IMAGINE THIS: “Home Prices Could Drop 50% As the Great Recession Resumes”

Home Equity Conversion Mortgages for Individuals 62 and over are worth taking a look at…….
Think of your home as a financial tool, the scenario is as follows: A 62 year old borrower owns his home outright and has a $625,500.00 value. Today he decides to obtain a Home Equity Conversion Mortgage that offers a FIXED Rate of 5.56% giving him a LUMP SUM of TAX FREE CASH in the amount of $336,807.04. In the event the value of the home declines rather than appreciates, neither he nor his successors are responsible to repay the loan. At the time the loan was taken out the Federal Government collected 2% of the appraised value or of the Maximum Claim amount of $625,500.00 in the form of Mortgage Insurance which guarantees the bank repayment if when the home is sold there is not enough equity to repay the loan. In addition .05% per year of Mortgage Insurance is calculated in the loan. The home drops 50% in value within 24 months from the time the mortgage was obtained. The new value is $312,750.00 less than the amount of cash that was obtained 2 years earlier. The point I am trying to make is due to the fact that these loans are non-recourse in nature, this type of mortgage will stay in effect as long as the mortgagee continues to reside in the home for at least 6 months out of a calendar year. As housing prices have fallen Gold prices have risen. Many individuals have been told these loans are bad instruments. I feel the contrary. As long as the Federal Government is insuring the product, in the worst case scenario the individual that completed the transaction is in an extremely better position than the individual that stood by the sidelines and watched. If you were to obtain a HECM loan, your home is yours, and will never be taken from you…the number 1 misconception. Select parts of our nation have already experienced this scenario. Florida saw housing prices drop 50% 2 years ago.
Any individual that obtained a Home Equity Conversion Mortgage prior to the bubble bursting received a free gift of EQUITY. I hope that housing prices stabilize and begin to appreciate at the 4% rule per year, however when you have Chief Market Strategist’s like Richard Henry Suttmeier predict a 50% decline, in a world that is upside down, you need to think for a minute on how you might be able to hedge your way around this type of dilemma.
Timing is everything, I have been in the industry for many years, and currently I have never seen a better time for a 62 or older person to obtain a loan of this nature. Reasonable interest rates with reduced closing costs along with higher lending limits make this product a true winner. Whether housing prices drop or stabilize the numbers make sense. If you are interested in taking a better look at how a Home Equity Conversion Mortgage could benefit you, I am available 7 days a week.

Please read the article below, it might give you a better insight on why I feel the way I do.

Article:
I read an article in Forbes Magazine June 28th 2010 titled “Home Prices Could Drop 50% as the Great Recession Resumes” written by Richard Henry Suttmeier “Chief Market Strategist for Valuengine.com.” Mr. Suttmeier believes the Recession that was time-stamped by the Economic Bureau of Economic Research (NBER) to have begun in December 2007 has not ended and continues today. How can the NBER declare an end to this Recession with unemployment at 9.7% when the Recession began with unemployment at 4.6%?

The basic causes of the Great Recession began in the Housing Market and the community banks on Main Street. Those problems have been masked by numerous failed attempts at mortgage mitigations as house prices stabilized during the period when the government was offering tax credits for first time homebuyers as well as existing homebuyers who wanted to move. Those programs ended on April 30th for contracts and for closings effective this week by the end of June 30th. If congress did not extend the deadline 180,000 home purchases would not close on time as the buyers were not able to get financing approval on time. President Obama is expected to sign the bill to extend the deadline. The legislation gives buyers until Sept. 30 to complete their purchases and qualify for tax credits of up to $8,000 for first-time buyers and $6,500 for existing owners who move. Under the original terms, buyers had until April 30 to get a signed sales contract and until June 30 to complete the sale.


The bill only allows people who already have signed contracts to finish at the later date. Nearly 3 million taxpayers claimed the tax credits through May 22 at a cost of more than $21 billion, according to the Treasury Department. Attached to the bill was a measure to extend unemployment benefits for 1.3 million Americans. The Senate failed to pass this measure three times last week. In addition the US economy is feeling the adverse affects of the Gulf oil spill and the debt crisis in Europe, which the Fed now cites as a potential economic contagion.
It’s housing that got the ball rolling down hill and more than half of the 7932 community banks can’t lend due to overexposures to lending, most notably to commercial real estate loans including construction & development loans.
All of the bailout moves and programs were like putting economic whip-cream on those crappy loans Senator Carl Levin from Michigan talked about in the Goldman Sachs (GS) investigation a month or so ago. With the soon passage of unworkable new financial regulations, we will see the same gunk when the whip-cream melts.
Home prices will decline again with risk of another 50% down to get house prices back to levels of 1999 / 2000. Community banks can’t lend as they continue to choke on C&D and CRE Loans written in 2004 through 2006. These are nearly uncollectible. Financial regulations just might shift the burden to the “too big to fail” banks who will need to raise capital while reducing their main source of income, proprietary trading. If you would like to read the full article copy and paste the following link into your browser: http://blogs.forbes.com/investor/2010/06/28/home-prices-could-drop-50-as-the-great-recession-resumes/?partner=artctrlinboxmain