Wednesday, January 16, 2008

The Candidates on the Housing Market

Last night, I was watching the Democratic Presidential Debate, and they discussed the topic of the subprime mortgage meltdown and the housing market. If my memory is correct, this was the first time I had seen the topic discussed in depth at any of the presidential primary debates. So, it made me curious what the official stance was from all of the candidates both on the left and on the right.

I thought it would be helpful to present statements and links for all of the candidates' viewpoints, but I could only find statements on this issue from the three major Democratic candidates. The Republican candidates do not address the housing market or the subprime situation on the issue statement sections on their websites. So, here are the statements from Clinton, Edwards, and Obama (alphabetically to be fair!):

Hillary Clinton:
"Foreclosure Moratorium: Hillary will call for a moratorium on home foreclosures of at least 90 days so that a rate freeze can take effect and at-risk homeowners can get financial counseling to help them transition to affordable loans.
Freeze Adjustable Rate Loans: The rate freeze must last at least 5 years, or until subprime mortgages have been converted into affordable loans. A typical subprime adjustable rate loan is raising monthly payments by 30% to 40% for many families, causing a wave of housing defaults across the country."

Read more: Hillary Calls On Wall Street To Address Housing Crisis

John Edwards:
"Insist that any freeze on interest rates – like the Bush-Paulson plan – keep rates low for seven years so housing markets can fully recover and families have the time to escape unaffordable mortgages.
Assure that families can halt foreclosures until their lenders offer help. Every family facing foreclosure will have a right to individual assistance from their lender – such as converting to a fixed-rate mortgage, capitalizing delinquent payments, reducing the interest rate, or forgiving a portion of the loan – so they can keep their home if they can."
Read more: Ending the Housing Crisis

Barack Obama:
"Obama will create a fund to help people refinance their mortgages and provide comprehensive supports to innocent homeowners. The fund will also assist individuals who purchased homes that are simply too expensive for their income levels by helping to sell their homes. The fund will help offset costs of selling a home, including helping low-income borrowers get additional time and support to pay back any losses from the sale of their home and waiving certain federal, state and local income taxes that result from an individual selling their home to avoid foreclosure. "
Read more: Address the Subprime Mortgage Issue

If the Republican candidates had their official views on this topic on their campaign websites, I would quote them and link to them, as well. There are many news reports and YouTube videos about their stances, but no official statements. If I missed the official statements somehow, please let me know.

What do you think of the candidates position on the housing market and subprime situation? I'd love to hear responses from the community.

Tuesday, January 15, 2008

What is a Reverse Mortgage?

More and more people are becoming curious about reverse mortgages, and I am seeing an increase in coverage about them. I even see banks hanging big banners promoting their reverse mortgages to lure in new customers. But what are they, and are they right for you?

If you are 62 or older and your home is your primary residence, then you can get a reverse mortgage loan based on the value of your home. The best part is that there are no monthly payments on the loan as long as you live there. Payment isn't due until you leave the home, either due to death, selling the home, or moving to a new primary residence. That is what makes reverse mortgages a great income option for seniors. One exception to these qualifications is the type of building you live in. Single family homes nearly always qualify, but condos and small multi-unit buildings are not accepted by all lenders.

Another great feature is that you will never owe more than the home's value at the time of repayment. If the value of your home has declined since the loan was started, the bank has assumed that risk and must absorb the loss.

Now, if you have a reverse mortgage, you are still responsible for taxes, insurance, repairs and other homeowner priorities. Also, be aware of the interest and fees associated with getting a reverse mortgage, including application fees, origination fees, closing costs, monthly service fees and more. The good news is that those fees can be paid for by the loan amount, and that reverse mortgages from local and state government lenders have the best rates and lowest fees.

I wanted to write this post because there are misconceptions about reverse mortgages out there, so I wanted to present the basics. Rest assured that you cannot lose your home due to a reverse mortgage. The federal government defines reverse mortgages as "non-recourse loans" and the lender cannot foreclose. In fact, they never even have the deed or title to the home.

Reverse mortgages have many complicated aspects, but they can be a simple solution for many homeowners looking to enjoy the equity they have built up in their homes. For more information, visit AARP's overview or Reverse Mortgages for Dummies. And, you can always give me a call. I'm always happy to help. I can be reached at 510-547-5970 x57 or