) retirement plan at work, contribute to it. As much as you can, as soon as you can.
Time is wasting.
USA Today reports that as many as a third of employees eligible for the
plans do not join. And many others do not pay in enough to obtain the
full company match.
Old-style, lifetime-income pension plans are being discontinued
or frozen. It could be a very cold, dismal world for tens of millions
of Americans who don’t look 30, 40, even 50 years ahead.
You get an immediate tax break for every dollar (up to the maximum
allowed) you put in to a 401(k); so, in effect, it costs less than a
dollar to invest a dollar. When the money comes out, there’s every
chance you’ll be in a lower tax bracket.
Any financial manager worth his salt will tell you the 401(k) is
one of the best deals around. Supplement that with a personal,
tax-advantaged IRA, and you’re well on your way.
Read more of this article.
Posted on August 15, 2006 by Jason
Fort Wayne Journal-Gazette, August 14th, 2006
Your 92-year-old widowed grandmother falls down and breaks her hip.
She stays at the hospital for a few days after surgery and then
transfers to a rehabilitation facility. After another week, she
transitions to a nursing home, the first several months paid for by
Medicare. Your family questions: “More than three months after Grandma
first fell, is the nursing facility the most appropriate setting for
her?” She wants to be independent, active and healthy.
Should your family consider an assisted-living facility, moving back
home with the assistance of a personal attendant or adult day care?
Regardless of the choice, you, your parents and your grandmother have
just become customers of long-term-care services in the State of
Indiana.
Although a comprehensive care facility, such as a nursing home, is
often the best option, many seniors would prefer and are able to live
more independently. The Indiana Family and Social Services
Administration supports 25,000 people in nursing facilities across the
state, but only a fraction of this number is in alternative care
settings. For example, fewer than 200 are supported in assisted-living
facilities.
Last year, FSSA directed 75 percent of its $1.65 billion long-term
care dollars to institutional care, while only 25 percent of those
dollars were spent on long-term care alternatives such as home health
care, assisted living and adult day services. Since the financial
criteria for nursing-home coverage by Medicaid are less restrictive
than the criteria for alternative care, the choice of a long-term care
option often becomes a financial decision, not a quality-of-life
decision. We do not want to force this unfortunate decision on our
seniors.
Read more of this article.
Posted on August 14, 2006 by Jason
The Baltimore Sun, August 13th, 2006
The equity you build up in your home is not a retirement-savings
account, although many Americans are tempted to think that it is.
The smartest way to think about home equity, financial planners say, is
as a cushion, a spare tire in reserve just in case savings calculations
are off or liquid assets run out.
Shelter is a necessity, and so many planners classify the home as a
“use asset,” a consumer need in the same class as a car or sofa.
“It’s a place to live, not a brokerage account,” said Sherman L. Doll,
a personal financial specialist with Capital Performance Advisors in
Walnut Creek, Calif. “But try to convince a Californian of that.”
The recent housing boom has boosted the net worth of many Americans,
especially those in markets that have experienced steep home-price
appreciation over the past years.
A recent Securities Industry
Association retirement study identified a “wealth effect” that surfaced
as homeowners amassed equity in their properties and perceived they had
less of a need to save. Factors such as rising interest payments and
higher energy prices also pushed Americans to slack off when it came to
lining their retirement nest egg, the study concluded.
Read more of this article. Learn more about Retirement Housing
Posted on August 14, 2006 by Jason
The Arizona Star, August 13th, 2006
Vince Olszewski was in something of a financial pickle: he owned
his 45-year-old Southeast Side home free and clear but had no cash to
make basic repairs.
The roof leaks. The water heater rattles. The doors need to be replaced.
“It will cost $20,000 in repairs to get it done properly,” Olszewski said.
But with $660 from Social Security every month as his only source
of income, Olszewski, 80, decided to take out a reverse mortgage, an
option that an increasing number of seniors are exercising across the
country.
With home values appreciating fast over the last few years, many
seniors are finding themselves rich in home equity. This option allows
them to pull out more equity than ever before and stay in their house,
though some financial advisers warn it can be misused.
In a regular mortgage, a home buyer makes payments to a lender,
paying down the debt and building equity. In a reverse mortgage,
homeowners over age 62 receive cash from a lender in a lump sum,
payments or line of credit. The increasing debt doesn’t have to be paid
back until after the homeowners die, move out or sell the home.
Read more of this article. Learn more about Reverse Mortgages.
