FHA may slash upfront costs of some reverse mortgages

The agency is finalizing plans to reduce the initial mortgage insurance premium on certain loans to 0.01% of a home’s value from 2%. Homeowners, however, would be able to borrow less and have to pay more per month.


The Federal Housing Administration isn’t talking publicly about it, but the agency may be getting ready to cut the upfront costs of reverse mortgages for some borrowers.

The agency also, however, may be reducing the amount seniors can borrow against their homes.

In a recent conference call with industry participants, FHA officials said they were finalizing plans to offer a home-equity conversion mortgage requiring almost no upfront mortgage insurance premium, according to the National Reverse Mortgage Lenders Assn. The FHA also may tinker with the traditional product in a way that increases the overall borrowing costs.

“HUD is looking at options to provide a lower-priced [home-equity conversion mortgage] option,” said Lemar Wooley, a spokesman for the U.S. Housing and Urban Development Department. “We are still working out the details. Our basic plan is to m

A home-equity conversion mortgage is a federally guaranteed reverse mortgage designed to let homeowners 62 or older tap the equity in their homes. The loans and accrued interest don’t have to be repaid until the owner sells the home, dies or fails to live there for one year, but the loans have traditionally carried significant upfront and annual expenses.

According to participants on the conference call, there would be two types of home-equity conversion mortgages beginning this fall: a “standard” loan and a “saver” loan.

The saver loan would have an upfront mortgage insurance premium of 0.01% of a home’s value, but the amount that could be borrowed, known as the principal limit, would be reduced by at least 10%. That would lower the risk to the FHA, which guarantees the loans. Because a smaller amount could be borrowed, the saver loan could be marketed as an alternative to a home-equity line of credit to seniors on fixed incomes who can’t make the monthly minimum interest payments required on such lines of credit.

Under the standard loan, the upfront mortgage insurance premium charged by the FHA would remain 2% of the property value (or a maximum of 2% of the FHA maximum loan limit of $625,500), and the principal limit would be cut 1% to 5% of a home’s value, depending on the borrower’s age.

For both loans, the monthly mortgage insurance premium, which is 0.5% of the mortgage balance for a traditional home-equity conversion mortgage, would increase to 1.25%.

“For someone who needs a chunk of money, but not a huge chunk, we believe this will significantly broaden the appeal,” said Peter Bell, president of the National Reverse Mortgage Lenders Assn. “They’re very smart changes.”

In the last few months, several reverse mortgage lenders decreased origination fees and closing costs, partly to increase demand for the product and partly to pass along some of the profit they’ve made as investors scooped up the loans on the secondary market. The saver product would further reduce the upfront borrowing costs.

The National Council on Aging, which has advocated a more flexible reverse mortgage product for some time, views the changes as a sign that the industry is moving past the one-size-fits-all mentality.

However, the advocacy group also sees potential pitfalls.

“The more flexibility there is, the more chance there is to be talked into [something] that doesn’t make sense,” said Barbara Stucki, vice president of home-equity initiatives for the National Council on Aging.

Mortgage rates still heading south

Mortgage interest rates have fallen for the 10th time in the last 11 weeks, according to Freddie Mac’s report on what lenders are offering to borrowers with solid credit and 20% down payments or home equity.

Freddie Mac’s weekly survey found that the offering rate for 30-year fixed loans averaged 4.32%, down from 4.36% a week ago. The borrowers would have paid 0.7% in fees and points to the lenders upfront. That’s the lowest since Freddie Mac, the giant government-backed buyer of mortgages, began keeping track in 1971.

Fifteen-year fixed loans averaged 3.83% with 0.6% in upfront fees, down from 3.86% a week ago, the lowest rate since Freddie began tracking the 15-year loan in 1991.

The average initial fixed rate for five-year Treasury-indexed hybrid loans, which become variable after five years, was 3.54% with 0.6% in fees, down from 3.56%, the survey showed — the lowest since tracking began in 2005.

As the Mortgage Bankers Assn. reported Wednesday, nearly 83% of mortgages these days are taken out by borrowers refinancing their existing loans to save money. The volume of purchase-money loans remains extremely low despite the extraordinary rates and home prices that have declined sharply in many areas.

30-year mortgage at lowest rate since 1971

Mortgage rates continued to decline this week, plunging to the lowest level in decades, according to surveys from Freddie Mac and Bankrate.

Freddie Mac’s weekly report said the 30-year fixed rate slipped to 4.44% for the week ended Thursday, the lowest since the government-backed lender began tracking the rate in 1971. Last week’s rates stood at 4.49%, and a year ago it was at 5.29%.

The 15-year fixed rate fell to 3.92% this week, the lowest since Freddie Mac began tracking it 1991, down from 3.95% last week and from 4.68% a year ago.

Adjustable-rate mortgages also declined, with the 5-year rate falling to 3.56% this week, the lowest since 2005 when the lender began tracking it.

Mortgage tracker Bankrate.com, which surveys large lenders across the country, said the average 30-year fixed loan sank to a record low for the fourth consecutive week, falling to 4.57% from 4.66% the previous week.

The 15-year fixed rate, which is a popular option for refinancing, also fell to the lowest level in the history of Bankrate’s 25-year old survey, dipping to 4.06%, from 4.11% the week before.

While the 1-year adjustable-rate mortgage held steady at 4.8% for a fourth week, the 5-year adjustable rate mortgage dropped to a record low of 3.92% from 3.95% the previous week.

“Low rates are helping to heal many battered local housing markets by increasing home-purchase activity, said Frank Nothaft, chief economist at Freddie Mac.

Mortgage rate applications inched up a modest 0.6% during the week, according to the Mortgage Bankers Association. Applications for purchase rose 0.3% while refinance applications increased 0.6%

Agent Reboot!!

Los Angeles

Program » Speakers » Location »

Los Angeles

Los Angeles | August 5, 2010 | Register Now »

Agent Reboot is a power-packed, low cost, local event for real estate professionals. This one-day, fast-paced program, will equip agents with the latest in business development, technology and marketing skills to help them be more successful. Agent Reboot is being offered in 12 cities across the United States.

Agent Reboot is the perfect hands-on training day for a newer agent or a seasoned pro. Local real estate agents and REALTORS® are expected to attend each event.

Highlights of each event include a networking power-hour and expo featuring cutting-edge real estate technology vendors.




Plug in to the future of real estate in one power-packed day!

8:00 am to 9:00 am — Attendee Check-in

Pick up your Agent Reboot badge and enjoy coffee and a continental breakfast while visiting with our sponsors and exhibitors.

9:00am to 9:15am — Welcome Address

Technology is changing the way buyers and sellers connect, and that means new opportunities and challenges for real estate professionals. Join Nicole as she kicks off the program with a fun and interactive look at how innovation is changing the future of real estate.
•  Moderated and Presented by: Nicole Nicolay, Founder & CCO, Agent Evolution, @nik_nik

9:15am to 9:30am — Download: Must-Have Tools for the Agent with Mobile Mojo (Part 1)

Get the lowdown on 10 leading edge technologies that will help you “reboot” the way you do business.

9:30am to 10:00am — From Clicks to Closings: Turning Your Online Marketing Strategy into a Lead Machine

Video, virtual tours, single property websites – there are dozens of options for marketing properties online. Not all methods are created equal though. Find out which ones will keep your pipeline of prospects full, while saving you time and money.


Jason Lopez, Director of Interactive Marketing, Century21 Award @jaylopez
•Derek Overbey, Senior Director of Marketing and Social Media, Roost, Inc. @doverbey

10:00am to 10:30am — Mastering Social Media to Expand Your Reach Online

Learn how to develop a comprehensive social networking strategy to grow your sphere of influence. Agent Reboot’s experts will help you sharpen your online marketing skills with proven best practices for using Facebook, Twitter and other online services. Win friends, influence people, and increase sales!


•Derek Overbey, Senior Director of Marketing and Social Media, Roost, Inc. @doverbey

10:30 to 10:45 — Break

10:45am to 11:00am — Life Style Branding: Why it Matters

The traditional branding strategies used by the real estate profession no longer work. Connecting with today’s consumer is a whole new adventure. The last 8 years has changed the expectations of home buyers and sellers. Learn why life style branding is critical to your success moving forward.

•  Sherry Chris, CEO, Better Homes & Gardens Real Estate @BHGRE_Sherry

11:00am to 11:30pm — Case Study: Managing Reputation and Content on the Web

Two experts will walk you through their journey towards a progressive Web strategy using social media. They’ll share lessons learned, offer tips, and show you the results of their efforts. Learn how to do it from people who have done it.

Presented by:

Stacey Harmon, Founder, AgentApplause.com @staceyharmon
• Lindsey Planeta, Realtor and Broker Owner for Orange County at M Realty Orange County @lindsey

11:30am – 11:40am – Download

11:40am – 12:00pm – Half Time Report

Gut-Check.  We hope the first half has left you brimming with ideas!  You’re ready to stop doing the old stuff, but what are you supposed to be doing now? Join Nicole as she checks in with the audience to wrap up the morning and sets the stage for the afternoon.

12:00pm to 1:00pm – Lunch Break

In real estate, making connections is vital to an agent’s success, so take advantage of this hour-long break to grab lunch with new found contacts. It’s a great opportunity to mix and mingle with some of the best agents and vendors in the business before the afternoon program begins.

1:00pm to 1:30pm — Maximum Exposure: Publicizing Your Listings

Make sure your listings appear everywhere potential buyers are looking. Discover easy methods for syndicating listings across the Web to spread the word about your properties, and get simple tips for tracking results.


David Vivero, CEO, RentJuice
• Amanda Wernick, Realtor/Director of Social Media, Seven Gables Real Estate

1:30pm to 2:00pm — Download: Must-Have Tools for the Agent with Mobile Mojo (Part 2)

Get the lowdown on 20 MORE leading edge technologies that will help you “reboot” the way you do business.

2:00pm to 2:45pm — Going Local: What Does It Take to Win in Los Angeles Real Estate?

It’s no secret that the industry has had its share of ups and downs in the last year. So, what lies ahead? Hear from leading real estate professionals who are navigating the changing landscape, and find out what steps you should be taking to ensure success in the future.


Gary Gold, Executive Vice President, Hilton & Hyland / Christine’s Great Estates
Mike Hickman, CEO, Seven Gables Real Estate
Rick Sharga, Senior Vice President, RealtyTrac

2:45pm to 3:00pm — Wrap-up and Agent Reboot’s Giveaways


Sherry ChrisSherry Chris
CEO, Better Homes
& Gardens Real Estate
Gary GoldGary Gold
EVP, Hilton & Hyland/
Christine’s Great Estates
Stacey Harmon
Stacy Harmon
Principal, Harmon Enterprises
Michael HickmanMike Hickman
CEO, Seven Gables
Real Estate

Jason LopezJason Lopez
Director of Interactive Marketing, Century 21
Nicole Nicolay Nicole Nicolay
Founder & CCO
Agent Evolution
Rick ShargaRick Sharga


Ackerman Union
Grand Ballroom
308 Westwood Plaza
Los Angeles, CA  90024

How to Keep a Positive Perspective in a Negative Market

“Whether you think you can or you think you can’t, you are right” – Henry Ford

I am sure you’ve heard the expression, “Attitude is everything.”  This is very true. Right now, it’s simply your attitude and mentality that will give you the edge over others who are trying to invest in this highly violatile market.   You’ve undoubtedly heard the importance of thinking positive and having the right attitude.  Most people are intelligent enough to know that this statement is true.  Some people reading this will argue that a positive attitude doesn’t always work.  Well, maybe not, but I know one thing for sure – negative thinking and a negative attitude NEVER works!  So your only choice and your only chance for success in this market are to pick the positive things in life and maintain a positive attitude at all times.

I once read a fortune cookie that said, “An optimist is someone who tells you to cheer up when things are going his way”.  I know that if you are reading this article, times may be difficult and you need serious answers to your burning questions such as, “How I profit in a slow market”?  There are many answers to this question, but first I need to impart to you some relative perspective.

A History Lesson on Real Estate Cycles

About every ten to twelve years, as an average, real estate values tend to double in most major metropolitan areas.  For example, in the 1920’s, the original colonial homes sold for just under $2,500 in Long Island, New York.  Since then, real estate prices have doubled almost eight times over the last 80 years.  That averages out to a 100% increase approximately every ten years.  An interesting note to this is that about every ten to twelve years, real estate values must correct before they enter their next “doubling cycle”.

It’s Not a Matter of If, It’s a Matter of When

The evolutionary process is three steps forward and one step backwards.  For example, imagine a 100% increase occurring in three steps of one-third parts each.  The last market cycle of the 1980’s was one in which real estate values doubled, followed by a correction of the early 1990’s, which equated to a 20-30% decrease over a three to five year period.  This cycle was then followed by the post-millennium cycle boom of 100% from the last high point of the previous cycle.  We are now in the naturally-occurring phase of a correction in the cycle.  This essential and beneficial adjustment gives the market pause to reflect and re-gather momentum and strength for the next doubling cycle.  This has occurred time and time again because the long-term demand for housing is growing an exponential rate based on population growth to almost double in the United States by 2050.  This will continue to drive prices higher as it has for the last 100 years.

Since we now know based on history that nearly all real estate prices will double again, it’s not a matter of if, it’s a matter of when your existing houses will sell.  Sharing these facts with your prospective buyers will put them in the right frame of mind to buy now versus next year if they plan on staying in the home more than five years.  If a buyer is apprehensive about being the right time to invest, ask him if he’d like to buy his parent’s home for the price they paid for it – the answer will be obviously “yes”.

Maintain a Positive Attitude Assuming a Negative Result

In “Winning Through Intimidation” author Robert Ringer talks of the importance of maintaining a positive attitude through the assumption of a negative result.  In other words, Ringer suggests that you be prepared for the worst case scenario while at the same time putting your best foot forward to get the best possible result.  This will take the mental pressure off of you and allow you to focus on getting the job done.  This approach, I believe, allows you to be positive and realistic in your mental assessment buying and selling houses.

If it Bleeds, it Leads

There’s an old expression in the media business, “If it bleeds, it leads.”  In other words, the media loves to cover negative news more than positive because it sells better.  When the real estate market is in turmoil, the media loves to run these negative headlines to keep reminding people how bad things are.  When buyers hear the bad news, it affects demand because the negative news drives fear, which makes buyers worry about whether the time is right to buy a home.

Is the media simply reporting the news or does the media actually affect the news in this regard?  The answer is obviously both.  The media reporting negative news alone can’t shape a real estate market.  However, since perception is often reality, when buyers are spooked, they may shy away from buying.  This affects lenders, builders, real estate agents and other professionals who rely on the real estate business for their income.  It becomes almost a self-fulfilling prophecy because things get worse and the media again reminds us how bad things are.

But, are things really as bad as the media reports?  At the time of this article (October 2008) the numbers certainly do reflect falling home prices and rising foreclosures.  When you hear that foreclosures have doubled or even tripled in a particular area, this may sound catastrophic at first until you realize that the vast majority of homes (97-99%, depending on the local market) are NOT in foreclosure.  Despite the doom and gloom, there’s always a buyer for a well-kept home offered at the right price and terms.  In short, don’t read the paper if you want to keep a positive attitude and sell your homes fast!

Ready Fire, Aim, Fire

Well done is better than well said – you have to take a whole lot of action to get your houses sold in s slow market.  In a good real estate market, people can sell a house fast, so when things slow down, they figure, “Oh well, there’s nothing I can do.”  Nothing could be further from the truth.  Not only is there something you can do, but there’s a lot you MUST do to get your house sold.  However, it’s not just about working hard, it’s about working SMART.  You need to do things in the right order and in the right way to get the proper results.

However, don’t focus too much on perfection before you take action.  You’re probably familiar with the phenomenon of the “C” student who outperforms the “A” student in real life.  This is because the “C” student is often satisfied with doing a mediocre job at something, but just getting it done.  The “A” student mentality often leads to paralysis of analysis and inaction.  In other words, the bottom line is getting your house exposed to as many buyers as possible, not necessarily getting it done perfectly.  For example, many sellers want to show their house only when it’s convenient for them and the house is in perfect shape to be shown, instead of when a buyer is ready.  While showing a house in its best condition is a priority, it doesn’t make sense to put off a ready, willing and able buyer for too long.


Many people reading this are prone to inaction because of fear of doing it incorrectly.  Remember, it’s not a matter of doing it perfectly, but putting forth your best effort.  As I discussed earlier, a lot of effort at a “C” level beats doing less things at an “A” level.

Lack of knowledge certainly makes it difficult to sell a house fast in a slow market, and in fact is probably the single biggest drawback for the average person.  Most people only have the opportunity to sell a few houses in their lifetime and often rely on professionals to do the work.  Thus, the average home seller does not have enough practice to get really good at the job.  In fact, most real estate agents who sell houses for a living are hardly good at it.  The top 5% of agents in any market do the vast majority of the business.

Taking the time to learn what to do is a very important part of the success in selling a house.  In the classic book “Think & Grow Rich”, Napoleon Hill writes about the importance of learning the right things.  He distinguishes between general knowledge and specialized knowledge.  Certainly, there’s a lot of general real estate knowledge in bookstores and floating around the Internet, but this book is unique because it offers the very specialized knowledge of how to sell a house … QUICKLY!  Our experience in selling thousands of homes will reveal the very specialized knowledge you’ll need to get your house sold fast and at the highest price you can get for your market.

California tax assessments of homes to go down…

If you own a home in California, chances are the assessed value of your property just dropped.

County assessors statewide are releasing this year’s property tax rolls – the total assessed value of all properties in a given county – and most are lower than last year.

Sacramento County’s tax roll dropped nearly 2.2 percent to $128.8 billion. Yolo County’s is down about 1.9 percent. And El Dorado County and Placer County both saw the value of their taxable property drop more than 6 percent.

The falling values represent good news for many homeowners, who will see lower property tax bills this October.

However, the second straight year of shrinking tax rolls is another blow to local governments that rely on property tax revenue to fund programs and services.

“It’s a significant hit,” said Mike Applegarth, a principal analyst in El Dorado County. “It translates into people (losing their jobs). It takes people to deliver services.”

Last year marked the first time most counties saw property tax rolls drop since voters approved Proposition 13 in 1978. That’s because the market value of many properties dropped below the assessed value. In such cases Proposition 8 – a tax measure passed as a companion to Proposition 13 – requires assessors to temporarily lower the taxable value of properties until the market value climbs again.

Market values have continued to plummet, and as a result, most county assessors have continued to lower the taxable value of properties in their region.

Sacramento County Assessor Ken Stieger’s office just lowered the assessed value of another 38,000 properties. In all, owners of nearly 154,000 Sacramento County properties are paying less in taxes because the market value is below the previous assessed value.

This year, there is a second factor at work as well. Under state law, counties are allowed to raise property taxes by up to 2 percent a year as long as the overall cost of goods and services is rising – in other words, during periods of inflation. In a time of deflation – when the costs of goods and services are falling – they are required to lower property taxes.

For the first time since 1978, that scenario is playing out. So even homeowners whose property is still worth more than when they bought it will see a quarter percent decrease from last year in its assessed value. That should amount to $2.60 less in taxes per $100,000 of assessed value, according to the State Board of Equalization.

“It’s the first time ever since Proposition 13 and probably the last time in our lifetime,” Stieger said.

The new property tax information comes weeks after counties and cities passed their fiscal year 2010-11 budgets. The question now: How well did local governments do in projecting property tax revenue when they passed those spending plans?

El Dorado County, for example, budgeted for a 4 percent drop in property tax but likely will see a 6.2 percent decrease. As a result, that county is facing an unexpected shortfall of $1.5 million in the fiscal year that started July 1.

Homeowners should see the impact of the newly assessed values in their October tax bills. But not everyone will see a decrease in what they owe, said Ron Thomsen, president of the California Assessors’ Association.

That’s because many residents are in areas with special assessments or levies that will increase this year. Also, the figures are based on the value of a property as of Jan. 1. This means any drop in market value since that date won’t be reflected.

Owners who want to see the assessed value of their property can visit their county assessor’s website. Many counties will conduct informal reviews if property owners dispute the assessed value. Owners can file an appeal until the end of November.

MEGA Camp!!!

Keller Williams invites you to join us at MEGA Camp- an exclusive gathering of real estate’s top producers. This year MEGA Camp will be held in Austin, Texas at the Austin Convention Center, September 15th and 16th.  This event is open to ALL real estate agents in the industry, so feel free to tell your friends. To register you can go to www.events.mapscoaching.com or check out our flier below for more information!