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Thursday, April 16, 2009

Show Me The Money!

Have you gotten yours, yet? I got two. I’m betting I’ll get more -- Info packets for Reverse Mortgages. One was weirdly generic and didn’t seem to have any contact info. The other, from True Compass in Paso Robles, offers several free lunches at the Madonna Inn (April 30 or May 5th at 11 a.m.) or a free dinner seminar at the matador Room in Paso Robles (April 28th 4 pm..) They even sent along four complimentary tickets for me and some friends. Show up, get some eats and get some information on Reverse Mortgages.

Why this sudden interest? I live in Los Osos and a whole lot of people who live in Los Osos, if they’re over 62 and are cash poor but house rich, will soon face eviction for non-payment of their sewer bills, so Reverse Mortgage companies are making sure their products and information about their products are available to their potential clients.

I’ve spoken with some folks who’ve gotten these packets who grumble that it’s like the vultures circling in for free dead meat. But I don’t view it that way. It’s smart business and for many people, the “vulture” may turn out to be a saving grace.

Some time ago, thinking I might like to write a column about this, I had a sit-down with Chrys Barnes from Capitol Mortgage here on Los Osos Valley Rd. (541-5353 if you’d also like to chat with her). I was quite surprised with what she had to tell me, since what little I knew about RMs turned out to be, not only way out of date, but the various horror stories I had vaguely heard about usually applied to foolish loans written on houses located in Hog Spit, Nowhereville, but not houses here on the Gold Coast. Not, at any rate, if the RM is prudently structured and used properly.

So, I’m gonna call the number given on this particular Seminar offer (1-800-508-0679) and make a reservation for one of the lunchie-poo dates at the Madonna Inn and go and take notes and report back here. If you didn’t get one of these packets, you could call True Compass, 1502 Spring St #D in Paso Robles. The seminar presenter is Katie Bateman. See if she can send you some tickets.

Some of the things that became clear when talking with Ms. Barnes was that there are a lot of different “products” now than there used to be, a lot of the rules have changed and, best of all, anyone considering an RM must pay for a loan review/audit ”educational class” given by a qualified independent personage. Said review ensures that the loan recipient has the right loan for their circumstances, understands thoroughly how the deal is structured, reviews the pros and cons and costs with a neutral person and has the loan looked at for real-time feasibility, thereby avoiding the predatory shenanigans we’ve recently seen by sub-prime mortgage brokers mugging, fleecing and then tossing their “clients” under the bad loan bus.

When I have mentioned RMs in the comment section of this blog, the usual “anonymous” reply comes in the form of cries about high fees and interest. True. The “downside” of any loan is always points, fees, and interest. However, there are several balancing upsides that people often don’t think about.

1.Compare the overall fees with the cost of packing up your home and moving. If you haven’t gotten a guestimate on what it costs to move an average 3 bedroom home, you’re in for an awful shock.

2. If you’ve owned your home for a long, long time and you sell your home and buy another one at today’s prices, unless you can somehow take your tax rate with you or have that put on hold (another kind of “reverse tax mortgage” with the taxes coming due when you die or sell the home or you forget to file the paperwork each year at which point all the taxes come due putting you into another pickle), the amount you’ll pay in increased property tax will likely come close to what you would have had to pay for the sewer you couldn’t afford in the first place, which is why you’re moving.

3. The loss of friends, family nearby, community connections, with the stress of pulling up stakes and starting all over again, is particularly hard on elderly people, with often devastating health consequences. And devastating health consequences also cost a whole lot of money as well.

4. Even though the overall housing market has dropped, Los Osos is part of The Gold Coast. The sewer is being sized to limit build-out here to a set rate, the town is ringed by green-belts, there is no water for additional homes, so the result is that whatever homes are here is it. This town has been gradually Yuppifing and aging (there’s a reason Sunnyside school is closed; Baywood elementary school will likely follow in a few years as younger families are priced out of the market, with the $200+ a month sewer fee helping that process along). This Yuppification will continue as wealthy Boomers retire, sell their very pricy homes in L.A. and S.F and look around for a little bit of Paradise to settle down in. And what’s not to love about Los Osos?

For many seniors (over 62) who bought their homes years ago, I have no doubt that a (prudent, conservative) reverse mortgage would enable them to live out their days in their homes with the eventual resale value of that home re-paying for that loan or at least a portion of it (the sewer’s scheduled for a 30-year pay back rate, so new home buyers will be picking up that cost as part of the cost of that home, yea unto the end of time), still leaving the RM holder/sellers (or their heirs) to still walk away with a nice bundle.

As I said, the cost of money is always the cost of money. But that should be weighed against other costs for any seniors who have sufficient equity in their homes, who may be house- rich but cash poor, and who are facing eviction and loss of their homes because they don’t have the income needed to pay for this sewer.

So, I’ll wander down to the Madonna Inn, notebook in hand, and report back. I suggest some of you might want to do the same.

24 comments:

Watershed Mark said...

Three things(at least) to consider:

1- The Value of homes today is what the RM will be based upon.

2- There is a Storm Sewer Saga on the horizon to pay for and that cost should be explored and considered as it could be sizeable.

3- The final cost of this current "process" is still unknown.

Churadogs said...

The final cost is unknown, the additional costs of flood control, increased water costs, etc. are all coming up, certainly something anyone looking at RMs need to keep in mind. What I'll be curious to find out from the sminar is how the rules have changed vis a vis total amounts available. And, of course, a lot depends on the amount of"free and clear" equity someone has. In short, every person's case will be individual and so would need looking at carefully. Which is why I'd advise anyone considering options goes and checks this option out. may not work for them, or it could. Would ned to get as much info before making any decisions. And while it's now premature to do anything right this minute, now's the time to get info, if nothing else.

Alon Perlman said...

It's odd that one of the complaints against Stan Gustaafson, former CSD Director, as he lobbied for support for a former sewer plan, is that he supposedly said that people could use reverse mortgages to pay for the sewer bill. Is there some Sarcasem here?

RM is a valid method for individuals to obtain access to the equity in their homes.

Utilizing the "principle" (the Value of Actual property ownership)in ones primary life investment, in order to pay out a consumable (a utilites bill, the cost of not storing your wastes on your property)has some issues.

This exchange of real property for cash, can be likend to eating one's "Seed Corn", in other words, it is appropriate for the last seasons in a person's life. On the other hand, the attachement to a "Community Sewer" and infrastructure may be considered to raise the value of the property.

Whether the recipient of the secured reverse mortgage loan will see the incramental increase of value (cents to the dollar) depends on the timing of the loan in context of the market value when the loan is fixed.
So as the previous commenter noted- The sewer saga continues- a Reverse mortgage in Los Osos may not have the same risk benefit as a Reverse mortgage in Paso. And a RM today may not match the return on investment of an RM tomorrow.

So do follow Anns advice, (including Chardog's qualification- which just popped up in real time isn't the internet great? Instant gratification for the "me" generation) but be cautious. Remember who will be paying for that free coffee. Banks and lending institutions need to profit. To paraphrase Gordon Hensley in his last election- "It's your money".

GVD said...

The county has a program that will transfer your current property tax from the newly sold house to your newly purchased house in the county and even some other counties in Ca. The asssessor has the details.

Watershed Mark said...

Banks and lending institutions need to profit.

Until they need to be bailed out, with taxpayer's future funding.

Unknown said...

GVD... That exchange is worked under Prop 60 Rules... It works well in most cases where the transfer is within one county... Most outside counties will not accept county to county Tax Base Transfers... Be sure to talk to the Assessor's Office...

Churadogs said...

GVD sez:The county has a program that will transfer your current property tax from the newly sold house to your newly purchased house in the county and even some other counties in Ca. The asssessor has the details."

The issue then would be leaving your familiar community and friends and support network. That should take some serious thought. Plus, you'll also face realty fees and moving costs, which can be hefty. And, you might not be able to get the same size or quality of house for the same price. (If you're downsizing anyway, this won't be an issue.)

Alon sez:"This exchange of real property for cash, can be likend to eating one's "Seed Corn", in other words, it is appropriate for the last seasons in a person's life. On the other hand, the attachement to a "Community Sewer" and infrastructure may be considered to raise the value of the property."

Actually, rather than the seed corn metaphor, using a RM to hook up to a sewer system (houses on sewers are traditionally worth more than houses on septics), is more akin to using an RM to, say, put on a new roof, paint the house, renovate the kitchen and bathroom, add a master bed and bath, say, all big ticket items that end up getting most of the expenditure back upon sale of the house since those items increase the home's value. Using an RM to take a cruise around the world while the roof leaks and the house collapses from termite damage probably wouldn't be too smart. Unless you're terminally ill, have excellent health and end-of-life care and your funeral arrangements are all pre-paid, you have no heirs worth thinking about, then that likely would be a grand use of your home's equity. Bon Voyage!

Again, there are a lot of factors to be looked at with an RM. What I hope people who are in a panic out of fear they will be forced out of their homes will take the time NOW to seriously look into the options available before doing something they'll regret.

GVD said...

there are other programs to help seniors [62 and older} with their property tax. One is an assistance program and the other is a postponment program. To learn more go to the county assessor web site and put into the search space " property tax assistance " . Since the 25 K for the sewer is really a property tax these programs may go far to help low income seniors. That is if the state dosen't do away with them.

Churadogs said...

GVD sez:"To learn more go to the county assessor web site and put into the search space " property tax assistance " . Since the 25 K for the sewer is really a property tax these programs may go far to help low income seniors. That is if the state dosen't do away with them."

Thanks for the suggestion. I checked on that some time ago and it was clear then that you had to renew the request each year -- fill out forms, etc. If someone, perhaps in ill health, or having too many "senior moments "forgot" to fill the form out one year, the all witheld tax becomes immediately due and payable and if unpaid (if you're having tax held in abayence, the chances you'd have a huge lump sum to repay it is nil) and could catch some people in a mess, including foreclosure for non-payment, etc. So, that's something to think about as well.

Unknown said...

Just hand wringing and fear mongering Ann... You are only making things up... again...

Perhaps if you actually listened to the Assessor's Office, you would have heard that Exclusions and Exemptions are reviewed every year...

There are checks and balances, but I can see where an old gossip "columnist" bent on seeing only diabolical schemes in any form of government would see a conspiracity around every corner...

Unknown said...

Finally some sanity from the Tribune...

Friday, Apr. 17, 2009

"Seemingly endless Los Osos talk earns rebuke

County supervisors verbally spanked some Los Osos activists during a terse exchange this week, after the Los Osans lectured the board for cutting back on their speaking time.

“Our constituency is the entire county, not just Los Osos,” Supervisor Jim Patterson told the agitated townsfolk during the Board of Supervisor’s meeting Tuesday.

The tense exchange took place after Chairman Bruce Gibson limited discussion on Los Osos water and wastewater issues to 10 minutes in the morning public comment section and 10 minutes in the afternoon.

Gibson cited the “chairman’s prerogative” and said he was invoking it because many others in the audience wanted to speak on other subjects. In addition, numerous people were there for award presentations.

But Richard Margetson and others who regularly speak every Tuesday about Los Osos issues sternly criticized Gibson for, among other reasons, being anti-democratic. Los Osos regular Linde Owen suggested he and his colleagues were unethical.

Gibson replied that Los Osans had been given “unprecedented access” to speak their minds at public meetings.

Patterson, who faced the same sort of attack from Los Osans last year when he was chairman, noted Tuesday that there were “people who are here for agenda-ized items who have been waiting for an hour and a half.”

He said people from Los Osos spoke “Tuesday after Tuesday.”

The skirmish was the latest in a long string. Plans for a Los Osos sewer has occupied county government for decades, and those with an opinion on it have been sharing those opinions regularly and at length during public meetings.

This has placed supervisors in a bind. As they said Tuesday, citizens get to express their views to local leaders. But allowing them to speak without limit — Los Osos residents sometimes go on for an hour or longer — can cause others who are taking time off from work, for example, to leave without saying their piece.

In addition, the lengthy comments can make other parts of a meeting run late, and KCBX, the radio station that carries the discussions, stops broadcasting them at 5 p.m.

Los Osans have a special afternoon time exclusively for them the first Tuesday of every month. But they also can speak at times when the meeting opens up for general comments that are not on the agenda. Many, including a core group of 10 to 15, which includes Margetson and Owen, do so.

Deputy County Counsel Tim McNulty said the Brown Act and the board’s own rules of procedure allow Gibson to legally limit testimony in the way he did Tuesday.

“By specifically identifying 10 minutes in the morning and 10 minutes in the afternoon for non-agenda Los Osos water and wastewater items, Chairman Gibson was managing the agenda in an appropriate and legal way,” he wrote in an e-mail to The Tribune.

In fact, McNulty wrote, the current rules allow only 15 minutes of the entire agenda to be allocated for the public to comment on non-agenda items."

“After all, someone needs to take charge and run the board’s meetings,” he wrote."

.........and I particularly like the following comment....

"It is about time that someone put a stop to these Los Osos people stealing moments of our lives three minutes at a time ... they have nothing to say, they have added great cost to the sewer project by adding staff time to listen to their empty words ... they are only looking for self glory at everyone's expense (literally) Margetson and Owen are idiots of the first order and they should just shut up and go away."

Aaron Ochs - Managing Editor of The ROCK said...

Here's my response to today's Tribune article:

Click here!

Watershed Mark said...

MIKE wrote:"It is about time that someone put a stop to these Los Osos people stealing moments of our lives three minutes at a time ... they have nothing to say, they have added great cost to the sewer project by adding staff time to listen to their empty words ... they are only looking for self glory at everyone's expense (literally) Margetson and Owen are idiots of the first order and they should just shut up and go away."

MIKE: why don't you come out of your little closet, "man/woman up" run down to the BOS podium next week, stare into the camera, identify yourself(MIKE/MIKEY) and make your statements on the record?

What are you afraid of?

Churadogs said...

Mark sez:"MIKE wrote:"It is about time that someone put a stop to these Los Osos people stealing moments of our lives three minutes at a time ... "

Mike doesn't understand either the Brown Act or the whole concept of "public comment" or anything about how our governments are organized and run.

Unknown said...

...and does Ann understand the extra cost she and the other extremists "PLAN" to delay any sewer has cost this community...and all because she didn't like where it was going... actually she doesn't want any sewer and will fight to defend her right until every last penny is wrung out of the community...!!!!

Watershed Mark said...

Head to the BOS Podium MIKEY.

Unknown said...

If I have chosen to speak in a Public Meeting and/or Hearing I would have of course identify myself by name and address...and I may indeed have...and on more than one occasion...

...however, this "blog" is a wide open free for all where only a few have chosen to identify themselves... I simply choose not to in this form of communication...

I do believe I am representative of some 80% of the community who actually reside here and pay property taxes here...

It really does not matter to me what a snakeoil sales person, supposedly from AZ, thinks...!!!! I don't think very highly of his attitude or "sales" technique... I found him to be both a bore and an arrogant airhead who couldn't back up 50% of the salesbabble he spewed forth... He doesn't reside in Los Osos or even California, so why would I be concerned about his excessive desire to know me personally.... He is such an ass that no one is taking him seriously and certainly won't respond to his assine "demands" that someone provide a name on this "blog"... Would it matter if you or I called ourselves Lisa Schicker, Al Barrow, Julie Tacker or Ron Crawford or just Mike...??? Maybe I could be Phoenix Overdraft...???

I just could care less who anyone says they are... I'm concerned with the delays and high cost brought on by the few extremists... I'm only slightly concerned about anything a snakeoil sales person, supposedly from AZ, says... He and his attitude has already been rejected by the County...

Watershed Mark said...

Ann wrote: "Mike doesn't understand either the Brown Act or the whole concept of "public comment" or anything about how our governments are organized and run."

Ann, he continues to prove it.

Watershed Mark said...

MIKE: Are you saying that the Design-build law will not followed?

Realistic1 said...

"Mike doesn't understand either the Brown Act or the whole concept of "public comment" or anything about how our governments are organized and run."

Yes he does, Ann. So does County Counsel. What Gibson did is perfectly legal (and would stand up to a court challenge), whether you like it or not. Everyone in the County is sick and tired of Los Osos comments dominating every BOS meeting - besides, as Gibson pointed out, Los Ososans have all the time they want on days when matters regarding Los Osos are on the agenda. At least now other citizens of the County will be able to speak on issues that concern them without having to endure hours of the repetitive ramblings of a select few from Los Osos.

It's done - get over it.

Watershed Mark said...

Aaron legally “pointed out”: “In order to modify the agenda or take action of items not appearing on the posted agenda, the actions must be approved by a majority vote of the legislative body (citing that an emergency situation exists as defined in Section 54956.5), which did not happen. Where's the emergency? Chairman Gibson announced the limitations of public comment but he did not motion to have a vote taken. There was no two-thirds vote, no unanimous vote on a need to take immediate action. There was no reason to take immediate action except for giving more time to public comments to the rest of the county.”

County Counsel Warren Jensen wished he would have thought of this…

Shark Inlet said...

Real1,

Are you sure that there will be the opportunity for unlimited comments on the sewer when Los Osos is on the agenda?

After all, if that is the case, it would seem that a whole lot of people are fussing a whole lot over a non-issue.

Sewertoons AKA Lynette Tornatzky said...

At the last "Los Osos Update" our part went from 1:30 to 7:56 p.m.. 71 people put in requests to speak - I think 3 or 4 had to leave before they got the chance. Gibson asked those who could speak in 1 minute or less to go first, then 2 minutes or less. (The presentations were quite long by the consultant and staff.) Attempts to limit the amount for all speakers has been set to an hour in the past on LO Updates, to much uproar. Maybe we'll have to see?

Realistic1 said...

Shark,

Isn't "fuss over a whole lotta nothin'" what this crowd lives for? Gibson was very clear - when LO is on the agenda, everyone will be given their 3 minutes. Seems reasonable to me.

I saw yesterday that Margetson and Gibson had quite an exchange - but Gibson stuck to his guns and Margetson sat down...