Showing posts with label Asbury Park Press. Show all posts
Showing posts with label Asbury Park Press. Show all posts

Monday, August 12, 2013

A reverse mortgage horror story, or is it?

From the Asbury Park Press, a story about a reverse mortgage that went bad, not for the homeowners, but their heirs. As the article set out below explains, reverse mortgages have benefits for elderly homeowners.  But they do have downsides as far as costs are concerned, and the heirs who believe they're getting the homestead after mom and dad's deaths.  While the following tale is cautionary, I sense there is more here than meets the eye.  Read on below.

For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us. We can help. Located in Fairfield, NJ, we are the title insurance agent that does it all for you.
For your next title order or
if you have questions about what you see here, contact
Stephen M. Flatow, Esq.
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165 Passaic Avenue, Suite 101
Fairfield, NJ 07004
Tel 973-808-6130 - Fax 973-227-0645
E-mail sflatow AT vested.com

Written by Michael L. Diamond @mdiamondapp Aug. 10, 2013 7:50 PM

REVERSE MORTGAGES

For Felix and Mary Jane Crincoli, the reverse mortgage was a lifeline that allowed them to stay in their Point Pleasant Beach home. After they died, their children have found only a weight pulling them down.

The home itself was damaged by superstorm Sandy. The lender began to foreclose and the family has been locked out. And they wonder in hindsight if their parents had all of the information they needed before agreeing to the loan.

“I’m still grieving my parents here,” Philip Crincoli, 55, of Point Pleasant, said after receiving yet another notice from the lender’s attorney to pay a whopping amount to put the issue to rest. “Nobody is saying, ‘I’m sorry about your mom and dad.’ It’s just, ‘Give us the money.’ ”

President Barack Obama on Friday signed a bill that will tighten regulations on reverse mortgages, a product that became popular in the last decade for seniors who lived longer, depleted their other assets and wanted to stay in their homes.

It comes as the government absorbs insurance losses from the reverse mortgage program, which experts tout as one that can be beneficial to many older homeowners. But as the Crincolis show, it also comes with cautionary tales.

“We do hear stories where the product did not work out or they did not have a clear understanding of the terms. That’s always a challenge,” Ramsey Alwin, senior director for the National Council on Aging, a Washington, D.C., group that provides financial counseling. “For others, it can be a lifeline.”

Essentially a loan

A reverse mortgage –or a home-equity conversion mortgage, as the government calls it –is essentially a loan offered to homeowners 62 and older. Borrowers can receive payments in a variety of ways –a lump sum, monthly installments or they can draw on it as needed. And the lender is paid back from the proceeds of the sale of the home, either when the homeowner moves or dies.

Their heirs aren’t personally responsible for the debt. If they inherit the house and want to keep it, however, they would need to pay off the debt or refinance.

If the home is worth less than the loan –not unusual in the aftermath of the housing bubble’s collapse –the difference is made up by the government through a Housing and Urban Development insurance fund.

Reverse mortgages typically have higher fees and interest rates than home equity lines of credit. But borrowers don’t have to meet income and credit requirements, and, while they are responsible for property taxes and insurance, they don’t need to repay the loan as long as they live in the home.

“For some, a (home-equity line) will be too much of a crunch on their monthly cash flow,” said Darryn Murdoch, a reverse mortgage consultant with Parsippany-based Maverick Funding, a mortgage lender.

A lifeline is what the Crincolis hoped for. They bought their Carter Avenue house in 1960 for $12,000 and paid it off. But as they got older, the expenses piled up –taxes, insurance, medical bills. And the nest egg Felix Crincoli built through his optometry practice dwindled.

Not wanting to downsize, they took out a $550,000 reverse mortgage –payments of $18,000 a month –in June 2009 from Financial Freedom, a company that used actor James Garner in commercials to pitch “a safe, easy way to quickly turn your home equity into tax-free money.”

Troubles with the deed

Technically, Mary Jane Crincoli was the borrower since hers was the only name on the deed. In hindsight, that was a mistake. She died two years later at the age of 89, making the loan due. If they both had been on the deed, Felix Crincoli could have stayed put.

“That was never explained,” Philip Crincoli said. “That should have been explained.”

The Crincolis moved their father to an assisted living center in Menlo Park and put the home on the market to repay the $300,000 or so their parents had borrowed. And they thought they had a buyer in place, but Sandy swept through last October, leaving five feet of water in the house. The deal fell apart. Their father died two months later.

Financial Freedom was closed down in 2011 by its parent company, OneWest Bank, based in Pasadena, Calif., Reverse Mortgage Daily, a trade publication, reported. The bank said it would continue to service existing loans. It didn’t respond with a comment before deadline.

Philip Crincoli said the family is in a bind. It offered to sign over the deed instead of going through foreclosure. And it offered to let the bank keep the more than $100,000 in insurance proceeds it received for damage caused by Sandy. But the bank hasn’t budged; it began foreclosure proceedings, Crincoli said.

The tipping point came last month when lawyers for the bank sent Philip Crincoli, his brother and sister a letter demanding $938,000 –an amount they couldn’t fathom.

“It’s not our debt,” Philip Crincoli said, thinking the amount must have been a mistake.

Keeping up with costs

Home-equity conversion mortgages paint something of a grim picture –a sign that seniors, like their younger counterparts, had few places to turn to in the last decade to keep up with the rising cost of living, other than their home.

The number of HECMs during the 2000s grew 17-fold, from 6,637 nationwide in 2000 to its peak of 114,639 in 2009. They slowed after the recession to about 51,000 last year, according to the U.S. Department of Housing and Urban Development.

Since the government-approved products are insured by the Federal Housing Administration, the FHA itself is on the hook, making up the difference if the value of the home isn’t enough to repay the loan. The government has paid more than $70 billion in insurance, and an actuarial review last November of the insurance fund found that it had an economic value of negative $2.8 billion.

It prompted Congress to pass a law, signed on Friday, that, among other things, would require applicants to go through a financial assessment and restrict the amount borrowers can withdraw immediately.

How best to approach this product?

Consider other savings to find extra income. Borrowers before receiving a reverse mortgage are required to visit an independent financial counselor. It’s a process that can help them consider aid programs available to seniors that could help them cut their expenses, free up income and avoid what amounts to taking on more debt.

In the meantime, while the idea of reverse mortgages may be straightforward, the number of options on how to take the money, along with the interest rates and fees involved, “can be confusing and overwhelming,” Alwin from the National Council of Aging said.

Consider other products such as home-equity lines, which have lower interest rates and up-front costs.

“The negative is you have to pay back the interest right away,” said John Callinan, a Wall-based attorney who specializes in elder law.

Make sure your spouse and heirs are on board. HUD in 2011 tightened a regulation to ensure that a borrower’s spouse needed to get counseling, too, even if he or she didn’t sign for the loan. It’s an attempt to ensure homeowners know the loan is due if the borrower dies. But even that might not be enough.

“It’s always good to have another set of eyes and ears listening in when you’re learning about it,” Murdoch, from Maverick Funding, said. “When you’re sitting down, it’s good to have a family member and trusted adviser to hear about how the loan works because it can be complicated. I just think that’s a good practice.”

 
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Tuesday, September 7, 2010

If you want to sell your home, you better price it right

The Asbury Park Press carries an AP story of interest to home sellers.
Advice for home sellers - Pricing homes right in a housing slump

“The good news for sellers: Your house will sell. The bad? Only if the price is just right.”
That translates into taking a hard look at your listing price if you are serious about selling.
“The recently expired tax credits for homebuyers gave sellers a boost. Home sales surged and values edged up. The worst appeared to be behind us. But since the deadline passed at the end of April, housing has faltered. Job insecurity, tight credit and consumer confidence are undermining a sustained recovery, despite the lowest mortgage rates in decades.”
“Here's the disconnect facing sellers: The vast majority of sellers believe their homes are worth more than what their real estate agent recommends, according to HomeGain.com. At the same time, most buyers think for-sale homes are overpriced.”
And it doesn’t look things will change for a while. What do you think?

Read the full article.

For your next title order or
if you have questions about what you see here, contact
Stephen M. Flatow, Esq.
Vested Title Inc.
165 Passaic Avenue, Suite 101 Fairfield, NJ 07004
Tel 201-656-9220 - Fax 201-656-4506
E-mail vti@vested.com - www.vested.com
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Sunday, August 29, 2010

Flood insurance program a mess

How would you like to live in home that is prone to flooding? How would you like to have it be “flooded 34 times since 1978?” Well, there is such a home, and there are more like it.

“In Wilkinson County, Miss., a home has been flooded 34 times since 1978.
“Extraordinary as the damage may be, even more extraordinary is that an insurer has paid claims every time, required no flood proofing, never raised premiums after a claim and vowed to continue insuring the house. Forever.
“The home's value is $69,900. Yet the total insurance payments are nearly 10 times that: $663,000.
“It's no surprise that the insurer faces huge financial problems.
“The insurer? The federal government.”
Billions of dollars have been paid to the owners of similar homes across the country and there is no end in sight.

Other insurers for casualties and liability are certain that the premiums collected exceed the cost of claims. But not with the federal government in charge.
“Instead it's running deeply in the red. A major reason, a USA TODAY review finds, is that the program has paid people to rebuild over and over in the nation's worst flood zones while also discounting insurance rates by up to $1 billion a year for flood-prone properties.”
In New Jersey, claim histories are not so great either.

As reported in the Asbury Park Press,
“For every dollar the National Flood Insurance Program has doled out since 1978 to repair flooded homes and businesses in New Jersey, 68 cents has been spent to repair properties that have been flooded more than once. Nearly one in seven of those properties is in Monmouth or Ocean counties.”
So, what do you think should be done? It seems that it makes sense that homes that are repeatedly subjected to floods are built where they shouldn’t be. Rather than continuing to pay claims, maybe the homeowners should be bought-out.

What do you think?

Read the entire USA Today report here.

For your next title order or
if you have questions about what you see here, contact
Stephen M. Flatow
Vested Title Inc.
648 Newark Avenue, P.O. Box 6453,
Jersey City, NJ 07306
Tel 201-656-9220 - Fax 201-656-4506
E-mail vti@vested.com - www.vested.com
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Thursday, August 26, 2010

New Jersey property owners abused by tax abatements

Two columns in the Asbury Park Press this past week highlight the use of real estate tax abatements to attract development.  Both columns point out that ordinary tax payers take a beating when abatements are granted because school taxes are impacted when abatements are granted.

The first column is Sunday’s editorial.

"A report issued last week by the state Comptroller's Office spotlighted the practice of municipalities from Hoboken to Millville giving out tax breaks involving "hundreds of millions of dollars" on property worth billions of dollars statewide.”

 “It also recommended a number of steps the state should take to ensure the tax breaks are benefiting the average citizen, not developers and their political friends.”
School districts are hurt the most when abatements are given since the property being developed does not pay school taxes.  Thus, in the words of the editorial,

 “[W]hen a developer gets a huge tax break, it does not mean a municipality's tax demands are correspondingly reduced. Other property taxpayers make up the difference. That's not fair.”

Columnist Bob Ingle also goes after tax abatements.  Picking up the editorial’s theme, he writes,

“Abatements can make the situation worse for the already over-burdened property tax payers. Consider: A municipality gives an abatement to a widget factory which hires 30 people. The town arranges for payments in lieu of taxes. School districts receive no part of those payments, but the 30 workers bring an additional 90 kids to the school district, which has to expand at additional costs to the property tax payers and state aid from Trenton.”

How about this case?

“In South Jersey, Gloucester Township in a six-month period handed out three short-term abatements to Wawa stories expanding to Super Wawas. The three are within two to four miles of each other. Why should property tax payers have to underwrite the expansion of Wawa stores? The company is big and wealthy and probably would have expanded the stores anyway.”
Well, this does seem unfair.  What do you think?

For your next title order or
if you have questions about what you see here, contact
Stephen M. Flatow
Vested Title Inc.
648 Newark Avenue, P.O. Box 6453,
Jersey City, NJ 07306
Tel 201-656-9220 - Fax 201-656-4506
E-mail vti AT vested.com - www.vested.com
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Wednesday, August 18, 2010

Loss of state support may end horse racing in New Jersey

New Jersey property owners are already hit hard by the state of New Jersey’s economy.  Taxes, taxes, and taxes head the list of complaints.  Now, a double-edged sword is being raised at one of N.J.’s homegrown businesses—horse racing.

According to a special report in the Asbury Park Press,
“Those in the New Jersey equine industry say the horse-racing business generates $780 million annually for the state's economy, responsible for more than 6,500 jobs.
“But with Gov. Chris Christie's proposal to shift the state's focus from horse racing to the casinos in Atlantic City, local horse farmers and other business owners worry the equine industry would lose its vitality or dissipate altogether.
"’People in the sport are going to go where horse racing is viable,'' said Tim Clevenger, 26, who tends to standardbreds every morning at a Manalapan farm.”If not here, they're going to race someplace else or get out of the game.’''
OK, so just how does this affect the quality of life in New Jersey?  Well, some will say that the 176,000 acres of real estate now being used for horse farms and related purposes will be, here comes the dirty word, developed into housing. 

In addition,
“In a study headed by Karyn Malinowski, director of Rutgers' Equine Science Center, the state's equine industry was valued at $4 billion, much of it related to racing. It generates $1.1 billion ($780 million from racing) annually in positive impact on the state economy, the study said, and is responsible for 13,000 jobs, more than half of which are generated by racing-related interests, such as race tracks, and horse breeding and training facilities.”
Read the full story.


For your next title order or
if you have questions about what you see here, contact
Stephen M. Flatow
Vested Title Inc.
648 Newark Avenue, P.O. Box 6453,
Jersey City, NJ 07306
Tel 201-656-9220 - Fax 201-656-4506
E-mail vti@vested.com - www.vested.com
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Tuesday, August 17, 2010

What can be done to control Canada geese in New Jersey?

Anyone who has tried to enjoy one of NJ’s beautiful parks and lakes knows first hand how foul the resident fowl—Canadian geese—can make those parks and lakes.  So, what to do?  Just last month someone decided enough was enough and killed 18 geese in Mount Laurel, N.J.
As noted in the Asbury Park Press:
“The butchering of the geese at the shopping center was a shocking reaction, perhaps undertaken by an annoyed resident or business owner, to what has become a growing problem in all corners of the state.”


“Towns, golf courses, parks and businesses face the choice of getting rid of the geese or letting them stay and dealing with the bacteria-carrying feces they leave behind. The towns and institutions that opt to get rid of some or all of their geese then face another choice: How to do it? Many of the options are unpopular. So is doing nothing about the problem.”
Municipalities and businesses around New Jersey have undertaken different ways to control the geese.  They range from euthanization to hiring dogs to chase the geese.  But as noted by Andrew Spears, superintendent of recreation for Monmouth County parks,

"The geese were taking over public facilities, lake fronts, golf courses and playing fields.

“Spears said Geese Chasers helps control the resident bird population by disrupting nests and eventually moving them to less trafficked areas in the park system. But Spears realizes chasing the geese from one place to another is not a permanent solution.”

Read the full story.


For your next title order or
if you have questions about what you see here, contact
Stephen M. Flatow
Vested Title Inc.
648 Newark Avenue, P.O. Box 6453,
Jersey City, NJ 07306
Tel 201-656-9220 - Fax 201-656-4506
E-mail vti@vested.com - www.vested.com Sphere: Related Content

Sunday, July 25, 2010

Greedy mortgage brokers charged with theft

The Asbury Park Press reported

"Three executives from Hawthorne Capital Corp., a mortgage brokerage with offices in Manalapan, (New Jersey) New York and Pennsylvania, have been charged with theft for failing to pay off original loans after refinancing mortgages, the Monmouth County Prosecutor's Office said."

"New Jersey customers used the company to refinance their mortgages, the Prosecutor's Office said. Typically when that happens, the lender pays off the original mortgages. But the Prosecutor's Office said it received a complaint from a Monmouth County homeowner who said a check sent to her original mortgage company had been returned for insufficient funds after the homeowner refinanced with Hawthorne."

Now, this is interesting because we normally find a title company and/or lawyer involved in the actual disbursement the new mortgage loans, not the mortgage broker. So, we think there’s more here than meets the eye.

Also interesting is the clumsiness in which the broker acted since there doesn't seem to be any attempt to hide the fraud by making a few months' worth of mortgage payments on behalf of the owner.

We’ll try to follow this story.



For your next title order or if you have questions about what you see here,
contact Stephen M. Flatow
Vested Title Inc.
648 Newark Avenue, P.O. Box 6453,
Jersey City, NJ 07306
Tel 201-656-9220 - Fax 201-656-4506
E-mail vti@vested.com - www.vested.com
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Sunday, June 27, 2010

A personal look at the housing collapse

Hollis R. Towns, executive editor of the Asbury Park Press, writes about a second home he has in the Atlanta, Georgia area. Things aren't going well with the home that he's trying to sell.

"I've always understood Main Street's frustration with the Obama administration and the bailout of Wall Street. The fat cats were made whole and the little guys were left trying to hold on. But you never really understand an issue until you are affected by it."

Mr. Towns found a buyer, the present tenants, but problems arose with the appraisal.
"It was for $90,000 — $44,000 less than the list price of $134,000 and $34,000 less than the payoff amount. This, for a 3,500-square-foot, six-bedroom Cape Cod with a finished, walk-out basement, screened porch and bonus room, all on nearly an acre of land in a drop-dead gorgeous, old neighborhood."
The culprit is the undeniable fact that the house was located in a neighborhood full of foreclosed homes. Prices on those homes are, by necessity, depressed. That impacts the value of homes where the owners have made every payment on time.

The lender was of no help--suggesting a "short sale" that would impact the owner's credit report and possibly have terribly adverse income tax consequences.

Read Mr. Towns' column.

[Note, I wrote to Mr. Towns in order to get more facts surrounding his original acquisition of the property; was it as his home or an investment property, and why he didn't sell the house when he moved. As of July 1, I have not received a response.]

For your next title order
or if you have questions about what you see here,
contact Stephen M. Flatow
Vested Title Inc.
648 Newark Avenue
P.O. Box 6453
Jersey City, NJ 07306
Tel 201-656-9220 - Fax 201-656-4506
E-mail vti@vested.com - www.vested.com
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