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

Naymz Exchange My Posts

Naymz Exchange My Posts

The Attorney's Role in Buying or Selling a House

Do I need a lawyer? I can buy or sell an automobile or 100 shares of stock without a lawyer. Why not a one or two family home? (An article by the New York State Bar Association)

• Buying or selling a home may not only be the most significant and largest purchase you will make, it also involves the law of real property, which is unique and has special problems. A lawyer is trained to deal with these problems and often has the most experience to deal with them. This applies to people selling a home or buying a home.
  In the typical home purchase transaction the seller enters into a brokerage contract with a real estate agent, which is usually in writing. When the broker finds a potential buyer, negotiations are conducted through the broker, most often acting as an intermediary. Once an informal agreement is reached, buyer and seller enter into a formal written agreement. The buyer then obtains a commitment for financing. Title is searched to satisfy the lender and the buyer. And finally, the property is transferred from the seller to the buyer and the seller receives the purchase price bargained for in the contract. Seems simple and uncomplicated, but, without a lawyer, the consequences may be more disastrous than purchasing a car that turns out to be a lemon, or a stock investment that was unwise.
  What are some of the reasons why you need a lawyer for a home purchase or sale?
  1.Dealing with the Broker. A seller without the advice of a lawyer, may sign a brokerage agreement that does not deal with a number of legal problems. The seller may become liable to pay a brokerage commission even if a sale does not occur or to pay more than one brokerage commission. For example, does the agreement offer the seller the right to negotiate on his or her own behalf; what is the effect of multiple listings; what are the broker's rights if the seller withdraws the property from the market, or can't deliver good marketable title; how long should an exclusive listing last? The seller should have the advice and guidance of an attorney with respect to a brokerage agreement. Even if the agreement is a so-called "standard form", its terms should be explained to the seller and revised, if necessary. An attorney is also necessary to determine if the agreement was properly signed.
  2.Dealing with tax consequences and other issues. Even though a lawyer may not be needed during the course of negotiations, the buyer and seller each may have to consult with a lawyer to answer important questions, such as the tax consequences of the purchase or sale. To a seller, the tax consequences may be of critical importance. For example, what are the income tax consequences of a sale, particularly if the seller has a large profit . . . will the seller be able to take advantage of the tax provisions allowing for exclusion of capital gains in certain circumstances?
  Aside from the tax consequences, the buyer and seller may have questions about the date set for closing, the date of occupancy, the condition of the property, arranging for an inspection and what personal property is included in the sale. These are some of the many questions that may need to be considered during the negotiation stage in order to avoid disputes when a written contract is prepared.
  3.Dealing with the contract of sale. The formal written contract for the sale and purchase of a home is the single most important piece of paper in the transaction. Its importance can not be overestimated. Although printed forms are useful, a lawyer is once again necessary to explain the form and make changes and additions for a particular transaction to reflect the understanding of the buyer and the seller. There are many issues that may need to be addressed in the written contract. For example, how should title be taken: individually, as tenants in common, joint tenants or tenants by the entirety. What happens if someone dies before title is transferred? The answers to these questions require the training and knowledge of a lawyer. There are numerous other legal questions that must be addressed in the contract, including the following. If the property has been altered or there has been an addition to the property, was it done lawfully or may what is planned for the property by the buyer be done lawfully? What happens if a buyer has an engineer or architect inspect the property who finds termites, asbestos, radon or lead based paint? What if the property is proximate to a hazardous waste dump site? What are the legal consequences if the closing does not take place and what happens to the down payment? Will the down payment be held in escrow by a lawyer in accordance with appropriately worded escrow instructions? How is payment to be made? Is the closing appropriately conditioned upon the buyer obtaining financing? These are only a few of the many questions that arise with respect to a contract. 4.Arranging for financing. Most buyers finance a substantial portion of the purchase price for a one or two family home with a mortgage loan from a bank or other lending institution. The contract should contain a carefully worded provision that it is subject to the buyer's obtaining a commitment for financing. Printed contract forms are generally inadequate to incorporate the real understanding of the buyer and seller without changes being made. In addition, there is now an extensive and often confusing menu of mortgages that may be available. Fixed rate mortgages versus adjustable rate mortgages and the complexities of each require the knowledge of an attorney who is familiar with current mortgage lending practices. Mortgage loan commitments and mortgage loan documents are also complex. Lawyers are necessary to review and explain the importance of these various documents. Buyers should know when and if they can prepay their mortgages; what happens if they make a late payment; how is interest computed; how much insurance does the lender require; how are real estate tax payments computed and collected and the answers to a myriad of other questions that may arise. Moreover, when dealing with the lender, although there is little room for negotiation, there is a need for the general assistance of a lawyer at the very least to explain what is happening and its consequences. 5.Searching and insuring title. After the contract is signed it is necessary to establish the state of the seller's title to the property to the satisfaction of the buyer as spelled out in the contract. Generally, a title search is ordered from an acceptable abstract or title insurance company. By the way, I represent Paragon Abstract Inc. voted #1 Title Company in 2008 by Long Island Business News. Feel free to contact me with any questions. In addition I have relationships with some of the best Real Estate Attorneys in Long Island and the boroughs that will represent you for a fair and reasonable fee....feel free to contact me for their contact information or log into www.realtyvendornetwork.com and go the attorney page. However, in some areas of New York State, title insurance is not obtained. In such cases an attorney is essential to review the status of title and render an opinion of title in lieu of a title policy. Assuming you are in an area where title insurance is customary, who will review the title search and explain the title exceptions as to what is not insured? Is the legal description correct? Are there problems with adjoining owners or prior owners? What is the effect of easements and agreements or restrictions imposed by a prior owner? Can I build a swimming pool or tennis court? Can I conduct a business in a spare room? Will there be any legal restrictions that will impair my ability to sell the property? Can the utility company build a high tension transmitter in the back yard? It should be clear that the guidance and advice of a lawyer can avoid a very costly mistake. 6.Checking out the zoning. The title search does not tell the buyer or seller anything about existing and prospective zoning. Does zoning prohibit a two family home? Does the deck you are planning violate zoning ordinances? There are invariably some questions that will require you to call upon a lawyer for the most direct and efficient response to your inquiry. 7.Reviewing the survey. Finally, there is the necessity of having a survey map of the property, which is a necessary adjunct to a title search. A lawyer is trained to review this survey, which may give rise to future problems. For example, your neighbors' fence or driveway may encroach upon your property or vice versa. A garage may have been built on a municipal street. Should you accept title? Will a lender give you a mortgage with these encroachments? 8.Conducting the closing. The closing is the event which is the "moment of truth" of the purchase and sale transaction. The deed and other closing papers must be prepared. Title passes from seller to buyer who pays the balance of the purchase price. Frequently, this balance is paid in part from the proceeds of a mortgage loan. A closing statement should be prepared prior to the closing indicating the debits and credits to buyer and seller. An attorney is helpful in explaining the nature and amount of closing costs. Final documents including the deed and mortgage instruments are signed. An attorney is necessary to assure that these documents are appropriately executed and explained to the various parties The closing process can be confusing and complex to the buyer and seller. Those present at the closing often include the buyer and seller, their respective attorneys, the title closer (representative of the title company), attorney for lending institution and real estate broker. Documents need to be recorded; various transfer taxes need to be paid, and provisions for insurance and other incidents of ownership need to be concluded. There may also be last minute disputes about delivering possession and personal property or the adjustment of various costs, such as fuel and taxes. Here a lawyer's advice and guidance is essential. 9.Condominiums, cooperatives and HOAS. Special mention needs to be made about condominiums, cooperatives and homeowners associations. These involve forms of ownership that are treated as securities under New York State law and require special documents that are complicated and should be reviewed by an attorney. Condominium declarations, proprietary leases, and by-laws are but a few of the complex documents confronting buyers of these forms of property ownership. The tax deductions and consequences with respect to the purchase of a condominium or cooperative also need to be explained by a professional that is familiar with these common ownership forms. It is obvious that throughout the process the interests of the buyer and seller will conflict. The broker generally serves the seller, and the lender is obtained by the buyer. The respective lawyers for buyer and seller will have no such conflicting loyalties and will serve only their clients' best interests. A lawyer's advice and guidance is essential from the time you decide to sell or to buy a home until the actual closing. Contact Steven Thall 631-926-4500 or email: steven.j.thall@gmail.com