NewRetirement Retirement News Digest : Housing

California Laws Get Tough on Mortgage Finance

jberman — Thu, 15 Oct 2009 07:52:00 GMT

Housing Wire, October 14th, 2009

California Governor Arnold Schwarzenegger signed seven mortgage finance-related bills into state law Monday. The new laws aim to crack down on fraud, set requirements for loan documents and set restrictions on mortgage and reverse mortgage originators.

Senate Bill (SB) 36 regulates the licensing requirements for residential loan originators in compliance with the federal Secure and Fair Enforcement for Mortgage Licensing (SAFE) Act.

SB 237 requires appraisal management companies (AMCs) and appraisers register with the Office of Real Estate Appraisers and subjects appraisers to the provisions of the Real Estate Appraisers’ Licensing and Certification Law.

SB 239 raises the crime of mortgage fraud from a misdemeanor to a felony and makes it easier for prosecutors to obtain fraudulent loan documents to investigate cases.

Assembly Bill (AB) 260 places restrictions on subprime loans and prohibits originators from “steering” borrowers, or encouraging borrowers to buy riskier loan products when they are eligible for affordable products. It also gives state regulatory agencies the authority to suspend or revoke the licenses of real estate lenders and mortgage brokers that violate the state’s lending laws.

AB 329 sets guidelines for reverse mortgages originated for elderly borrowers — those over 65 years old — requiring specific disclosures and offering counseling service referrals. Originators are also prohibited from selling other financial products to a reverse mortgage borrower.

AB 957 gives the buyers of foreclosed property the right to choose local escrow officers to complete transactions. It prohibits the seller of a residential property from requiring the buyer to use an escrow service company or purchase title insurance chosen by the seller.

Older Americans On The Go: How Often, Where, and Why?

jberman — Wed, 02 Sep 2009 21:41:00 GMT

Center for Retirement Research at Boston College, August 31st, 2009

The lore on whether older Americans move is mixed. On the one hand, the stereotype of retirement is that people flock to a warm climate such as Florida or Arizona. On the other hand, researchers have found that the home equity of older Americans changes very little over time, suggesting that they tend to stay put. To date, researchers have seldom directly addressed the migration patterns of older Americans. Understanding such patterns can be useful in assessing the social and economic circumstances of the elderly. Therefore, this brief – the first in a two-part series – uses the Health and Retirement Study to examine how often older households move, where they move, and why they move.

The brief is organized as follows. The first section covers the prevalence of moving and the geographic locations of the moves. The second section analyzes the reasons that households give for moving and explores whether these reasons suggest different types of movers. The third section concludes by setting the stage for the next brief, which will explore the determinants and consequences of moving.

Read this article.

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Loans That Looked Easy Pose Threats to Recovery

jberman — Fri, 28 Aug 2009 04:07:00 GMT

The New York Times, August 26th, 2009

When Harvey Clavon took out an exotic mortgage to refinance his home in Santa Clarita, Calif., three years ago, he thought he knew what he was doing.

Mr. Clavon, 63, was planning to sell the home in a few years and retire to Palm Springs. So he got a loan called an option adjustable rate mortgage, or option ARM, which allowed him to pay less than the interest for the first five years.

On his annual salary of $100,000 as a television camera operator, he could afford the $2,200 initial mortgage payments. And he planned to sell the home before the mortgage reset.

Now Mr. Clavon is part of what many economists say is a looming threat to a housing recovery: more than a half-million option ARMs scheduled to reset in the next four years, at rates many homeowners cannot afford. His mortgage payments have risen to $2,700 a month because of a clause he did not notice on his contract, and are scheduled to rise above $4,000 in two years.

Since February, default and foreclosure rates on option ARMs have passed those of subprime mortgages, according to the research firm First American CoreLogic, in part because so many subprime mortgages have already failed.

Because Mr. Clavon made only minimum payments on his mortgage, his balance has risen to $680,000 from $618,000, on a house worth closer to $400,000.

“I don’t know what I’m going to do, ” he said. “I got duped into the loan, and I consider myself an educated man.”

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Experiencing Life, Briefly, Inside a Nursing Home

jberman — Tue, 25 Aug 2009 00:59:00 GMT

The New York Times, August 23rd, 2009

For 10 days in June, Kristen Murphy chose to live somewhere she and many others fear: a nursing home.

Ms. Murphy, who is in perfect health, had to learn the best way to navigate a wheelchair around her small room, endure the humiliation that comes with being helped in the bathroom, try to sleep through night checks and become attuned to the emotions of her fellow residents.

And Ms. Murphy, 38, had to explain to friends, family and fellow patients why she was there.

Ms. Murphy, a medical student at the University of New England in Biddeford, Me., who is interested in geriatric medicine, came to New York for a novel program that allowed her to experience life as a nursing home patient.

Students are given a “diagnosis” of an ailment and expected to live as someone with the condition does. They keep a daily journal chronicling their experiences and, in most cases, debunking their preconceived notions.

The program started in 2005 after a student approached Dr. Marilyn Gugliucci, the director of geriatrics education at the medical school. “ ‘Dr. G,’ ” she recalled the student saying, “ ‘I would like to learn how to speak with institutionalized elders.’ What came out of my mouth was, ‘Will you live in a nursing home for two weeks?’ ”

To Dr. Gugliucci’s surprise, she found nursing homes in the region that were willing to participate and students who were willing to volunteer. No money is exchanged between the school and nursing homes, and the homes agree to treat students like regular patients.

“My motivation is really to have somebody from the inside tell us what it’s like to be a resident,” said Rita Morgan, administrator of the Sarah Neuman Center for Healthcare and Rehabilitation here, one of the four campuses of Jewish Home Lifecare.

“But she is really there to study herself, her own feelings about living in a nursing home,” Ms. Morgan added, referring to Ms. Murphy.

Read more of this article.

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Reverse mortgages shift gears

jberman — Sat, 22 Aug 2009 09:40:00 GMT

San Jose Mercury-News, August 21st, 2009

Ann Tubbs and Ehtesham Majid left behind their house in Moraga more than two years ago to enjoy the urban lifestyle of San Francisco. The retired couple ended up renting a place in the city but eventually hoped to buy a home, a place they could personalize and make their own. ß Now, a new program made possible by federal legislation passed last year to address the foreclosure-driven housing crisis is also helping seniors use a reverse mortgage to help buy a home, provided they can come up with a large down payment. Before the Home Equity Conversion for Purchase program rolled out in January, seniors 62 years and older could only use reverse mortgage loans to draw out tax-free payments from the equity held in an existing home while continuing to live in it.

Tubbs and Majid used the new program to help purchase a $625,000 two-bedroom condominium located downtown near the city's waterfront.

"We like city living. We like to walk around at night and look in windows," said Tubbs, who retired from a 30-year-career at Planned Parenthood. She and her husband moved into their new home in August.

"It's a great program for people like us. We don't have any children and want the urban lifestyle," said Majid, a retired software engineer.

Many lenders are starting to offer these new loans in addition to traditional reverse mortgage products. But as with traditional reverse mortgages, there are costs involved that can add thousands of dollars to the loan amount, which grows over time and has to be repaid after the last borrower leaves or sells the property or dies and the home is passed on to heirs.

Sales of Existing U.S. Homes Leap Higher

jberman — Sat, 22 Aug 2009 00:45:00 GMT

The New York Times, August 21st, 2009

Sales of previously owned homes surged in July as buyers stormed back to the market, taking advantage of falling prices, lower interest rates and a tax credit for first-time homeowners, an industry group reported on Friday.

Sales of condos and single-family homes each rose for the month, and the overall number of existing home sales rose 7.2 percent in July from June, the National Association of Realtors reported. It was the largest monthly gain since the group began tracking existing home sales in 1999.

Moreover, home sales last month were 5 percent higher than in July 2008. Homes were selling at a seasonally adjusted annual rate of 5.2 million in July, up from a rate of 5 million last year.

It was the first year-over-year increase in home sales since November 2005.

“I’m a little bit flabbergasted,” said Patrick Newport, an economist at IHS Global Insight. “These are really good numbers.”

Some 30 percent of the homes sold in July were distressed properties like short sales or foreclosures, but that is a lower percentage than in previous months, when nearly half of all existing-home sales were estimated to be foreclosures.

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Making Home a Safer Place, Affordably

jberman — Sat, 18 Jul 2009 08:23:00 GMT

The New York Times, July 17th, 2009

Stay put or sell?

That’s the question many older people ponder as they move into their 70s and beyond.

Most older people settle on staying put, according to a recent survey by the Home Safety Council, a nonprofit organization dedicated to preventing home-related injuries. (From the source of the survey, you can see where this column is heading, right?)

Staying put makes economic sense. It is not only more comfortable to live out your life in your own home, it’s much more affordable.

The average annual fee at an assisted-living facility — a place where older people live independently but also receive a host of services like medication monitoring and meals — is $34,000. And in the nation’s most expensive metropolitan areas, including New York, the costs may be closer to $70,000.

But while home might be cozier and cheaper than a residential center, it’s not always safer. Every year in this country about 7,000 elderly people die in home-related accidents, and millions are seriously injured. Falls are the leading cause of injuries, but the elderly are also at risk for being burned by the stove, scalded by hot water or drowning in the tub.

Read more of this article.

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Reverse Mortgages to the Rescue

jberman — Wed, 08 Jul 2009 09:47:00 GMT

Kiplinger.com, July 7th, 2009

Reverse mortgages have been around for nearly 20 years, but it wasn’t until the current financial crisis that they caught on. Seniors are turning to these loans to tap the equity in their homes and generate tax-free income to help them ride out hard times.

For Frank and Carol Rider, a reverse mortgage is providing a cushion, giving their investments time to recover from the bear market. The Riders, both in their early seventies, borrowed about $200,000 against their home in New Mexico. They used the money to pay off their traditional mortgage and to take $1,500 a month for the next 20 years to supplement their pensions and Social Security benefits. “We’re trying to maintain our lifestyle,” says Frank, noting that he and Carol travel extensively year-round.

For Luther and Peggy Combs, their reverse mortgage is a lifeline that saved their home from foreclosure. The Combses, both in their early sixties, had high hopes for a comfortable life when they moved from Chicago to central Florida a few years ago. But Luther lost his job when the economy soured, and the couple found themselves deeply in debt. Although they had to use every penny of their home equity to pay off their bills, the reverse mortgage wiped out their monthly house payments and made it easier for them to sleep at night.

Baby Boomers ‘Under Water’

tsaleen — Sun, 15 Mar 2009 07:06:00 GMT

The New York Times - March 13, 2009

A recent report suggests that the housing-market slump is hitting baby boomers particularly hard: many middle-aged homeowners had been so seduced by the rising prices of years past that they failed to save for retirement and may now owe more than their homes are worth.

The Center for Economic and Policy Research in Washington, which released the report last month, estimated that 30 percent of homeowners aged 45 to 54 were in this predicament, known as being “under water.” (About 15 percent of older baby boomers, 55 to 64, fell into that category as well.)

So, if these people were forced to sell their homes now, they would have to bring cash to the closing.

The center’s report also found that baby boomers in the 45-to-54 group saw their overall net worth plummet by about 45 percent over the last five years, to a median level of $94,200 from $172,400.

While the drop partly reflected the meltdown of Wall Street, Dean Baker, the co-director of the Center for Economic and Policy Research, said that conservative estimates showed that home equity accounted for about $20,000 of the net income figure.

Another factor that has led to a decline in personal wealth is what the report calls “the near zero level of savings nationally” from 2004 to 2009.

“As a result of the bubble-inflated values of their homes, tens of millions of families opted not to save during what would typically be their peak saving years,” the report said.

The center used 2004 consumer finance data from the Federal Reserve Board that measured a typical consumer’s wealth in several categories, including stocks and home equity. Researchers then reduced those values in accordance with the drop in the Standard & Poor’s 500-stock index and the median sale price of a house as tracked by the National Association of Realtors. The November S.&P./Case-Shiller 20-city price index was also factored into the projections.

Mr. Baker said he suspected that fewer baby boomer homeowners were under water in the New York metropolitan region than in other parts of the country, particularly areas where prices have fallen sharply, like Florida, Arizona and Rust Belt states like Michigan and Ohio. But he said that because of the financial industry’s persistent woes, owners in the New York area could see more significant declines in home prices this year.

Indeed, many areas in the region are already suffering. According to a report this month by Integrated Asset Services, a Denver-based real estate consulting firm, prices in Fairfield County, Conn., have dropped 42 percent since their peak in 2006, while prices in Passaic County, N.J., have dropped 26 percent.

Those homeowners around age 60 whose mortgages are under water, and who might now be considering selling, should carefully weigh their options, said Richard E. Austin, a financial adviser with Lincoln Financial Advisors in Rye Brook, N.Y. Selling the house would cost them money, he noted, which could mean that they might need to liquidate other assets — even retirement savings plans like 401(k)’s.

But Mr. Austin said that if these homeowners expected real estate prices to decline for years, and if they wanted to retire someplace other than their current home, selling now could shield them from deeper losses in the future.

“I wouldn’t recommend that as the first option, because I’m more of an optimist,” Mr. Austin said, adding that a better option might be to rent out the house while waiting for home prices to rebound.

Even baby boomers who aren’t under water could have a more difficult time affording retirement. According to the center’s report, five years ago, the median baby boomer household, with people aged 45 to 54, had enough net assets to generate about $14,000 in annual interest once the homeowners reached age 65.

Now, that figure is just under $8,000.

See the full article...

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Moving to Depreciated Area Could Restore Nest Egg

tsaleen — Wed, 11 Mar 2009 04:44:00 GMT

Dallas News - March 8, 2009

If you are in your 50s or early 60s, you're in the Peril Period. And the Worst-of-All-Possible-Worlds appears to be happening. Everything – home value, 401(k) and job – is going down the drain just as you're getting really serious about retirement.

How would you like to restore your suffering retirement savings in a single step?

It's possible. Maybe, just maybe, the collapse of housing prices is an opportunity.

How do you turn disaster into opportunity? You move from a high-cost area to a lower-cost area. You move from a somewhat depreciated area to a much-depreciated area.

Let's see what can happen if you can accept disappointment in the sale of one house but buy another at a bargain price. Can you use the difference to restore a shattered retirement? Some back-of-the-envelope figures indicate that you can.

Let's imagine George and Gina Mover. They're about 60. They live in New England. They had hoped to retire soon.

But then the housing crisis came along. It took 7 percent to 20 percent off the value of their house. Then the financial crisis came along. It took at least 25 percent off the value of the retirement savings accounts.

Mixing lemonade

Finally, the recession came along. It may take their jobs. This would force them to retire.

How do they turn all these lemons into lemonade?

They make the traditional retirement move to a warmer climate.

If they owned a median-price house in the Boston area, for instance, it was worth about $400,000 in 2006 but is worth only $336,000 now. But if they're among the many homeowners over 50 who have no mortgage, they can sell the house and move to any number of places where the median home price is lower. Then they can add the liberated home equity to their retirement portfolio.

Anyone who lives in a relatively high-price area can do this.

Some readers will be shocked by the idea that many 50-plus households have no mortgage, but the data come from a recent study by the AARP Public Policy Institute.

If the Movers went to Miami, where the median home price has declined from $371,000 to $234,000, they could add $102,000 to their nest egg.

They could liberate still more by moving to Orlando, Fla., where the median home price has fallen from $270,000 to $175,000. This would liberate $161,000 for investment.

Or they could move to the struggling Cape Coral-Fort Myers area of Florida, where home prices have plummeted from $268,000 to $111,000. That would allow them to add a hefty $225,000 to their retirement nest egg.

What if the Movers don't like Florida?

No problem. They can move to Las Vegas, one of the most distressed housing markets in America. They can buy a median-price home there for $182,000, and they'll add $154,000 to their nest egg.

In fact, they don't even have to move to a distressed area.

According to National Association of Realtors figures, the Austin-Round Rock area has actually appreciated since 2006. So it isn't considered distressed – even though it has an abundant supply of builder close-outs, other bargain deals and a growing number of short sales.

If the Movers buy a median-price $185,000 home there, they'll add $151,000 to their nest egg.

Start playing with the possibilities for a move – city, state, possible changes in home size or moving to a no-income-tax state such as Florida, Nevada or Texas – and geographic arbitrage starts to look like a positive plan. Cut your expenses and increase your savings in a bum market.

Repairing the crack

Will liberating home equity restore the retirement nest eggs of older workers?

It's very likely. Only a minority of older workers have ever had more than $400,000 in their retirement savings plans. The moves discussed here could restore nest egg losses ranging from 25 percent to 50 percent.

Is moving easy? No. It's a major hassle.

But it's an action you can take. The prime mover behind this action will be George and Gina Mover. It won't be the economy. It won't be the government.

George and Gina are a much better bet than those other two.

See the full article...

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SEC accuses Sunwest Management of securities fraud

tsaleen — Tue, 03 Mar 2009 04:30:00 GMT

USA Today - March 2, 2009

A major corporate operator of assisted-living facilities and its founder were accused of a massive securities fraud Monday in what the Securities and Exchange Commission charged was a scheme that raised $300 million from investors who now face the loss of their money.

The allegations, the latest in a string of alleged scams uncovered amid the national recession, target Oregon-based Sunwest Management; Jon Harder, the firm's founder and former CEO; and several related entities and individuals.

Harder defense attorney Stephen English said his client had done nothing wrong. Lawyers for Sunwest did not immediately respond to a message seeking comment on the case.

At its peak in 2007, Sunwest managed more than 320 retirement facilities in 34 states and had estimated assets of $2 billion, the SEC said. But the company collapsed in December as Harder filed for bankruptcy court protection.

From 2006 through 2008, Harder allegedly raised $300 million from more than 1,300 investors who were told that their money would buy partial ownership interest in a specific retirement facility and provide a 10% annual investment return, the SEC charged.

But the money was allegedly commingled in a single fund that was used to pay operating expenses, investor returns and other costs. As a result, the SEC charged that misled investors didn't realize that more than half the retirement sites were losing money.

"As the national credit markets tightened in 2007 and 2008, the house of cards Harder had built came crashing down," the SEC charged. But Harder and co-defendants allegedly continued to raise funds from investors in what the SEC alleged became a virtual Ponzi scheme, in which money from new investors is used to pay earlier ones.

As of January, more than 100 of Sunwest's retirement homes were in foreclosure, receivership or bankruptcy, "resulting in the effective elimination" of the investors' financial stakes in the facilities, the SEC complaint charged.

"This is a tragic example of investors being defrauded out of millions of dollars because they were far more exposed to a downturn in the real estate market than they had been led to believe," said Marc Fagel, regional director of the SEC's San Francisco office.

English, however, said a federal court on Monday denied the SEC's request for an emergency asset freeze and appointment of a receiver to administer Sunwest and try to recover funds on behalf of investors.

The court ruled that a Sunwest operating agreement approved by Harder and investors as part of the bankruptcy "was sufficient to protect the interest" of investors and found that the proposed receiver "was an added level of oversight, which was not necessary," English said.

"It's just like any other lawsuit in which claims are made, and now they have to gather the proof for it," English said of the federal allegations.

Fagel said the SEC had sought the protections on investors' behalf and officials would now proceed with the lawsuit.

See the full article...

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FHA implements temporary higher loan limits to help families keep their homes

tsaleen — Thu, 26 Feb 2009 03:52:00 GMT

HUD - February 25, 2009

More American families will be eligible this year to purchase or refinance their homes using affordable, FHA-insured mortgages, thanks to the economic stimulus package signed into law by President Obama last week. The American Recovery and Reinvestment Act of 2009 will allow HUD's Federal Housing Administration to temporarily increase its maximum loan limit, allowing FHA to insure larger mortgages at a more affordable price in high-cost areas of the country.

"This is one of many elements of the President's recovery plan that will help homeowners and homebuyers in these high cost areas secure lower cost mortgage financing," said HUD Secretary Shaun Donovan. "These loan limit increases will help FHA continue to provide safe, affordable mortgage products to families in all areas of the nation. Today's announcement is just one example of how the President's recovery and homeowner affordability plans work together to make homeownership more affordable for those looking to buy a house or refinance their current loans."

HUD will increase FHA loan limits up to $729,750 in high-cost metropolitan areas such as New York, Los Angeles, San Francisco and Washington, D.C. There are 73 counties in the U.S. that will now be eligible for the highest loan limit of $729,750. Previously, FHA's loan limits in these high-cost areas were capped at $625,500. The change in loan limits is applicable to all FHA-insured mortgage loans originated until December 31, 2009.

Increasing loan limits will help FHA continue to provide needed stability to housing markets across the country. As conventional sources of mortgage credit have contracted, FHA has been filling the void. From September to December 2008, FHA facilitated $97 billion of much-needed mortgage activity in the housing market, $35 billion of which was through FHA's refinancing products. By focusing on 30-year fixed rate mortgages, FHA helps homeowners avoid and escape the risks associated exotic subprime mortgage products, which have resulted in rising default and foreclosure rates.

Home Equity Conversion Mortgages

FHA's reverse mortgage product known as the Home Equity Conversion Mortgage (HECM) will have a new national mortgage limit of $625,500, up from the previous limit of high of $417,000. Reverse mortgages allow homeowners age 62 and older to borrow against the value of their homes without selling them or having to make any monthly repayments. Homeowners can select a lump-sum payment, monthly payments or tap into a line of credit. No repayment is required as long as a homeowner lives in a home with a reverse mortgage. The reverse mortgage is repaid, with interest, when a homeowner sells the home or dies.

FHA loan limits are based on the county in which the property is located. However, for properties located in metropolitan or micropolitan statistical areas, the limit is set for the county with the highest median home price within the metropolitan or micropolitan area.

The new temporary FHA loan limits are posted on the HUD website. Additional details on these new temporary loan limits, including FHA's mortgagee letter and attachments, are available.

See the full article...

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Rick Santelli's Shout Heard 'Round the World

tsaleen — Sun, 22 Feb 2009 21:30:00 GMT

CNBC - Feb 20, 2009

CNBC's Rick Santelli called for a "Chicago Tea Party" Thursday, leading the charge for calls to revolt against the Obama Administration's mortgage bailout plan (see video below).

The clip has gone viral on the Internet, bringing with it loads of opinions, both pro and con.

And CNBC.com's The Heat is back for the occasion, asking "Should America Join Santelli's Tea Party?"

Santelli was back in action Friday (watch the video), and even the White House mentioned him directly in response to questions about the bailout — not once, not twice, but NINE times ... and even invited Rick to the White House for coffee. Not tea, mind you.

Watch the original shout heard 'round the world in the following video clip. Then read what others are saying about it.

See full article with video here...

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A Florida Court's 'Rocket Docket' Blasts Through Foreclosure Cases

tsaleen — Sat, 21 Feb 2009 04:17:00 GMT

The Wall Street Journal - February 18, 2009

FORT MYERS, Fla. -- Hoping to save her house, Saundra Hill Scott arrived at the county courthouse clutching dog-eared mortgage bills and letters from her lender.

She need not have bothered. The foreclosure hearing lasted less than 20 seconds, with Judge John Carlin asking her two questions: Are you current on your mortgage and are you living in the home? She answered no and yes and then offered to show him her paperwork.

"I don't need to see that. That's between you and the bank," he said as he gave Ms. Hill Scott, her husband and three grandchildren 60 days to work out a deal with their lender or vacate their three-bedroom house.

While the Obama administration prepares to unveil on Wednesday its plan to rescue the U.S. housing market, officials here in Lee County have come up with their own unique plan for dealing with the crisis. To clear a huge backlog of foreclosures, judges are hearing "rocket dockets" of nearly 1,000 cases a day and calling retired colleagues back to the bench to help ease the workload.

The housing crisis has been pounding the Florida court system like a Category 5 hurricane. Not only does the state have among the highest default rates in the country, its legal system, unlike many other states with devastated housing markets, requires judges to sign off on foreclosures. The combination has created a monster glut of cases that are overwhelming the courts. The Obama plan to encourage more loan modifications nationally may stem the flood of foreclosures in Florida somewhat, but Lee County officials say that the area's large number of unemployed residents and housing speculators may end up losing their properties anyway.

Hard-Hit County

Charlie Green, Lee County's clerk of the circuit courts, says the county is still on pace in February to exceed new filings in January and there's a hearing on Thursday with 800 foreclosure cases. "All these plans that the government has come up with are great," says Mr. Green. "But it doesn't help us get these cases off our books."

No area has been hit harder than Lee County, a largely working-class and second-home enclave, where Ponce de León is believed to have wandered in search of gold and conquest in the 16th century.

Modern-day treasure seekers invaded this area during the recent housing boom, snapping up houses and parcels of land, hoping to flip them to retirees and working families. Millionaire University, an unaccredited program in nearby Cape Coral, taught speculators from around the country how to buy and sell properties for huge profits. From 2000 to 2005, house prices in Cape Coral more than doubled.

Two years ago, the Lee County court system had about 1,900 foreclosure cases on the books. That number swelled to 24,000 by the beginning of this year. "We have to move these cases out of here,'' says Mr. Green. "That's how we get these houses back on the market and get to the bottom faster."

Many defendants in Fort Myers are speculators who never lived in the houses and don't bother to show up for the hearings or respond to court summonses. But some of the homeowners who do come to court are annoyed that they're given only a few seconds to speak to the judge.

"The judge didn't want to hear from me," said a frustrated Reed Morgan, a self-employed business consultant, wearing loafers and a blue oxford shirt, after Judge Carlin gave him 60 days to work out a modification plan with his lender or vacate his three-bedroom house.

Minutes after the bailiff opened the courtroom doors at a recent hearing, every seat was filled with delinquent homeowners: a mechanic with two pierced ears and a goatee, a young woman in a car-rental uniform, a gray-haired landlord who rehearsed his lines with the woman next to him.

"It's like the Exodus," said Ms. Hill Scott, a middle-school teacher who went into default after her monthly payments on her adjustable-rate mortgage reset. She now owes $3,300 a month, up from the $1,600 she was paying a year ago. She says she hasn't made a mortgage payment since January 2008 and is in negotiations with her lender seeking a modification.

During a break in the hearing, lawyers used dollies to wheel in boxes containing hundreds of case files, which they piled onto tables and on the floor.

One lawyer, wearing a dark suit and untucked white shirt ran between the judge's bench and the dozens of open boxes on the floor. His colleagues sat cross-legged on the courtroom floor, sorting through files.

The judge signed dozens of them without discussion and passed them to a row of court employees to process the paperwork.

"Case No. 136," the clerk intoned. "Wells Fargo versus Edward Callahan."

Judge Carlin asked whether the man was living in the house and was current on his mortgage. He answered no to both questions.

"Your house will be sold in 45 days,'' said the judge. "That's all for today."

Case time: 15 seconds.

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How to Fund Retirement Living

tsaleen — Fri, 02 Jan 2009 18:20:00 GMT

The Wall Street Journal - December 22, 2008

Older Americans who banked on selling their homes to finance care in assisted-living facilities and retirement communities have seen their dreams go up in smoke amid the housing-market bust. At the same time, their investment portfolios have nose-dived.

In these rough economic times, funding long-term care poses a challenge for seniors and their families. There are a range of strategies you can pursue.

For people without long-term care insurance, which is the majority, the financial hit can be hard if care is needed. The average cost of a private room at a nursing home runs $76,500 per person annually, while a one-year stay in a one-bedroom unit in an assisted living facility costs $36,000 and periodic care from a home health assistant at $18,000 or more per year doesn't come cheap.

While there are no easy answers, shopping around, switching the care setting, pooling family finances and looking at loan options can be conduits to affordable care.

Many independent-living and assisted-living facilities, in particular newer facilities or those that embarked on ambitious expansion plans when the economy was riding high, are offering specials to boost flagging occupancy rates.

"Many facilities are offering to defer rent until seniors can sell their homes or are offering lower introductory rates for the first six months" as sweeteners, says John Temple, chief operating officer at A Place for Mom Inc., a national senior-housing referral service. (The service is provided free to consumers. A Place for Mom is compensated by the facilities when a senior is placed.)

Many facilities will waive the "community fee," a deposit typically equivalent to one-month's rent, for those who ask. The best deals to be had are often at smaller residential homes because they need to fill vacancies quickly and have more latitude to cut individual deals, according to Mr. Temple.

Continuing-care retirement communities, which offer more health services as seniors age, typically require entrance fees of hundreds of thousands of dollars, plus monthly fees.

Cheryl J. Sherrard, a certified financial planner at Rinehart & Associates in Charlotte, says switching to a smaller apartment can be a money-saving strategy for older Americans who've set their hearts on moving into a specific retirement community.

"I've seen communities allow couples to move in with a percentage of the entry fee due initially, but a delay on the remainder being due for a period of six months after move-in," giving seniors wiggle room to complete the sale of a house, she says.

"Retirement communities backed by nonprofit religious organizations can be a more-affordable option," says Karen Schaeffer, president of Schaeffer Financial in Rockville, Md. (These communities welcome people of all beliefs.)

Mr. Temple recommends asking independent and assisted-living facilities about "non-premium rooms" that can be real bargains, but generally aren't advertised. Longer walks to the dining room and less desirable layouts or views account for the cheaper rates. Having a roommate might not be everyone's cup of tea, but "companion rates" can shave $1,000 a month off rent for single seniors who are willing to share, he says.

Widening your geographic search even by just a few miles can produce more budget-friendly options, says Karen Altfest, vice president of L.J. Altfest & Co. Inc., a fee-only financial-planning firm in Manhattan.

Family members can pitch in toward the cost of care in a variety of ways. For instance, individuals can make gifts of up to $12,000 per person per year without paying a federal gift tax. That exclusion amount will increase to $13,000 in 2009.

Another option is an intrafamily loan. This could provide a mechanism for adult children to lend money to cash-strapped parents who need funds now to pay for care until they can sell their homes.

A reverse mortgage is another option. Reverse mortgages enable homeowners age 62 or older, who own their home outright or have a small mortgage balance to convert home equity into cash without selling the house. The Home Equity Conversion Mortgage, or HECM, insured by the Federal Housing Administration and backed by the U.S. Department of Housing and Urban Development, or HUD, is the most popular kind. Lending institutions also offer their own proprietary products.

The amount you can borrow will depend on your age, how much your home is worth and current interest rates. For a HECM the limit is $417,000, but proprietary products may allow you to borrow more.

Payments can be taken as a lump sum, in regular installments or as needed, or through a combination of these options. The accrued principal and interest comes due when the last borrower dies, sells the home or moves out permanently.

A big drawback of a reverse mortgage is the high fees, which closely mirror the closing costs on a regular mortgage.

For this reason, says Sue Hunt, a housing counseling programs manager for Consumer Credit Counseling Service of Greater Atlanta, reverse mortgages tend to make the most sense for people who want to spend the rest of their lives in their homes and whose total income, including the loan, will be sufficient to cover all their future expenses, she says.

With any type of loan, it's important to ensure you understand the fees, interest rates and repayment terms.

For instance, an important safety feature of an HECM is that your payments from the lender are guaranteed by the federal government. Plus, if your home is sold for an amount lower than the value of the loan, neither you nor your heirs will be liable for the balance, which isn't always the case with proprietary products.

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