Archive for September, 2010 Page 2 of 5

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FTC Seeks to Ban Deceptive Mortgage Ads and Allow Civil Action Against Violators

Posted on September 29, 2010 by Jason

Reverse Vision, September 28th, 2010

A new proposal
from the Federal Trade Commission would ban misrepresentations for all
mortgages and allow the agency and states to seek civil penalties
against those who violate the rule.

According to the FTC, the move is meant to further strengthen its
longstanding enforcement program?? ?and make the agency more effective
in combating deceptive advertising.  The proposed rule would prohibit
all material misrepresentations in advertising about consumer mortgage
products, including reverse mortgages.

The proposal lists 19 examples of misrepresentations about fees,
costs, obligations, and other aspects of credit that would be
violations.  The rules would apply to mortgage lenders, brokers, and
servicers, real estate agents and brokers, advertising agencies, home
builders, lead generators, rate aggregators; and other entities under
the FTC’s jurisdiction.

?According to the proposal, companies would have to retain copies
of all sales scripts, training materials, related marketing materials,
websites and weblogs, and various other documents describing mortgage
products being sold to consumers, be retained for a period of 24 months
to ensure compliance with the rule.

Read more of this article.

About Reverse Mortgages:  You don’t need salesmen to give you pitches about how much you should get a reverse mortgage.  You don’t need wildly inflated claims about what the program will do for you.  What you need are raw facts, numbers, and details about how the program works, and why people do or don’t get one.  Make up your own mind about reverse mortgages after figuring out the details of the program, using the resources available at NewRetirement.com.

Reverse Mortgage Industry Reacts to Changes and HECM Saver Opportunity

Posted on September 29, 2010 by Jason

Reverse Vision, September 29th, 2010

The Department of Housing and Urban Development announced two big
changes and the reverse mortgage industry is still trying to figure out
what it all means. As expected, HUD reduced the principal limits but surprised the industry by lowering the floor from 5.50 percent to 5.00 percent.

“We made the suggestion for them to lower the floor months ago but
they never indicated they were seriously considering it,” said John
Lunde, President of Reverse Market Insight.  ”I like that they did it and how they did it to surprise the industry on the upside for once.”

By lowering the floor, younger borrowers will have access to more in
proceeds than before as long as rates remain low.  ?”The lower interest
rate was a sensible adjustment given market reality,” said Michael
McCully, Partner at New View Advisors.
 ”Lowering the floor of the look-up tables delivers more benefit to
borrowers, and lowers the price at which newly-created HBMS will trade.”

While unable to predict the future, McCully said it’s likely that a
reduction in execution for HMBS will be met with price reduction for
lenders as well.

Even though the benefit could be short lived if rates rise, lenders
welcome the surprise from HUD.  ”Any program that gets more money to the
borrower is good,” said Dave Bancroft, Executive VP of Security One Lending. “The changes provide the potential for younger borrowers to refinance, but because rates are so low, it’s a short term run.”

HUD and investors are concerned about the potential for “churning” –
where lenders refinance borrowers even if the benefit is minimal – but
several lenders told RMD they don’t expect any sort of “refi-boom”.
 Because rates will have to rise eventually, the HECM Saver is where
lenders see the most opportunity.

From a long term perspective, the HECM Saver provides ?the industry
with a low cost reverse mortgage and the opportunity to reach new breed
of customer.  ”The industry has been catering to a diminishing customer
base since home values have depreciated,” said Jean Noble, EVP of Guardian First. “We can’t control home values, so lost production can be made up targeting a higher end client with the HECM Saver.”

Read more of this article.

About Reverse Mortgages:  The new HECM Saver program doubles the options available to seniors looking to a reverse mortgage to secure their retirement.  The program doesn’t come into effect until the 4th of October, but once it does, you will need to know how, or if, the new program can help you.  Keep up with the latest at NewRetirement.com.

Some common retirement account mistakes investors make

Posted on September 29, 2010 by Jason

Daily Breeze, September 29th, 2010

The biggest mistakes investors can make with
their retirement accounts are failing to choose appropriate investment
options and succumbing to the asleep-at-the-wheel mentality: not
tracking performance and not insisting on expert management of
employer-sponsored accounts.

There are other ways that retirement accounts can go awry,
most can be avoided with knowledge of the rules and thoughtful planning.
Some of the common ones are:

Handling rollovers poorly. Failing to move 401(k) assets into
appropriate vehicles within the required time period can be costly. The
401(k) holder who’s taking the finds out of a former company plan has
precisely 60 days to reposition those funds in IRS-sanctioned vehicles,
only one rollover

annually is allowed.

Ideally, the money should be transferred directly from the
employer 401(k) to a new qualified retirement account, in a
trustee-to-trustee transfer, to avoid having the account-holder “take
possession” of the funds. That “personal possession” is allowable, but
often individuals forget to move the funds into other retirement
accounts within 60 days. Failing to act within 60 days could mean the
funds lose their tax-deferred status.

Mishandling an inherited IRA. Many older investors are
bequeathing their IRAs to children or grandchildren. That’s nice, but if
funds are mishandled by the heir, tax benefits of the IRA could
dissolve.

Read more of this article.

401(k)s and IRAs:  How do you put your retirement savings to work without making crippling mistakes?  The best place to start is to learn as much as you physically can about these programs.  NewRetirement.com has the information you need to avoid pitfalls like these.

Democrats campaign on GOP threats to Social Security

Posted on September 28, 2010 by Jason

The Los Angeles Times, September 28th, 2010

The day after Jesse Kelly won the Republican primary in Arizona’s 8th Congressional District, Democratic incumbent Gabrielle Giffords went on the air with a lacerating attack.
Noting that Kelly said he ultimately wanted to eliminate Social
Security, Giffords’ television ad warned that Kelly “is a risk we can’t
afford.”

Kelly, a construction manager with no political experience, had made the
mistake of venturing into the mine-strewn politics of Social Security.
No matter that he said he would preserve benefits for current retirees.
The fact that he once described it as “the biggest pyramid scheme in
history” gave his rival the equivalent of cannon fodder in a district
where nearly one-fifth of the population is older than 65.

Kelly is now running his own ad vowing to “honor our commitment to seniors,” trying to fend off a line of assault that Democrats are stepping up throughout
the country. It’s one of the few consistent themes in Democratic
campaign commercials in a year when the party has otherwise eschewed a
national message.

Accusing Republicans of wanting to do away with Social Security is a well-worn trope for Democrats. But a slew of “tea party”-backed
candidates who have called for privatizing or eliminating the program
have given Democrats fresh ammunition at a time when they are on the
defensive about healthcare reform and the economic stimulus.

The strategy allows Democrats to link their rivals to former President George W. Bush, who sought to allow younger workers to invest a portion of their Social Security taxes in the stock market.

“And because it has also become a rallying cry among some of the tea
party movement … it’s an indicator of how far to the right and how
extreme a position the Republican candidates are taking,” said Rep.
Chris Van Hollen of Maryland, chairman of the Democratic Congressional
Campaign Committee, which has devoted the majority of its spots to
slamming House GOP candidates on the topic.

Read more of this article.

Social Security Optimization:  How do you ensure you get what you’re owed from Social Security?  Make sure you’re taking full advantage of the full rules of the program.  Learn how to optimize your Social Security at NewRetirement.com

"Illinois is Broke" group calls for state pension, health care reforms

Posted on September 28, 2010 by Jason

WQAD, September 27th, 2010

Illinois business leaders are calling to reform the
state’s pension and retiree health care costs. The group, Illinois is
Broke, wants elected officials to reduce the state’s mounting debt with
no time to wait.

This ticking financial time bomb already hit close to home at Skills
Incorporated in January. Illinois money troubles left 50 disabled
clients without the help they need. A four-decade history disappeared at
an auction.

“This is our problem,” said Jim Farrell, retired chairman and CEO of Illinois Tool Works. “This is our lifetime.”

Reasons why top executives like Farrell are fronting the group. It’s a
non-partisan call to action for budget reform linked to the state’s
pension and retiree health care system.

The group made its case before some 30 local firms at Deere & Company on Tuesday morning.

“In 10 years, it’s estimated that all of those pension funds will be out of money,” he said.

Read more of this article.

Retirement Calculator:  If you can no longer count on a Pension, how are you going to prepare for retirement?  Start answering these questions with the NewRetirement Retirement Calculator.

Retirement checklist: What to do from 35 to 55+

Posted on September 28, 2010 by Jason

CNN Money, September 22nd, 2010

The road to retirement is littered with distractions. In the
hurly-burly of life, so many things compete for your attention that you
can lose sight of what really matters most.

That’s where MONEY’s
checklist comes in. We’ve created to-do lists for each of the main
stages of retirement planning. Think of them as basic reminders you can
set aside and refer to on occasion — say, every year or so — to make
sure you’re on the right track.

It needn’t be a complicated list. Says Charles Farrell, a financial
adviser and author of Your Money Ratios: “Simpler is better. Focus on a
few key goals and you won’t miss the forest for the trees.”

TO DO: Mid-30s to early 40s

Goal: Develop the habit of saving.
Savings: 1.5 times your annual salary by age 35.

7 secrets to a richer retirement

  • Take full advantage of my 401(k) match.
    Your employer-sponsored retirement plan is the easiest way to put your
    savings on autopilot. And if you take full advantage of your company
    match, you could earn 50% to 100% on your money before taking on any
    market risk.
  • Boost my 401(k) contribution. As
    your paycheck grows, your savings rate should too. Sign up for “auto
    escalation” to boost your contributions by a percentage point or so a
    year. If your 401(k) doesn’t offer this feature, sock away half or more
    of each raise.
  • Find other tax-advantaged ways to save. Already
    maxing out on your 401(k)? If you make less than $120,000 — or
    $177,000 for married couples filing jointly — check out a Roth IRA.
    Already hitting the $5,000 annual IRA limit? Move on to investment
    options such as index funds that don’t expose you to stiff tax bills.

Read more of this article.

Retirement Calculator:  Keeping track of whether or not you’re on the right road is hard, but it helps to have a firm idea of what the right road is.  Our Retirement Calculator can help you do just that, and track the changes to your portfolio.

Recession Raises Poverty Rate to a 15-Year High

Posted on September 23, 2010 by Jason

The New York Times, September 16th, 2010

The percentage of Americans struggling below the poverty line in 2009 was the highest it has been in 15 years, the Census Bureau reported Thursday, and interviews with poverty experts and aid groups said the increase appeared to be continuing this year.

With the country in its worst economic crisis since the Great Depression,
four million additional Americans found themselves in poverty in 2009,
with the total reaching 44 million, or one in seven residents. Millions
more were surviving only because of expanded unemployment insurance and
other assistance.

And the numbers could have climbed higher: One way embattled Americans
have gotten by is sharing homes with siblings, parents or even
nonrelatives, sometimes resulting in overused couches and frayed nerves
but holding down the rise in the national poverty rate, according to the
report.

The share of residents in poverty climbed to 14.3 percent in 2009, the
highest level recorded since 1994. The rise was steepest for children,
with one in five affected, the bureau said.

The report provides the most detailed picture yet of the impact of the recession
and unemployment on incomes, especially at the bottom of the scale. It
also indicated that the temporary increases in aid provided in last
year’s stimulus bill eased the burdens on millions of families.

For a single adult in 2009, the poverty line was $10,830 in pretax cash income; for a family of four, $22,050.

Given the depth of the recession, some economists had expected an even larger jump in the poor.

“A lot of people would have been worse off if they didn’t have someone to move in with,” said Timothy M. Smeeding, director of the Institute for Research on Poverty at the University of Wisconsin.

Read more of this article.

Retirement Calculator:  How do you avoid winding up below the poverty line in retirement?  Part of it is careful planning for your retirement.  To determine how best to maximize your options, and find out what you need to plan around, try our Retirement Calculator, on NewRetirement.com

Cheaper Reverse Mortgages May Be Coming

Posted on September 23, 2010 by Jason

US News & World Report, August 27th, 2010

The Federal Housing Administration (FHA) is developing a new reverse
mortgage product that sharply cuts up-front payments by home owners but
also significantly reduces the percentage of a home’s equity that can
be paid to owners under the program. Reverse mortgages insured by the
government are available on homes where the youngest owner is at least
62 years old. The program is called a Home Equity Conversion Mortgage
(HECM).

Many consumer advocates have been opposed to reverse mortgages, in
part because they carry stiff fees to consumers. They also have been
controversial because of high-pressure marketing tactics that led some
borrowers to use loan proceeds for inappropriate investments. Most
experts advice older consumers to use a reverse mortgage only when they
need funds for living expenses and other necessities.

[Visit the U.S. News Retirement site for more planning ideas and advice.]

Details of the new product were outlined in a press release from an
industry group, the National Reverse Mortgage Lenders Association
(NRMLA). It said the FHA had already approved the changes. A government
spokesman, however, said the changes were not yet final. “There has
been no official announcement yet because we are still working out the
details,” said spokesman Lemar Wooley.

In lowering one of the major sources of high reverse mortgage fees,
the FHA would also limit its own losses. Even with insurance payments


set at two percent of a home’s value, the government has been losing
money on the program. The NRMLA release said that under the new HECM
loan, to be called the “HECM Saver” loan, the two percent payment will
be effectively eliminated. The downside is that homeowners will be able
to draw down 10 to 18 percent less money
from their home’s equity than under the current HECM loan rules. By
paying out a smaller percentage of a home’s equity, the FHA says, it
will be able to sharply reduce losses on the program, and thus not need
to collect thousands of dollars in up-front insurance premiums.

The new HECM Saver loan will be offered in October, the news release
said. It said the current loan, to be called a “HECM Standard” loan,
would continue to be available.

Read more of this article.

About Reverse Mortgages:  The HECM Saver program has been confirmed, and lenders are already preparing to offer it.  Find out all the details of this new program and determine whether or not it’s right for you at NewRetirement.com

Social Security Increase Unlikely For a Second Year

Posted on September 23, 2010 by Jason

The Fiscal Times, June 2nd, 2010

For the first time since 1975, Social Security beneficiaries received no
cost-of-living adjustment (COLA) this year because prices fell in 2009.
President Obama tried to offset the loss by proposing a special $250
check in lieu of a COLA, which would have cost more than $13 billion .
But the Senate rejected that measure by a vote of 50-47.

Now, there may be more disappointing news for 43 million seniors: This year’s low inflation may mean no COLA increase in 2011.

The
final piece of the puzzle in determining the size of any 2011 COLA, the
September consumer price index, will be released a little more than two
weeks before the midterm elections on Nov. 2. While public concern
about the size of the $1.4 trillion federal budget deficit has risen
sharply in recent months, the temptation for politicians to garner favor
with seniors surely will be there — a temptation that Obama and
Congress should resist.

Unintended Consequences

The
COLA is based on the percentage change in consumer prices from the
third quarter of one year to the same quarter the following year.
Because of a big increase in energy prices from 2007 to 2008, the Social
Security COLA was a whopping 5.8 percent in January 2009. With energy
prices later falling and the onset of recession, the price index
declined 2.1 percent between the third quarters of 2008 and 2009. Hence,
no COLA for 2010. Social Security benefits were indexed for inflation
beginning in the 1970s precisely to stop politicians from repeatedly
increasing them on an ad hoc basis. It’s also worth mentioning that
adding a few dollars to a monthly Social Security check isn’t a good way
to boost the economy. There are better ways to implement more economic
stimulus if necessary, as many believe it is. Moreover, it’s far from
clear that a modest COLA would be of much help to seniors.

Consumer prices are
increasing this year, but according to most forecasts, not by enough to
trigger a COLA. In fact, the Obama administration’s fiscal 2011 budget 
released in February assumed there would be no COLA next year. With several more months of price data available, that’s still looking like a good bet.

One
benefit for the 31 million qualifying seniors — they don’t have to pay
the $169 annual Medicare Part B increase because there was no COLA. It’s
not as good as a $250 check but at least it’s not taxable.

Read more of this article.

Social Security Optimization:  With no Cost of Living Adjustment for the next year, it is vital that you get the most out of your social security.  Consider how best to optimize Social Security at NewRetirement.com

Retirees Face 2nd Year with No Social Security Increase

Posted on September 21, 2010 by Jason

Marketwatch, September 14th, 2010

Official word won’t come for two more months, but it looks like
Social Security payouts in 2011 will not get a cost-of-living adjustment
(COLA). That will make it two straight years that Social Security
benefits won’t get an inflation bump, the first time that’s happened
since COLAs were formally added to Social Security in 1975.

The culprit here is that there likely will be no inflation from the
third quarter of 2009 to Q3 2010; the 12-month stretch used to determine
Social Security COLA adjustments.  While general inflation has been
non-existent and the bigger concern is deflation,
it’s not as if retirees’ cost of living has held steady. For example,
the price level of U.S. medical care services has risen 6 percent since
the end of 2008 (the last time there was a Social Security COLA).


A $250 Band-Aid

In anticipation of the October announcement that payments will not
rise — and just in time for mid-term election campaigning — a new bill
was introduced in the House last week that would give all Social
Security recipients a one-time $250 payout next year.
What retirees, and all savers, really need is a shift in Federal Reserve
policy that would let savings rates rise. Since 2008 the downward
trajectory of six-month CD rates has been rivaled only by Lindsay
Lohan’s career prospects:

Yet Federal Reserve Chairman Ben Bernanke has told
us that rates will remain low for an “extended period,” a position that
is no longer garnering universal support.  Thomas Hoenig, president of
the Kansas City Fed recently recently told CBS News it’s time for the
central bank to stop penalizing savers and begin to push the Federal Funds rate off the floor.

Where to Find More Income

So far Bernanke hasn’t given any indication he’s ready to give savers
a break. And a $250 bonus Social Security payout — assuming it is
approved by Congress — isn’t likely to offset most retirees’ income
losses from lower rates. But that doesn’t mean yield-starved savers and
investors should just wait for general rates to rise. There are ways to
earn more yield today, if you’re willing to hunt around.  MoneyWatch’s Allan Roth recently pointed out that Alliant Credit Union is paying 1.5 percent on deposits.

Read more of this article.

Social Security Optimization:  If (as we expect) there is to be no COLA this year, then it becomes all the more important to ensure that you are getting the maximum out of your Social Security.  You can use our resources on Social Security Optimization to assist in this regard.

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