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Politics : Politics for Pros- moderated -- Ignore unavailable to you. Want to Upgrade?

To: LindyBill who wrote (92687)	12/29/2004 6:08:18 AM
From: Ilaine	Read Replies (1) \| Respond to of 793818

The economy is bound to lose the stimulus of rising consumer debt. Just started working on helping an elderly client pay off his ex wife via a reverse mortgage. One of the mandatory hoops you need to jump through is a session with a specially trained counsellor, and since I have power of attorney, I need to do this, too. Spent a long time on the phone with a debt counsellor who works for a credit counselling agency. Up until then, I thought they were worthless, rip-off artists. After talking to this person, I am willing to revise my opinion for those credit counsellors who actually meet stringent requirements established by a national group and reviewed by the BBB and FTC - she says they won't take anybody who can't get out of debt in five years. They send those who can't get out of debt in five years to lawyers to talk about bankruptcy. She also says that once they set up a payment plan with the creditors, which takes two or three months, that if the debtor makes their payments on time, the creditors report them as current, which improves their scores. She is appalled (as I am, too) at how easy it is to get credit once you file for bankruptcy. We agree that this has come about due to the repeal in usery laws. She's seen post-bankruptcy interest rates in excess of 30%. The insane thing is that people will take those because they get right back on the debt treadmill. They can't file Chapter 7 again for 6 years, so they're stuck. My client should have gotten a reverse mortgage two years ago, at least. It would have solved so many of his problems. Of course, that would have meant cannibalizing his home equity, but he's doing that anyway via refinancing, and that means ever increasing mortgage payments. Which is sad because his house was almost paid off. He can't even use the tax break from mortgage payments because he's on a fixed income. The interest rate for reverse mortgages is capped by FHA/HUD at a point or so above prime, currently it's around 4%, and he doesn't have to make any payments, it just comes out of the equity when he dies or sells the house. You are eligible for a reverse mortgage when you turn 62. So there is more than one way to tap your home equity.