Plus a case for getting a reverse mortgage
Monday Morning Cup of Coffee takes a look at news coming across HousingWire’s weekend desk, with more coverage to come on bigger issues.
Personal finances content dominated the web this weekend, including discussions debating the safety of reverse mortgages and the wisdom of strategically defaulting on a mortgage.
But let’s begin with the mortgage detail.
Retirement expert Russell Powell makes a case for using a reverse mortgage as part of your retirement plans.
Wait, don’t those get elderly spouses thrown out of their homes? Not very likely, not any more.
Writing in MarketWatch Powell states:
“Recent policy changes “should make the product safer for seniors in the future,” says Stephanie Moulton, an associate professor at Ohio State University and co-author of a 2015 paper on reverse mortgages published in the Journal of Urban Economics. Moulton estimates that such changes as limiting how much equity borrowers can extract upfront could cut the default rate on reverse mortgages in half. (In 2014, nearly 12% of reverse-mortgage borrowers in the federally insured Home Equity Conversion Mortgage program were in default on their property taxes or homeowners insurance.)”
So the latest reverse mortgages are basically safer?
“I believe most criticisms relate to a myopic view of the product that has not been reviewed for decades,” says Harold Evensky, chairman of Evensky & Katz/Foldes Financial, a wealth-management firm based in Lubbock, Texas, in the MarketWatch piece. “Unquestionably, there can be misuses of the product. But the problem is the use, not the product.”
How so? Well director Julian Castro states that not renting to them could be considered a form of discrimination.
“The agency is absolutely right to be working on the important issue of re-entry. It is reasonable to expect landlords to consider criminal records on a case by case basis,” the editorial states.
“But HUD’s guidance to housing providers is distressingly vague and in some ways arbitrary. What “evidence” will show whether a person with a record is a risk?”
What about a reformed arsonist with a pot addiction? The LA Times runs some speculation in writing through their thoughts.
The opinion piece is admittedly vague, but then again, that’s the same blame they lay at the feet of the new HUD rule.
“HUD officials say they’re not trying to force landlords to make decisions that would jeopardize the security of their tenants,” they conclude. “But the guidelines may leave landlords with more questions than answers.”
This weekend, Reddit user Niki_P openly asked housing experts on the housing subreddit if it would be a good idea to strategically default on her home — something that many consider a criminal offense.
She lays out her case very well, here’s a sample:
“We are wondering if we should cut our losses and walk away from a bad investment before pouring more money into mortgage with a very high interest rate and repairs. I know in Illinois they cannot go after my husband for whatever money the bank doesn’t recoup in the sale of the home, because he is not on the loan, but they could go after shared assets. Thankfully we don’t have any shared assets except bank accounts, which we could separate, and tax returns, which we could also start filing separately.”
Have some advice? She needs it.
Right now, everyone is saying she should seek legal advice or face up to the responsibility of homeownership.
One commenter puts it bluntly: “Talk to a lawyer.”
UK Prime Minister David Cameron has no problems paying his bills, but he’s still in trouble.
Read the latest on his weekend controversy due to the #PanamaPapers scandal.
The best coverage is from NBC, which states that the Feds arechomping at the bit to use the surreptitiously gained documents against the named parties.
Could some big names be headed to the slammer for their offshore banking activities? Time will tell.
For the rest of us, the majority hopefully, who are not 1) considering a strategic default and/or 2) laundering personal finances through shady Panama law firms, there is this breath of fresh air.
Forbes contributor Tom Anderson writes a fresh piece on how to spring clean your finances.
Here’s his advice, in a sample:
1. Check your loan balances
2. Scrutinize your spending
3. Take a look at insurance policies
4. Update your will
5. Get rid of paper
The FDIC reported no banks closed for the week ending April 10.