Notes: What's happening? What about Seniors Retirement Accounts?
Thinking about money, security? Maybe it would be good to think about a reverse mortgage - now would be the time. With housing continuing to slide downhill and eating into your equity, and with the FHA HECM loan limit raised, nationwide to $417,000, today, tomorrow or next week wouldn't be too soon to start to analyze your financial position.
If you don't need the money now - you can still qualify for the maximum loan and keep it in the reverse mortgage credit line - which grows at the same annual rate of interest that is charged for your loan. And you won't be paying interest on a lot of money either.
If you think you're going to need to access money in the next few years, there's no reason not to have a free analysis done and look at the costs vs. benefits. There is absolutely no obligation.
Before you move- talk it over with your financial advisor(s) whether they be professional advisers, family members, trusted friends; search out a reputable reverse mortgage bank and don't be afraid to ask questions about the company, the loan officer or the reverse mortgage. And get your mandatory 1 hour counseling done. The certificate is good for 180 days.
My bank is offering the FHA HECM (Home Equity Conversion Loan) Program to $417,000 and proprietary programs for 60 year olds, as well as Jumbo Loans will be available in the next couple of weeks.
If you have questions, please call me at 703-244-8151
SENIORS: PLEASE READ THE SEQUENCE OF EVENTS BELOW AS WELL AS THE TWO POSTED STORIES TO GIVE YOURSELF AN IDEA OF JUST WHERE WE ARE:
It's been real tough for the Feds - especially Ben Bernanke, Chairman of the Federal Reserve Bank, and Henry Paulson, Secretary of the Treasury. Bernanke must have made a few enemies when he let Lehman Brothers sink into their own ocean of bad paper. Of course, when Richard Fuld Jr., chairman and chief executive of Lehman Brothers Holdings Inc was negotiating for some federal help Lehman Bros. continued to squander millions on executive compensation,” according to Mr. Henry Waxman, Chairman of the House Committee on Oversight and Government Reform.
But Bernanke and the Feds were hero's when they dragged Bear-Stern to shore by agreeing to provide up to $30 Billion in non-recourse financing in a sales deal to J. P. Morgan. The $30 Billion was, of course, collateralized by Bear Stearns cesspool of illiquid mortgages and other securities.
Then Bernanke and Henry Paulson, Secretary of the Treasury and President Bush agreed to put life-jackets on Fannie Mae and Freddie Mac at what the Congressional Budget Office says could cost the taxpayers up to $25 Billion. Or, perhaps nothing if the plan to back their toxic loans works out correctly. There are some real doubts on that program working any more smoothly than any other of our current financial storms.
Then came a real surprise as global insurance giant American International Group, (AIG) came with hands out for an $85 Billion lifesaver ring which was immediately granted them. Congress was infuriated since Bernanke, Paulson and the White House didn't bother to inform them of the plan beforehand.
"The American taxpayer should not be asked to unwillingly assume the inordinate risks that financial experts knowingly undertook, particularly when taxpayer exposure is increased by the ad hoc manner in which these bailouts have been engineered," said Alabama Senator Richard Shelby's aide, Jonathan Graffeo.
And finally, along came Bernanke, Paulson and Bush with another great idea. They wanted $700 billion to purchase toxic loans from financial institutions that were clogging up the credit system and damming back the flow of short-term credit that businesses need to operate - even just to meet their payrolls. Not only that, but the whole world financial system would collapse if they didn't get the money in 3-4 days, and put it under Paulson's discretion to dispense without oversight from Congress, the U.S Courts or federal administrative judges.
As though Congress would write a check, turn it over to a non-elected, political appointee whose term was up in four months when administrations will change. Of course, the fact that Paulson used to be CEO of Goldman-Sachs, and the current Goldman-Sachs CEO, Lloyd C. Blankfein, sat in on the meetings with the Feds. didn't have any overtones at all. After two weeks and numerous midnight oil meetings with Congressional, Executive and Wall Street a bill was finally drafted that provided for some oversight and regulation. Probably, most amazing was the fact that Congress stuck around long enough to do this, rather than heading back to their districts and states to fight for their seats this election year.
As you know, it didn't pass the first House vote. More fast and furious meetings, a lot of new hung porkballs to "christmastree" the Bill and it passed the Senate; and finally, with enough pork and pressure, the House gave the bill it's blessing.
And, now, today we find out that someone else is drowning, and Bernanke announces yet another last minute multi billion dollar life-saver: "The Federal Reserve will create a special fund to purchase U.S. commercial paper after the credit crunch threatened to cut off a key source of funding for corporations". "Today's action follows a slide in the commercial-paper market to a three-year low of $1.6 trillion last week as investors fled even companies with few links to the subprime mortgage crisis."
And Wall Street's drubbing continued Tuesday, with a 500-point loss bringing the Dow's two-day slump to nearly 900 points, as the Federal Reserve's plan to loosen credit markets failed to temper investor pessimism.
Gloria
703-244-8151
Retirement Accounts Have Lost $2 Trillion
By JULIE HIRSCHFELD DAVIS, Associated Press Writer
Americans' retirement plans have lost as much as $2 trillion in the past 15 months, Congress' top budget analyst estimated Tuesday. The upheaval that has engulfed the financial industry and sent the stock market plummeting is devastating workers' savings, forcing people to hold off on major purchases and consider delaying their retirement, said Peter Orszag, the head of the Congressional Budget Office.
As Congress investigates the causes and effects of the financial meltdown, the House Education and Labor Committee was hearing from retirement savings and budget analysts on how the housing, credit and other financial troubles have battered pensions and other retirement funds, which are among the most common forms of savings in the United States.
"Unlike Wall Street executives, America's families don't have a golden parachute to fall back on," said Rep. George Miller, D-Calif., the panel chairman. "It's clear that their retirement security may be one of the greatest casualties of this financial crisis."
More than half the people surveyed in an Associated Press-GfK poll taken Sept. 27-30 said they worry they will have to work longer because the value of their retirement savings has declined.
Orszag indicated the fear is well-founded. Public and private pension funds and employees' private retirement savings accounts — like 401(k)'s — have lost some 20 percent overall since mid-2007, he estimated. Private retirement plans may have suffered slightly more because those holdings are more heavily skewed toward stocks, Orszag added.
"Some people will delay their retirement. In particular, those on the verge of retirement may decide they can no longer afford to retire and will continue working," Orszag said.
A new AARP study found that because of the economic downturn, one in five workers 45 and older has stopped putting money into a 401(k), IRA or other retirement savings account during the past year, and nearly one in four has increased the number of hours he works.
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Fed to buy massive amounts of short-term debts
WASHINGTON (AP) - 10-7-2008 The Associated Press
The Federal Reserve announced Tuesday a radical plan to buy massive amounts of short-term debts in a dramatic effort to break through a credit clog that is imperiling the economy.
The Federal Reserve will buy "commercial paper," a short-term financing mechanism that many companies rely on to finance their day-to-day operations, such as purchasing supplies or making payrolls.
The $99.4 billion daily market for this crucial financing, which relies on investors rather than banks, has virtually dried up. That has made it increasingly difficult and expensive for companies to raise money to fund their operations. Commercial paper is a way of borrowing money for short periods, typically ranging from overnight to less than a week.
The unstable situation has left many companies vulnerable. The notion under the plan is for the government to provide a "backstop" that would give companies a new place to get cash, the Fed said. The action makes the Fed a source of credit for nonfinancial businesses in addition to commercial banks and investment firms.
The Fed said it is creating a new entity to buy three-month unsecured and asset-backed commercial paper directly from eligible companies.
"The commercial paper market has been under considerable strain in recent weeks as money market mutual funds and other investors" have become increasingly reluctant to buy commercial paper, especially longer-dated maturities.
The Treasury Department, which worked with the Fed on the program, said the action is "necessary to prevent substantial disruptions to the financial markets and the economy." The Treasury will provide money to the Federal Reserve Bank of New York to support the new program, the Fed said.
If a company's commercial paper is not backed by assets or other forms of security acceptable to the Fed, the company could pay an upfront fee, the central bank said.
The Fed said it hoped its effort would jolt the commercial paper market back to life.
"This facility should encourage investors to once again engage in term lending in the commercial paper market," the Fed said. That should eventually spur financial companies to lend to each other and to their customers, including consumers, the Fed said.
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