As part of the $26 billion National Mortgage Settlement announced earlier this year, big banks contributed $400 million to Attorney General Kamala Harris’s office to administer the relief from the settlement. Just last Friday, Attorney General Harris announced that more than half of the funding would be given to housing counselors and legal service agencies who help homeowners avoid foreclosure.
Then, yesterday, Governor Jerry Brown announced his May revision to the state’s budget, which included his plans to raid those funds to plug budget holes. Governor Brown is following suit after several other states have announced their own intentions to raid this necessary funding.

Housing counselors and legal service agencies will definitely struggle and millions of homeowners across the state will suffer because of the losses.  Attorney General Harris negotiated with the big banks for this funding to expand the capacity of housing counselors and service providers. This $400 million needs to be preserved for the purposes of housing counseling, so that counselors can try to meet the growing demand for their services.  I hope these agencies have a B plan because I’m sure they were depending on this money.

FICO scores are increasingly important in today’s economy.  The reality in the housing market right now is that unless you have nearly perfect credit, it is difficult to get a home loan.  The only way to keep good credit is by paying your bills on time.  On the face of it, that shouldn’t be terribly difficult if you have a job and don’t purchase more than you can afford.  However, if you find yourself in a crisis, your credit score will take a nosedive, very quickly.  The people that already do have homes are getting very little grace from their own banks if they have a family disaster that impacts their finances, whether it might be unexpected medical bills or the loss of a job.

Dire things happen when the government can’t pay their bills.  We are seeing more and more people who work for their local, state and federal governments who are being laid off or furloughed for a extended period of time, putting them in a difficult position.  Without knowing whether their job will continue, or when, they are unable to move on to a new position or career, effectively putting them in job limbo.  All of this is happening at the same time the government at large is arguing about larger government or smaller government and refusing to pay the people they have already hired.  When these
government employees are furloughed, disaster begins to trickle down.  The government can’t pay their employees, so those employees can’t pay their bills.  Lucky for the government – they don’t have a FICO score to maintain.

The bottom line is that nobody is getting a break.  Things we need to buy every day are more expensive than ever and people need their jobs in order to pay their mortgages.  Banks are more skittish than ever because of the recent downturn in the economy and require their note-holders to pay their mortgages on time or face penalties.  When you add the government’s erratic behavior to the mix, the trickle down effect means that no one is getting the help that they need, and there is nothing left in the cupboard for a rainy day.  People are living on fumes.

What’s the solution?  For you and me, it’s to be careful with our jobs and our finances.  For the government, it’s to help the people that really need help without being hypocritical.  It’s time for the government to pay attention to their own FICO score.  We’d all be better off for it.

The bottom line is: If the Federal Government credit rating is slipping, The States credit rating is slipping and your Local cities credit rating has slipped.

Why does the government, creditors and banks expect individuals to have great credit or high FICO scores to get loans??

Podcast: Senior Downsizing during Part 1

Reverse Mortgage loans allowed people at least 62 years old to tap the equity in their homes for cash. The products are known for having high upfront fees, and consumer advocacy groups have warned the complex loans are fertile ground for scams and deceptive marketing.

Times and changed and the reverse mortgage program is behind the times and very risky.  Seniors as well as their siblings are having problems paying the loans back.  The families abilities to meet the obligations of homeownership and reverse mortgages, such as paying property taxes and homeowner’s insurance, has grown difficult because of unpredictable home values and restrictions associated with reverse mortgages.

Reverse mortgage loans and its interest are due when the borrower dies, moves, sells the house or fails to pay property taxes or homeowner’s insurance.  There is a 1 year statute of limitaion for the family member to pay it back from date of death.  This is not happening.  There is also a increased number of short sale transactions on the reverse mortgage fence.    

The reverse mortgage business was about 2.2% of Wells Fargo’s retail mortgage volume and 1.2% of overall mortgage volume.  Met Life Bank will be picking up a line share of this business in the near future.

Probate, trust and Estate Attorney Andrea Van Leesten is going to dig deep and explore ”WILLS”.  If your love one passes, where is the will? who is named? It it legit? Is it on a kitchen napkin or drafted by a professional or non-professional?  Eliminate stress and protect your family assests at time of loss.  E-mail your questions to questions@wetalkrealestate.com.

 Podcast: Exploring Last Wills and testaments with Atty Andrea Van Leesten