My Way Lending

With America’s 78 million baby boomers just around the corner from retirement, the reverse-mortgage market is poised for explosive growth. But so is the market for risk management, because risk–particularly in the form of fraud–always “follows the money.” [??] Because seniors are frequently targeted for financial scams of all kinds, lenders hoping to tap into this lucrative market must begin to incorporate effective risk-management strategies now in order to stay one step ahead of the “perps.” This article briefly examines market demographics and program limitations, and then focuses on identifying and managing fraud risk.

How the program works

The primary advantage of a reverse mortgage is that it allows an owner to access accumulated home equity without having to sell the property or make monthly payments while living on a fixed income. With a longer lifespan, upheaval on Wall Street and the near-certainty of increasing medical costs making them uneasy, many soon-to-be-seniors are justifiably worried that they have not saved enough to live comfortably in their twilight years. Seniors will increasingly see reverse mortgages as a viable way to tap their home equity–currently estimated at $4 trillion, according to Washington, D.C.-based AARP–to close the retirement savings gap.

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Post from: Reverse Mortgage Loan Blog

Risk Management In Untested Waters: Many See Reverse Mortgages As The Next Big Loan Product

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With all the news about the housing crises, loan defaults and home foreclosures, borrowers are definitely becoming aware of the pitfalls of overextending themselves. I’m continuously receiving questions about the best way to approach a mortgage and how handling debt, particularly mortgage debt, fits into an overall financial plan.

One question that seems to be coming up more frequently is whether or not a reverse mortgage makes sense for older homeowners who want to increase their cash flow. Apparently, reverse mortgages - first introduced in 1988 - are becoming increasingly popular. According to an AARP study, consumer awareness is up and the median age for borrowers is down from 76 to 73. And as the boomer generation reaches 62, the age of eligibility, the market for reverse mortgages is expected to increase dramatically.

On the surface, a reverse mortgage can seem like a low-risk way for homeowners to tap into their equity for retirement needs, long-term care costs, or even to avoid foreclosure. Dig a little deeper and you’ll find that there are many factors to consider, from high fees to family inheritance issues. If you or someone you’re close to is thinking about a reverse mortgage, I strongly suggest you start with these general facts and carefully consider the pros and cons before making a decision.

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Post from: Reverse Mortgage Loan Blog

Get the Facts Before Choosing Reverse Mortgages

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Struggling home builder Standard Pacific got a big-time private equity bailout today by investors who will gobble up a bunch of equity in exchange for a nice cash infusion.  They’ve also been able to restructure about $13 billion worth of debt through MaitlinPatterson.

We’ve seen this with the banks taking on huge amounts of cash from sovereign wealth funds and via other channels, it will be interesting to see how many home builders are ’saved’ in the same manner.

From the Wall Street Journal on the Standard Pacific bailout:

Standard Pacific Corp., a struggling home builder which for months has been besieged by bankruptcy rumors, is getting a much-needed equity infusion from one of its creditors, the big private equity firm MatlinPatterson.

MatlinPatterson has agreed to buy about $381 million of stock at $3.05 a share. In addition, the firm will swap $128.5 million of the builder’s debt that it owns for warrants to acquire preferred stock. The builder is also planning a rights offering, which is expected to raise an additional $152 million. If shareholders reject the proposed offering, MatlinPatterson has agreed to back stop any short fall.

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