National Elder Abuse Resources and Colorado Financial Elder Abuse Mandatory Reporting Law

Elderly folks tend to be more trusting and less informed of the latest scams, making them the perfect target. To learn more about elder abuse, on the national level, two great resources are the National Committee for the Prevention of Elder Abuse and the National Center on Elder Abuse.

In Colorado, there is the Colorado Coalition for Elder Rights and Abuse Prevention.

As well, Colorado has a mandatory reporting law (including financial abuse) for certain categories of professionals and other workers.

Sadly, it is all too common where a family member is committing financial abuse of a parent, grandparent or other senior family member.

While it is encouraged that reporters of elder financial abuse contact local law enforcement, we’ve learned many local law enforcement agencies are unaware of the Colorado financial elder abuse law and are not trained on how to deal with it.

To report elder abuse in Colorado, the first option is to contact the Adult Protective Services (APS) intake office within the county department of human services were the at-risk adult lives. Click anywhere in this sentence for a current list of phone numbers to report elder abuse.

If reporting to the county APS office is not a viable option, contact the District Attorney’s office for the county in which the at-risk adult lives.

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Financially Speaking™ James Spray RMLO, CNE, FICO Pro | CO LMO 100008715 | NMLS 257365 |August 26, 2017

Notice: The information on this blog is opinion and information. While I have made every effort to link accurate and complete information, I cannot guarantee it is correct. Please seek legal assistance to make certain your legal interpretation and decisions are correct. This information is not legal advice and is for guidance only. You may use this information in whole and not in part providing you give full attribution to James Spray.

Do you prefer a ReLOC or HELOC? – Tools for Retirement Planning

Tom Davidson has written and illustrated another great article which I know you will enjoy reading. Here are the first few paragraphs which lead into the link to his wonderful presentation:

“HELOCs (Home Equity Lines of Credit) are widely used. Simply having one makes many people more comfortable. My wife and I had a standby HELOC for many years – ready to use as a convenience or in an emergency. Luckily that emergency never happened, but we felt well prepared knowing we had ready access to a substantial amount of cash that could be used for anything we needed. When I was a financial advisor, a HELOC was on my checklist to discuss with every client – at least those who were prudent with their money.

ReLOC: A Retirees Line of Credit

Is there a better alternative for homeowners over age 62?  A ReLOC may be a far better choice for many retirees. ReLOC is a nickname that stands for either Retirees Line oCredit or Reverse Mortgage Line of Credit. While ReLOCs share many features with HELOCs, three unique features make a ReLOC a line of credit designed for retirees:

  1. The amount you can access grows every month
  2. You don’t have to make payments until you permanently leave your home
  3. The loan can’t be canceled, reduced, or frozen as long as you keep up with basic mortgage obligations (property tax, homeowner’s insurance, basic maintenance, and Homeowner’s Association dues).

Here’s the borrowing limits for a ReLOC and a HELOC for a 63-year-old in a $400,000 house who lives to age 99:”

Source: Do you prefer a ReLOC or HELOC? – Tools for Retirement Planning

Romance and Credit Scores

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In addition to getting the best employment and the lowest interest rate on everything financed, including credit cards, home and auto loans, the prime potential partners in the dating pool are quickly thinned of those with inferior credit.

This is clearly highlighted in a post made by the Credit Slips summary of a Washington Post article which examines the working paper recently published by the Federal Reserve titled Credit Scores and Committed Relationships.

Barron’s Market Watch recently published an article titled, Nearly 40% of Americans want to know your credit score before dating. In part, this phenomena was summarized by University of Kansas Communications Professor Jeffrey Hall who stated,

By showing an interest in these three digits, people are probably being smart rather than shallow, says Jeffrey Hall, associate professor of communications at the University of Kansas. “Finances, education, and job prospects all factor into the value of a potential mate,” he says. “Assuming that people can actually interpret a credit score meaningfully, it makes sense they would think a credit score is useful in evaluating mate value.”

“…In fact, the higher your credit score, the less likely you’ll separate from your partner — and a lower score often means you’ll be less lucky in love, researchers at the Federal Reserve Board, the Brookings Institution and UCLA recently concluded.”

Your credit score has become such a popular character-meter that there are dating services based on them. A 2015 academic study found that “quality in credit scores, measured at the time of relationship formation, are highly predictive of subsequent separations.” The research suggested “credit scores reveal an individual’s relationship skill and level of commitment.” How More Americans Are Getting a Perfect Credit Score Bloomberg Suzanne Woolley, August 14, 2017.

I think it’s safe to predict that more and more people in the dating pool will become savvy to the benefit of checking one’s credit score before entertaining the possibility of a committed relationship.

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Financially Speaking™ James Spray RMLO, CNE, FICO Pro | CO LMO 100008715 | NMLS 257365 | Published November 13, 2015 – Updated August 16, 2017

Notice: The information on this blog is opinion and information. While I have made every effort to link accurate and complete information, I cannot guarantee it is correct. Please seek legal assistance to make certain your legal interpretation and decisions are correct for your situation. This information is not legal advice and is for guidance only. You may reproduce this information in whole and not in part, providing you give full attribution to James Spray.

Reverse Mortgages and the Under-Age 62 Spouse

The-Good-News

New Rule on Reverse Mortgages

A new rule has been issued which allows that a reverse mortgage (HECM) shall protect borrowers even when one spouse is younger than 62. Both the  purchase or traditional reverse mortgage amount will be based on the younger spouse’s age. Given the number of variables, and the complexity with how these new factors work please contact your trusted reverse mortgage loan originator.

For all FHA case numbers issued on or after August 4, 2014 this revolutionary new rule becomes effective. This rule will allow younger spouses of borrowers that no longer live in their home to stay in their home without the threat of foreclosure. In a nutshell, the requirements are this:

  • They must have been married when the mortgage was taken,
  • Have remained married,
  • The surviving spouse shall continue to pay taxes, insurance, and HOA fees (if applicable).

Prior to August 4, 2014, the full repayment of the reverse mortgage was due and payable following the death of the borrower, leaving the surviving spouse whose name was not on the mortgage in the lurch for the debt or forced to sell the home. This change defers that settlement until after the surviving spouse’s death.

This new rule comes at a cost. Lenders factor in the age of the younger spouse when calculating the reverse mortgage payout; in a nutshell, the younger the spouse the longer the loan will be outstanding resulting in the lesser payout.

Reference: FHA Mortgagee Letter: ML 2014-07

Readers of this blog may also wish to read: What Is A Purchase Reverse Mortgage? as well as The New Reverse Mortgage.

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Notice: The information provided is not intended to be an indication of loan approval or a commitment to lend. Additional program guidelines may apply. Information is subject to change without notice.
DISCLAIMER – This post does not represent that any of the information provided herein is approved by HUD or FHA or any US Government Agency or Department.
Financially Speaking™  James Spray, MLO, CNE, FICO Pro 
CO LMO 100008715 / NMLS 257365 | August 2, 2014

 Notice: The information on this blog is opinion and information. While I have made every effort to link accurate and complete information, I cannot guarantee it is correct. Please seek legal assistance to make certain your legal interpretation and decisions are correct. This information is not legal advice and is for guidance only. You may use this information in whole and not in part providing you give full attribution to James Spray.

Eliminating Mortgage Insurance

  Confused Yet

Is it Necessary to Refinance to Eliminate Private Mortgage Insurance?

In short, the value of the property must exceed the loan balance by 20% due to additional payments made such that the principal balance has been reduced to 80% and the request has been made in writing to eliminate the Private Mortgage Insurance (PMI).

The answer depends on a few factors. If the loan type is a conventional mortgage and had a greater than 80% loan to value and was closed on or after, July 29, 1999 the following applies per the Homeowner Protection Act as discussed by the Consumer Finance Protection Bureau (CFPB):

“The Homeowners Protection Act gives you the right to request that your lender cancel PMI when you have reached the date when the principal balance of your mortgage is scheduled to fall to 80 percent of the original value of your home. This date should have been given to you in writing on a PMI disclosure form when you received your mortgage. If you can’t find the disclosure form, contact your lender.   You can also make this request earlier if you have made additional payments to reduce the principal balance of your mortgage to 80 percent of the original value of your home.”

  • The payment history must be good and the payments current.
  • Your request must be in writing to the proper address in an acceptable format such as the RESPA letter.
  • The lender/servicer may require you to provide an appraisal to prove the value of the property has not declined below value when the loan was funded. Note: This is not to prove that your home value has appreciated.
  • The lender/servicer may require you certify that there are no junior liens (second mortgage, HELOC, judgment or tax liens).
  • Send a QRM your servicer if you are unable to locate the PMI disclosure form you received at closing.
  • If you do not contact your servicer to eliminate the PMI, the PMI is to automatically drop off once the loan has been paid down to 78% of the funded loan.

Click here for the CFPB link on eliminating PMI.

Click here for the August 4, 2015 CFPB update for mortgage servicers.

If you have Lender Paid Mortgage Insurance (LPMI) the only way to eliminate LMPI without selling the property is to refinance. As always, this is a business decision. How much will you save in what period of time by eliminating the LPMI. It’s worth noting that LPMI may be tax deductible (check with your tax advisor to make sure).

Is it Necessary to Refinance to Eliminate FHA Mortgage Insurance Premium?

If the loan is an FHA Insured mortgage it has Mortgage Insurance Premium (MIP). For mortgages with an FHA case number assignment date on or after June 3, 2013, the FHA monthly mortgage insurance can only be terminated by the servicer or holder if the mortgage is paid in full before the maturity date. The exception to this rule is the FHA Streamline Refinance.

Again generally speaking, providing accelerated payments were made such that the unpaid principal balance is 78% or less of the original loan balance, the MIP can be eliminated prior to the originally scheduled cancellation date. For several years prior to the change implemented on June 3, 2013 the mandatory time for the MIP was 84 months.

In short, if you wish to eliminate the MIP prior to the termination date of the MIP, as explained by the CFPB, you’ll find it necessary to refinance.

Can You Refinance to Eliminate Mortgage Insurance?

Providing the property has sufficient equity to eliminate PMI or MIP (20% equity) and there are no junior liens (above discussed), the mortgage loan may be refinanced into a conventional loan eliminating the PMI or MIP. As always, this is a business decision. How much will you save over what period of time by eliminating the PMI or MIP. Next calculate your costs in purchasing another first mortgage. Remember, there is no such thing as a free lunch.

If You Are Being Solicited to Refinance Here’s a Suggestion:

Before investing the time and expense of applying for a refinance, make sure the solicitor is in fact both an NMLS Registered Loan Originator as well as Licensed by the CO Division of Real Estate or, the state in which you reside; if they are, obtain their NMLS Number and their CO License Number as well as their contact information. If they are neither, they are merely a lead generator and get paid only by the number of leads they generate. This doesn’t mean that which they are selling can’t be done; it just means you may wish to be extra vigilant as they may not have your best interests at heart.

A licensed mortgage loan originator has a much higher level of interest in helping to protect your interests. Therefore, you may wish to avoid the lead generator altogether. Discuss your refinance possibility with your State Licensed, NMLS registered loan originator.

The Bottom Line: Before You Pay For an Appraisal

Make sure you are dealing with someone licensed and make sure it makes business sense prior to shelling out several hundred dollars for an appraisal. With the refinance there will also be many more hundreds or perhaps several thousand dollars in new costs to purchase a new mortgage. Not insignificant is how many more months or years the refinance will add to your total cost. Consider as well how long you really will keep the house on which you are contemplating the refinance.

Image credit: Google Images

Financially Speaking™  James Spray, RMLO, CNE, FICO Pro |CO LMO 100008715 / NMLS 257365 | August 8, 2015

Notice: The information on this blog is opinion and information. While I have made every effort to link accurate and complete information, I cannot guarantee it is correct. Please seek legal assistance to make certain your legal interpretation and decisions are correct. This information is not legal advice and is for guidance only. You may use this information in whole and not in part providing you give full attribution to James Spray.

QWR: The RESPA Letter

 

Federal Reserve Board Building

Federal Reserve Board Building

QWR: The RESPA Letter

Most reading this post are reading it for a particular reason which is to learn about writing a letter to a mortgage lender and/or servicer regarding a specific problem or situation such as requesting the mortgage servicer report your payments to the credit bureau(s). For some, it may be that your mortgage servicer or bank is reporting incorrect information or you may need specific documentation. For others, perhaps this is being read for informational purposes. In any event, we trust the reader finds this information helpful.

 Step 1. Contact your mortgage servicer for the correct address for correspondence. This will be the legal address of the servicer. Some servicers will have a specific address for a Qualified Written Request (QWR). This is  a different address than where you mail the payment or from where you get the periodic statements. This procedure was established per the Real Estate Settlement Procedures Act (RESPA).

 Step 2. You may utilize the following template provided by HUD for your QWR. Or you may click here to open and read the information or you may copy and paste the pertinent paragraphs (opening and closing) as show below. Focus your thoughts and keep your letter brief and specific to the topic. less-is-more - erickimphotography.com

“Attention Customer Service:

Subject: [Your loan number]

[Names on loan documents]

[Property and/or mailing address]

This is a “qualified written request” under Section 6 of the Real Estate Settlement Procedures Act (RESPA).

I am writing because:

  • Describe the issue or the question you have and/or what action you believe the lender should take.
  • Attach copies of any related written materials (as applicable).
  • Describe any conversations with customer service regarding the issue and to whom you spoke.
  • Describe any previous steps you have taken or attempts to resolve the issue.
  • List a daytime telephone number in case a customer service representative from the legal department  wishes to contact you.

Sincerely, [Your name – Printed and Signed]

I understand that under Section 6 if RESPA you are required to acknowledge my request within 20 business days and must try and resolve the issue within 60 business days.”

If you are satisfied with the resolution to your situation, you may wish to compliment the servicer by sending a note to the Consumer Financial Protection Bureau (CFPB or Bureau) via their Comment Form.

Step 3. Send your QWR via Certified Mail Return Receipt. Keep copies of your letter and any enclosures as well as your Certified Mail Receipt from the post office and the Return Receipt from your mortgage servicer proving they have received your QRM

Finally, if you are still unable to resolve the situation, there is a complaint process that may get action. We suggest this be your last and not first step as you will then have evidence which will indicate to the Bureau that the servicer is either unwilling or unable to address your situation. Mortgage Complaint Form

There’s a New Sheriff in Town?????????????????????????????????????????

The following is excerpted from the prepared remarks of Steven Antonakes, Deputy Director of the CFPB which he presented to the Mortgage Bankers Association National Mortgage Servicing Conference in Orlando, Florida on February 19, 2014.

“…My message to you today is a tough one. I don’t expect a standing ovation when I leave. But I do want you to understand our perspective. I would be remiss if I did not share it with you … if you choose to operate in this space (mortgage servicing), the fundamental rules have changed forever. It’s not just about collecting payments. It’s about recognizing that you must treat Americans who are struggling to pay their mortgages fairly before exercising your right to foreclose. We have raised the bar in favor of American consumers and we are ready, willing and able to vigorously enforce that bar.

Ultimately, these profound changes will be good for all Americans, including industry. But please understand, business as usual has ended in mortgage servicing. Groundhog Day is over. Thank you.”

Sheriff – Update

In a June 22, 2016, Press Release, the CFPB said, in part: “In 2013, the CFPB established mortgage servicing rules designed to protect consumers against many of the practices that plagued the mortgage servicing industry during and after the housing crisis.

According to the CFPB, the rules require servicers to maintain accurate records, give troubled borrowers direct and ongoing access to servicing personnel, promptly credit payments, and correct errors on request.”

In addition to sending your RESPA letter, do not hesitate to file a complaint, with the CFPB. Click here for the particular complaint link.

The Bureau’s Enforcement Power – One Example

As an example of the Bureau’s enforcement authority, RealtySouth™, a Berkshire Hathaway Affiliate, was recently fined $500,000.00 for a RESPA violation which amounted to failure to disclose their affiliated business relationship(s) to consumers. This is a typical example of the enforcement action undertaken by the Bureau as one may readily determine with an Internet search. For those who don’t recognize the name Berkshire Hathaway, it is largely owned by one of the world’s wealthiest persons. Clearly, wealth does not buy immunity from the CFPB.

Exceptions to QWR: Those transactions excluded from the QWR are limited to “(1) subordinate lien loans or (2) open-end lines of credit subject to TILA, whether secured by a first or subordinate lien.”* Further, “(a) request does not constitute a QWR if it is delivered to a servicer more than one year after either the date of transfer of servicing or the date that the mortgage servicing loan was paid in full, as applicable.”*

NOTICE: I am not an attorney nor am I providing legal advise. This post is for educational purposes only. The images are for illustration only and not meant to imply in any way an endorsement or authorization by any government agency or authority of this blog or this post.

* Jonathan Foxx, President & Managing Director Lenders Compliance Group

Image Attribution: erickimphotography.com and  CFPB

Financially Speaking™  James Spray, RMLO, CNE, FICO Pro | CO LMO 100008715 / NMLS 257365 | Rev. June 16, 2016

 Notice: The information on this blog is opinion and information. While I have made every effort to link accurate and complete information, I cannot guarantee it is correct. Please seek legal assistance to make certain your legal interpretation and decisions are correct. This information is not legal advice and is for guidance only. You may use this information in whole and not in part providing you give full attribution to James Spray.

Boomerang Buyers – Welcome Home!

boomerangAs was written so eloquently by John Rebchook of Inside Real Estate News in his June 20, 2013 article Boomerang Buyers return to market , “Tens of thousands of home owners who lost their homes in the Denver area during the Great Recession may now be qualified to once again buy a home.

“’Depending on the loan program the formerly distressed home owner had, the circumstances of the default and efforts made to improve their credit scores, they may be able to qualify for a new mortgage in one year*,’” said Jim Spray, a veteran lender… ‘“A large number of industry professionals, including me, are calling these Boomerang Buyers…’”

Homeowners are returning to the housing market following a short sale, foreclosure or deed-in-lieu of foreclosure. This phenomenon of rebound or boomerang buyers is not without critics, but they enjoy the strong support of Housing and Urban Development Secretary Shaun Donovan, who was quoted in a November 2012 Denver Post article titled FHA providing buying opportunities to those who defaulted on homes, “the FHA has tightened its standards significantly but must still lend to those who wouldn’t otherwise qualify for a mortgage. It’s crucial for families to ‘show that they are responsible, that they have worked hard to reestablish their credit.’”

Simply becoming eligible based on the mandatory mortgage market time-out does not by itself mean that buyers will necessarily qualify to be approved for a mortgage. Lenders require borrowers to have strong FICO®  scores and qualify with sufficient acceptable income. An excellent tool to help determine your FICO score range is the FICO® Score Estimator. If it is not a FICO Score, the chances are the score is what I call a FAKO Score.

The Chart Of Facts: How long after bankruptcy or foreclosure must you wait to get a mortgage?

FACT: One can qualify for a new home purchase loan three years after a short sale, foreclosure or deed-in-lieu of foreclosure. Such requires a proactive approach by the borrower.

FACT: One can qualify for a new home purchase loan just two years after a Chapter 7 Discharge. Again, this requires a proactive approach by the borrower.

The number of potential Boomerang Buyers, just in Colorado is substantial. There were 42,692 foreclosure filings in the state in 2010 and 27,113 Chapter 7 Bankruptcy cases filed.  Giving people a second chance — even a third chance — is as deeply ingrained in the American psyche as is owning a home, the American Dream. Welcome home Boomerang Buyers!

 Boomerang Buyers Are Expected To Boost The Economy In 2014

According to a poll of LoanSafe.org and AfterForeclosure.com’s members:

  • 79 percent of those who lost their homes are interested in buying again.
  • 41 percent have incomes higher than when they first purchased.
  • 63 percent report that their other debt obligations are lower (30 percent said “significantly lower”).
  • 46 percent report the desire to purchase in a lower price range, and 29 percent report wishing to purchase in the same price range.

According to an article in Bloomberg Businessweek, it is possible that rental payment reporting may become a part of certain credit reports; time will tell is this information is accepted by the mortgage giants Fannie Mae and Freddie Mac.

Update: As reported in Distress Servicing on July 25, 2016 under the headline – Boomerang Buyers Bounce Back

It was also reported that boomerang buyers are, on average, four times more likely to finance with FHA loans than traditional non-distressed, owner-occupied repeat buyers. FHA loans are, as a general rule, easier to obtain than conventional loans for cash-strapped borrowers with past foreclosures in their credit history because FHA guidelines allow potential borrowers to apply for a loan three years after the foreclosure sale date with a minimum 3.5 percent down and a credit score of at least 580.” Click here for the full article.

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Financially Speaking™  James Spray, MLO, CNE, FICO Pro | CO LMO 100008715 | NMLS 257365 | Updated August 1, 2016

 Notice: The information on this blog is opinion and information. While I have made every effort to link accurate and complete information, I cannot guarantee it is correct. Please seek legal assistance to make certain your legal interpretation and decisions are correct. This information is not legal advice and is for guidance only. You may use this information in whole and not in part providing you give full attribution to James Spray.

*Correction from two years to one year made on 8/20/2013.