Retirement Living News

March 2009

HEADLINES  (Click on headline to read story)

• Many Retirement Communities Offering Deals to Attract Seniors
• Reverse Mortgages Can Now Be Used to Buy Homes
• AARP Magazine Outlines 10 Ways to Earn Extra Money
• House Passes Silver Alert Act
• AARP Research Identifies Best Employers for Workers Over 50
• New Book: Letting Go of Home

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NEWS STORIES

Many Retirement Communities Offering Deals to Attract Seniors 

For seniors, the collapse in the housing market is especially difficult. Many have worked all their life to reach the point when they can finally retire. "It's a disaster across multiple dimensions," says John Rother, executive vice-president for policy and strategy at AARP. "People who can't sell their home can't move into more appropriate housing. And people whose portfolios have fallen in value, or who have lost their jobs prematurely, don't have the money to move." 

For builders, it's a difficult time. Many are just trying to avoid going out of business. Others are offering deals that include bridge loans which finance a new mortgage until your current home sells. Rent-to-own deals are becoming popular. Upgrades for a low price or free are also being offered as are rebates on moving expenses. 

Demand for housing in continuing care retirement communities (CCRCs) which provide a continuum of care, or assisted-living facilities that depend more on the health of the purchaser than on the economy, are feeling the effects of the economy. Occupancy rates are down and administrators are going all out to help seniors sell the family home so that they can afford to move. Such assistance is crucial in the campus-like continuing care setting, where deposits are often tied to median home prices, mounting to hundreds of thousands of dollars. 

"Some CCRCs are suspending or postponing entry fees," according to Larry Minnix, CEO of the American Association of Homes and Services for the Aging. "Others are providing bridge loans or retaining real estate specialists to help people prepare and sell their homes." 

Brookdale Senior Living, with 550 communities nationwide, is offering a home purchase plan in which the company will purchase a home if it has not sold in a specified period of time.  The company is making available a variety of resources to help future residents make their move.  For details, click here.

Erickson Retirement Communities, which has 22 continuing care retirement communities, established a moving service last year which helps seniors stage their homes for sale. For details, click here.  

For those with cash available, this is a good time to be in the market for an active adult community. Prices have dropped more than 30 percent since peaking in 2006 in popular areas like Las Vegas, Naples, Fla, and Phoenix. The best values are said to be in complexes completed more than five years ago. You may not get the latest and greatest amenities but that's why prices have fallen more than those of newer ones. While the newer ones offer more on-site facilities and amenities, one should be careful about projects that are not finished no matter how many free upgrades the developer offers. A construction site where a builder is struggling may stay in the construction phase for quite a while.
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Reverse Mortgages Can Now Be Used to Buy Homes

Today many senior homeowners find themselves unable to move to a retirement community or buy a home elsewhere because they can't sell their current home. Those looking to sell and then purchase a new home will benefit from the new FHA Home Equity Conversion Mortgage (HECM). 

Beginning in 2009, the HECM mortgage can be used to purchase a primary home when the borrower is 62 years of age or older and is able to use cash in hand to pay the difference between the reverse mortgage and the sales price plus closing costs for the property. 

The recently signed economic stimulus bill temporality lifts the size of home equity conversion mortgages from $417,000 to $635,500. The new loan limits are in force for 2009 only. 

Because older persons can be vulnerable to fraudulent practices, the program requires that persons receive free reverse mortgage housing counseling from a HUD approved reverse mortgage counseling agency before applying for a reverse mortgage. FHA insures HECM loans to protect lenders against loss if amounts withdrawn exceed equity when the property is sold. 

The total income that an owner can receive through HECM is the maximum claim amount, which is calculated with a formula that includes the age of the owner(s), the interest rate, and the value of the home. 

Borrowers may choose one of five payment options: (1) tenure, which gives the borrower a monthly payment from the lender for as long as the borrower lives and continues to occupy the home as a principal residence; (2) term, which gives the borrower monthly payments for a fixed period selected by the borrower; (3) line of credit, which allows the borrower to make withdrawals up to a maximum amount, at times and in amounts of the borrower's choosing; (4) modified tenure, which combines the tenure option with a line of credit; and (5) modified term, which combines the term option with a line of credit. 

The borrower remains the owner of the home and may sell it and move at any time, keeping the sales proceeds that exceed the mortgage balance. A borrower cannot be forced to sell the home to pay off the mortgage, even if the mortgage balance grows to exceed the value of the property. A HECM loan need not be repaid until the borrower moves, sells, or dies. When the loan must be paid, if it exceeds the value of the property, the borrower (or the heirs) will owe no more than the value of the property, if they sell the property to repay the loan. 

A lender can charge an origination fee up to $2,500 if the home's appraised value is less than $125,000. If the home is valued at more than $125,000, lenders can charge 2% of the first $200,000 of the home's value plus 1% of the amount over $200,000. HECM origination fees are capped at $6,000. 

All money that a senior receives from the reverse mortgage program is tax-free -- a great source of tax-free retirement income. All HECM borrowers are required to complete reverse mortgage counseling through a HUD approved housing counseling agency. You can search online for a HECM counselor. You can use a reverse mortgage calculator to help you see if you qualify. If you meet the eligibility criteria, you can complete a reverse mortgage application by contacting a FHA-approved lender. 
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AARP Magazine Outlines 10 Ways to Earn Extra Money

As the recession continues many people are looking for ways to earn extra income. The latest issue of AARP The Magazine (March/April 2009) carries a story about 10 different ways to earn extra money. Among the options outlined are the following: 

• Sell goods from home, with the potential payoff of $100-400 per party. Checkout companies such as Avon (cosmetics), Party Lite (seasonal home decorations), and Southern Living at Home (home accessories); 
• Engage in dog walking, pet sitting, or dog grooming ($10-60 an hour);
• Conduct a workshop or course in a subject you love, from computers to crafts to Chinese cooking ($20-50 an hour); 
• Tutor children ($20-60 an hour); 
• Rent out rooms ($400-700 a month); 
• Provide feedback in focus groups for market research firms ($40-100 per session); 
• Run some errands for others with no free time ($15-25 an hour); 
• Usher at theaters, arenas, or concert halls ($9-12 an hour); 
• Sell unwanted items to second hand and vintage stores, consignment stores, or online (variable profits); 
• Get involved in "workamping" which combines work with recreational vehicle camping such as traveling to take part-time or seasonal work at resorts, amusement parks, and theme parks ($7-12 an hour). 

To read the full article with more details and many links, click here. 
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House Passes Silver Alert Act

On February 10 the U.S. House of Representatives passed the National Silver Alert Act (H.R. 632), which would establish an infrastructure for alerting both law enforcement and the public when a senior goes missing. The ball is now in the U.S. Senate's court on the issue of financing the system. 

Much like the Amber Alert System already in place for missing children, the Silver Alert System would use radio, television and highway signs to inform the public. The bill would allocate $10 million to help states implement the system. The Silver Alert Coordinator, a newly created position within the Department of Justice, would oversee the voluntary implementation of the system across the country. Many long-term care, other healthcare and senior advocacy groups have praised the legislation and its chief sponsor, Rep. Lloyd Doggett (D-TX). A similar measure was introduced during the previous Congress, but it died after the Senate did not act on it. 

Approximately 13 states now have a Silver Alert program or one similar to it, and 13 more are considering it. 
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AARP Research Identifies Best Employers for Workers Over 50

For the past eight years AARP has been evaluating the performance of employers on a range or workforce practices that are beneficial to older workers. These practices include recruiting, training and development, health benefits, pension plans, and alternative work arrangements. 

"We've seen innovations such as flextime, phased retirement, and tuition reimbursement become mainstays at age-friendly companies. But even our seasoned judges were impressed by this year's (2008) group of honorees, says AARP. "Their commitment to the total health and well-being of their workers and families is further evidence that the 50+ employee has become a valuable asset worth nurturing and protecting." 

The top 10 companies are as follows: Cornell University, Ithaca, NY; Scripps Health, San Diego, CA; SC Johnson, Racine, WI; YMCA of Greater Rochester, Rochester, NY; Lee Memorial Health System, Fort Myers, FL; Securian, St. Paul, MN; First Horizon National Corporation, Memphis, TN; Stanley Consultants, Muscatine, Iowa; Bon Secours Richmond Health System, Richmond, VA; and Blue Cross Blue Shield Association, Chicago, IL. To read more about these companies and to view the next 40, click here. 
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New Book: Letting Go of Home

For those who are seeking a compassionate way to move a loved one into an assisted living facility or a more appropriate living arrangement, a new book (handbook) titled Letting Go of Home may be quite helpful. It was written by Richard and Carol Meier who have decades of direct experience in developing and operating assisted living homes and other age qualified senior projects. 

The handbook is intended to be a working document that families can use through the relocation process, rather than a detailed philosophical discussion of it. It begins with help in the assessment of the quality of life of their loved one and their ability to live independently and safely now and in the future. It provides an outline of each step to take in the complex process, and addresses medical, legal, financial, family and emotional issues each family must face. 

The handbook presents the perspective of the authors who have been in the business and have served hundreds of families in assisted living, including their own family members. It is available in a spiral bound hard copy ($27.50 plus shipping) or download from the Web site ($20). For more information, go to www.lettinggoofhome.com. Online ordering is not yet available. Currently you can purchase it by sending an e-mail to rick@georgetowne.net.
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