It Just Got Tougher To Get A Reverse Mortgage

New federal rules that kicked in on April 27, 2015 may make it harder for some people to qualify for reverse mortgages. But they’ll also make it more likely that those who do receive reverse mortgages will have fewer worries about them.

Reverse mortgages are FHA-insured loans available to homeowners age 62 or older that let the borrowers convert their home equity to cash without making monthly payments; they’re repaid when the borrower sells the home, moves or dies. A 65-year-old with a $250,000 home might be allowed to borrow $127,000 with a reverse mortgage, according to the Boston College Center for Retirement Research.

 

 

The New Financial Assessments

Under the new rules (which sprang from a 2013 law), to get a reverse mortgage, you’ll now be subject to what’s known as a “financial assessment” — much like what lenders do when sizing up applicants for regular mortgages. Lenders will now review the income, cash flow and credit reports of prospects.

Basically, you’ll need to prove that you have the “willingness” and “capacity” to continue paying your home’s property taxes and insurance premiums. If the assessment convinces the reverse mortgage lender that you won’t have the cash to make those home-related payments, you may be rejected. That’s because a reverse mortgage borrower who fails to pay property taxes or homeowner’s insurance could be tossed out of the home and the house could then go into foreclosure.

“I think these changes are positive overall,” says Phil Stevenson, a Certified Reverse Mortgage Professional and principal of PS Financial Services in Coral Gables, Fla. “They’ll affect five to 10% of potential borrowers and, in reality, those are the ones who probably shouldn’t have done reverse mortgages in the past.”

The new rules will undoubtedly make the reverse-mortgage application process more complex, though, and will lengthen the time it’ll take for loan approval, at least initially.

More Work for Borrowers

see more: http://www.forbes.com/sites/nextavenue/2015/04/29/it-just-got-tougher-to-get-a-reverse-mortgage/

Many find fault with paper critical of consultants

The paper — “Picking Winners? Investment Consultants' Recommendations of Fund Managers” — asserts that consultants' recommendations of money manager strategies are not driven by investment performance, and instead are based largely on “soft factors,” such as “clear decision-making, capable portfolio management and consistent investment philosophy.”

The authors were unable to find evidence that recommendations based on those factors added any particular performance-based value, suggesting the search for winners is “fruitless.”

“They (consultants) may be adding value through the other decisions they help plan sponsors with, they just fail to do it in this particular decision: which asset manager to hire for a particular mandate,” in this case, active U.S. equities, said Jose Martinez, assistant professor of finance, University of Connecticut School of Business and co-author of the paper, which won the annual $10,000 Commonfund Prize this year.

But investment consultants and asset owners interviewed for this story cry foul.

Michael A. Rosen, a principal and chief investment officer at investment consultant Angeles Investment Advisors LLC, Santa Monica, Calif., said the questions clients should be asking are: “Over time, has the fund performed better than its benchmark? Has it done so with less risk? Has the manager achieved their objectives?”

“If so, then the consultants provide considerable value,” Mr. Rosen said.

He also said consultant recommendations being driven largely by soft factors rather than performance, is by design and is “a good thing.”

“Past performance is a poor indication of future results because performance can be affected by many complex factors, some of which are random or difficult to control or anticipate,” he said after reading the paper.

When asked to comment on the paper, Michael G. Trotsky, executive director and CIO of the $61 billion Massachusetts Pension Reserves Investment Management board, Boston, echoed the sentiment that consultants shouldn't choose investment strategies based on past performance.

“Past alpha generation has absolutely zero predictive ability for future performance,” said Mr. Trotsky. 

story continues: http://www.pionline.com/article/20150420/PRINT/304209989/many-find-fault-with-paper-critical-of-consultants

What Boomers Need to Know About Reverse Mortgages

You have been making mortgage payments most of your adult life. Maybe it’s time your mortgage lender starts to pay you back.

According to the National Reverse Mortgage Lenders Association, since 1990, 906,018 seniors have accessed the equity in their homes by taking out a reverse mortgage. Although recently, the numbers seem to be on a decline. In 2009, 114,292 applications were processed, while in 2014 only 51,642 seniors applied.

The reverse mortgage is a financial product that has been available for more than 50 years, but many people are confused about what it is and how it works.

The original idea of the reverse mortgage was to give seniors (age 62 and over) the opportunity to access the equity in their homes without selling or incurring the obligation to make monthly payments to a lender.  It was expected that most reverse mortgage borrowers would receive monthly payments from the lender to help pay their living expenses and age in place.  However, recent studies have exposed worrisome trends that can put borrowers at financial risk. 

David Cutner, partner at Lamson & Cutner, P.C., attorneys for the elderly and disabled, offered the following insight about reverse mortgages for boomers:

Boomer: What is a reverse mortgage and how does it work?

Cutner:  I think that a reverse mortgage might be best understood by comparing it to a conventional mortgage. With a conventional mortgage loan, you borrow money from a lender (usually a bank or mortgage company), and you pay back the loan in monthly installments over a lengthy period of time (typically 15 or 30 years). Your property is collateral for the loan, and the bank can foreclose on it if you fail to pay back your loan. 

With a reverse mortgage, the bank or mortgage company is lending you money, but you don’t have to pay back the loan until the property is sold, you move out of your home, or you die. The home is collateral for the loan, and the loan is repaid when the home is sold. If the home is worth more than the mortgage (amount loaned plus interest), then the remaining equity will go to your estate. If the home is worth less, your estate is not liable for the debt and the lender must take the loss, although the lender may be able to obtain reimbursement from the Federal Housing Administration (“FHA”). Most reverse mortgages are government insured.

see more: http://www.foxbusiness.com/personal-finance/2015/04/17/what-boomers-need-to-know-about-reverse-mortgages/

5 things to know about reverse mortgages

If you own your own home, you can turn it into a pension -- giving you a tax-free monthly payout or a lump sum -- with no need to repay until you die or sell your home. It's not too good to be true. It's called a reverse mortgage, and it's your reward for faithfully paying down your mortgage over the years.

Now you can access that equity even if you still have a small balance on your mortgage. You can use the cash for any purpose -- living expenses, medical expenses or even a vacation.

There is no repayment until you die or sell the home -- and even then, the lender can't come after you for anything more than the proceeds of the sale of the house. You --or your heirs -- can never owe more than the home is worth.

Here's more of what you should know about reverse mortgages:

1. How much can I borrow? The amount of equity you can access depends on your age (only homeowners age 62 or older are eligible), the current value of your home and the current level of interest rates. The maximum amount of home equity that can be accessed in a federally insured Home Equity Conversion Mortgage (HECM) is $625,000. But the amount you can get in a lump sum is far less, as the lender reserves some equity to protect itself against the cost over your projected lifetime.

To get an idea of how much you could get in a lump sum or monthly check, go to ReverseMortgage.org and use the calculator. You can also search for a lender at the site, and learn more details about this type of loan.

2. What's the interest rate? The interest rate will be fixed at the time you take out the reverse mortgage, or you can take a floating rate, which gives you a slightly higher payout because the lender doesn't bear so much interest rate risk. But you won't have to actually pay the interest; instead it will accrue monthly to the balance owed when the house is sold.

3. What other fees and costs are there? There are other significant fees that add to the balance of your home equity borrowing, which is why you should only take out a reverse mortgage if you are planning to stay in your home for a long time.

First there is an up-front federal mortgage insurance premium (MIP), designed to protect the lender against your longevity and protect you against owing more than the home is worth, ensuring that you will continue to receive that monthly check, no matter what happens to the lender.

To obtain a reverse mortgage, you will pay 0.5 percent of the funds withdrawn in the first year. (If, however, you take more than 60 percent of the equity in a lump sum, the upfront MIP will be 2.5 percent.) And there will be an additional annual MIP premium equal to 1.25 percent of the outstanding loan balance.

Plus, there will be a servicing fee every month. You don't pay these fees outright; instead they are rolled into the balance you owe, and upon which you pay interest. There are also closing costs, such as appraisal fees and title search, which can add to the cost of setting up a reverse mortgage.

The government requires all reverse mortgage borrowers to get independent counseling so they understand the costs and that their heirs will not receive the asset as part of their inheritance.

see more: http://www.chicagotribune.com/business/sns-201504100000--tms--savagectnts-a20150412-20150412-column.html

Applying for reverse mortgages will get tougher

But during the recession and mortgage bust years, thousands of borrowers fell into default because they didn't pay their required property taxes and hazard insurance premiums. On top of that, real estate values plunged, producing huge losses on defaulted and foreclosed properties for the FHA. The losses got so severe that the Treasury Department had to provide the FHA with a $1.7-billion bailout in 2013, the first since the agency was created in the 1930s.

All of this led to the dramatic changes coming April 27. Applicants are now going to need to demonstrate upfront that they have both the willingness and the capacity to meet their obligations. Reverse mortgage lenders are going to pull borrowers' credit reports from the national credit bureaus, just as they do with other mortgages.

Applicants are going to have to show that they paid their real estate taxes, homeowner association fees and other property-related charges on time for at least the last 24 months. They will be asked to produce documentation of their employment status (if they're still working), income and financial assets, as well as undergo a "residual income" analysis that examines all their monthly expenses and cash flow.

If they get inadequate marks on these tests, they may be required to create a "life expectancy set-aside" — essentially a reserve account or escrow funded wholly or in part from their loan proceeds. For some borrowers, the set-asides may be so substantial they'll be left with minimal cash at closing, making the entire reverse mortgage process a waste of effort.

The changes, say reverse mortgage industry experts, will exclude potentially thousands of older homeowners from obtaining a reverse mortgage, especially those who are on the margins economically and need the cash to help pay for ongoing household expenses.

Reza Jahangiri, chief executive of American Advisors Group, the highest-volume reverse mortgage lender, said his company expects a decline in loan activity of 8% to 10% after the financial assessment rules take effect. He also expects a countervailing shift toward "mainstream" borrowers who seek to use a reverse mortgage as part of their overall retirement financial planning, including raising money to purchase a new house or to establish a flexible line of credit they can draw from as needed.

source: http://www.latimes.com/business/realestate/la-fi-harney-20150412-story.html

Mortgage rates pushed down by disappointing jobs report

Friday’s disappointing jobs report pushed mortgage rates lower this week, according to the latest data released Thursday by Freddie Mac. That’s good news for house hunters as they head into the busy spring home-buying season.

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The 30-year fixed-rate average dropped to its lowest level since early February, falling to 3.66 percent with an average 0.6 point. (Points are fees paid to a lender equal to 1 percent of the loan amount.) It was 3.7 percent a week ago and 4.34 percent a year ago.

The 15-year fixed-rate average slid to 2.93 percent with an average 0.6 point. It was 2.98 percent a week ago and 3.38 percent a year ago. The 15-year fixed rate has remained below 3 percent for the past three weeks.

[Hiring slowed in March]

Hybrid adjustable rate mortgages were mixed. The five-year ARM average sank to 2.83 percent with an average 0.5 point. It was 2.92 percent a week ago and 3.09 percent a year ago.

The one-year ARM average has remained at 2.46 percent with an average 0.4 point for the past five weeks.

[New minutes show Federal Reserve sticking to a gradual approach on rates]

Len Kiefer, Freddie Mac deputy chief economist, cited the most recent employment data when explaining why rates came down this week.

“The US economy added 126,000 new jobs in March, well below market expectations of 247,000 jobs,” Kiefer said in a statement.

“We did see some uptick in wages, as average hourly earnings increased 7 cents for the month, and are up 2.1 percent over the year. Meanwhile, jobless claims fell sharply to 268,000 this week, much lower than market expectations of 285,000.”

read more: http://www.washingtonpost.com/blogs/where-we-live/wp/2015/04/09/mortgage-rates-pushed-down-by-disappointing-jobs-report/

New ‘Smart’ Tennis Racket Improves Swings With Data

MINNEAPOLIS (WCCO) – In our data-driven world, sports is increasingly embracing data to try and gain an advantage.

And now, that data is making its way into actual sports equipment.

Want to get better at tennis? There’s an app for that, and it’s being used right here in Minnesota.

That’s right, the tennis racket of the future has an “on” button.

It’s called, of course, the SmartRacket, and it’s made by Babolat.

“It’ll go on to your iPhone or your Android device, instantly, right off the racket,” said Rajan Keswani, Babolat’s midwest territory representative. “In every single normal racket that we make, there’s 20 grams of dead weight inside, and [the engineers] took those 20 grams, withdrew it, and put in a chip that has a gyroscope and an accelerometer built into it.”

Keswani said it gauges the amount of spin on the ball, notices whether you’re over- or under-hitting, tracks your forehands vs. backhands, and clocks your swing speed.

“You can’t lie,” he said. “You come off the court, and this measured everything exactly the way it happened.”

John Pratt runs the Baseline Tennis Center at the University of Minnesota and was one of the first to get the rackets when they debuted, just 15 months ago.

“I was a bit skeptical about it,” he said, “but it really is cool stuff.”

It takes about two seconds to download data from the racket onto your phone.

Pratt said playing with the SmartRacket takes the guesswork out of getting better, replacing subjectivity with hard numbers.

“We’re able to go ahead and let them play with the racket, pull the data off, work a little bit, come back out, see if things have changed or improved,” Pratt said.

Rafael Nadal and Caroline Wozniacki are both using SmartRackets in competition right now. In fact, you can see their data from the Australian Open right now on Babolat’s website.

Babolat’s SmartRackets are about double the price of its regular tennis rackets. 

read more: http://minnesota.cbslocal.com/2015/04/07/new-smart-tennis-racket-improves-swings-with-data/

4 million mortgages that never were: What happened

Not only is it harder to get a home loan today than it was during the height of the housing boom when lending standards went out the window, but it is also harder to get a loan today than it was before the boom, when mortgage underwriting was relatively conservative.

That is, according to a new report from the Urban Institute. How much harder? Researchers there claim that 4 million more loans would have been made between 2009 and 2013 if lenders had used the same standards as were used in 2001.

"The borrower's FICO score has become much more important in terms of who can qualify," said Taz George, a research associate with the Urban Institute. FICO measures a borrower's creditworthiness.

The report looks specifically at FICO scores (borrowers' credit ratings from a low of 300 to a high of 850, as gauged by Fair Isaac Corp. and commonly used by lenders).

 Less than 40 percent of borrowers in 2013, using their loans to purchase a home, not refinance, had FICO scores below 720. In 2001, more than half did.

"When you look at more moderate credit score borrowers, those with a FICO of between 660 and 720, that's a score that in a year like 2001 we would consider eligible for a purchase mortgage, but today we see a 37 percent decline in the number of loans in that category," said George.

As for why the credit box remains so tight, the report points to lenders adding to credit standards because they are so worried they might be forced to pay back any loans that default. This so-called repurchase risk has been at the heart of credit tightening, since banks were forced to pay back billions of dollars in bad loans during the foreclosure crisis. Banks are also worried about litigation and the high cost of servicing troubled loans.

read more: http://www.cnbc.com/id/102563222

Dobler Consulting Offers White Sands ProActive DBA to Help Companies Boost Productivity

April 02, 2015 10:01pm   Comments

Dobler Consulting, a leading provider of database consulting services, is including White Sand's ProActive DBA product suite as part of its remote database support services.

Tampa, Fla (PRWEB) April 02, 2015

Dobler Consulting, a leading provider of database consulting services, is including White Sand's ProActive DBA product suite as part of its remote database support services. ProActive DBA is one of the most powerful database monitoring and management solutions available in the marketplace.

Combining ProActive DBA with Dobler's database expertise will allow Dobler to continuously monitor clients' server performance and availability, and quickly identify factors that are slowing a system down. The resulting server optimization will help companies increase uptime and productivity, and boost their capacity to manage more business.

"ProActive DBA is the most comprehensive database monitoring solution available. It works seamlessly with the SAP platform, which is very important to us. We are excited to bring the suite's capabilities to our clients," said Peter Dobler, Founder and CEO of Dobler Consulting.

"Partnering with Dobler Consulting is a great fit for both companies. ProActive DBA provides the most comprehensive performance/auditing data with the least amount of overhead. This will make it easier for Dobler clients to maintain good service levels, quickly identify the root cause of performance problems and provide an audit trail of database access," said Ariel Michaels, Vice President of Marketing at White Sands Technology, Inc.

About Dobler Consulting

Dobler Consulting is a leading information technology and services company, offering a broad spectrum of services to its clients. Dobler serves as clients' trusted database advisor, providing ongoing support and preventative maintenance. The company specializes in license sales, database architectural review and design, optimization services, database high availability review, implementation and customization services, optimization, remote database support, and training and cross training for enterprise organizations. Founded in 2000, the Tampa-based consulting firm specializes in helping clients maximize their SAP, Microsoft SQL Server, and Oracle technologies. Contact Dobler Consulting at http://www.doblerconsulting.com, 813 322 3240, or info(at)doblerconsulting(dot)com.

Read more: http://www.benzinga.com/pressreleases/15/04/p5381375/dobler-consulting-offers-white-sands-proactive-dba-to-help-companies-bo