When a reverse mortgage can make sense

Q: Our home has no mortgage. I am 86 and my wife is 79. Home value is about $260,000. Would we benefit from a reverse mortgage and what are disadvantages? Melvin Gatlin, Christiana, Tenn.

A: Not knowing all that's needed to give a complete answer, the short answer is yes.

"I believe there would be a benefit to you from a reverse mortgage," says John Salter, an associate professor in the Department of Personal Financial Planning at Texas Tech University.

He says the Home Equity Conversion Mortgage (HECM) program offers a way to use the equity in your home through a line of credit, a monthly payment called a tenure payment, and a source of cash if needed.

The first benefit, he says, is the line of credit. "There are many advantages to setting up a HECM line of credit, which include the lender cannot call, cancel or reduce the line such as in a traditional home equity line of credit, the line of credit actually grows over time based on the borrowing rate, and the payback is flexible and voluntary," says Salter. That, in essence, means you can pay back any borrowed money at your own will.

In your case, Salter says a line of credit can be useful as a source of emergency funding, a place to draw cash for needs if your portfolio has a severe loss and you would prefer not to sell, and it can be used down the road. If your portfolio gets depleted, you can live on the line of credit.

Other benefits: The program is non-recourse; the loan value will never exceed the home's market value. "So, if you sell or upon death the only amount that is owed is the loan balance up to the home value," says Salter.

There are, of course, downsides to reverse mortgages. If you borrow funds from the mortgage, Salter says you are creating a debt that has to be repaid in the future upon sale of the home or death.

Plus, the mortgages aren't necessarily free. A few lenders have a zero-cost or minimal-cost option to open a line of credit. But those reverse mortgages may or may not have a nominal monthly service charge, says Salter.

Plus, to get a low-cost reverse mortgage, Salter says you'd need to choose the higher lender borrowing rate, called margin. "This increases your borrowing cost ... if your plan is to have the line of credit is for emergencies or future financial protection," says Salter. "This may not be as big of an issue and may be to your benefit later in terms of a larger line of credit available to you."

The line of credit would also be beneficial if you are in a position where you and your wife are comfortable now, but want a safety net for possible future financial issues, says Salter. "If you are in need of shorter-term cash, you can still use the line of credit for this," he says. "But be aware there is a new rule where you can only use less than 60% of the benefit in the first year to avoid a higher up-front cost, and you may be better off long term paying up-front costs to obtain a lower rate if you would plan to use funds earlier."

Salter's bottom line: If your house is paid, and you are financially comfortable, setting up the no-cost reverse mortgage seems like a logical choice. "You may never need it, but it will be there if you do," Salter says. "Just remember any funds borrowed is debt in your grand financial picture."

To learn more about reverse mortgages, check out the government's website, which also has a list of lenders to contact

read more: http://www.usatoday.com/story/money/columnist/powell/2015/06/27/reverse-mortgage-answers-robert-powell/28977291/

NextEra Energy hires The Boston Consulting Group for Hawaiian Electric Co. deal

NextEra Energy Inc., which is proposing to buy Hawaiian Electric Co. for $4.3 billion, has hired The Boston Consulting Group as an integration consultant, according to public documents.

 

The selection of one of the world's largest management consulting firms, which has 81 offices in 45 countries and is one of the “Big Three” in its industry, sets in motion the integration planning process for the sale.

 

In March, NextEra Energy CEO Jim Robo directed the company to retain an integration consultant upon completion of a successful shareholder vote in May by Hawaiian Electric's parent, Hawaiian Electric Industries. But HEI did not get enough of its shareholders to approve the sale at that time, which led to an extension of the vote to June 10, when it was approved. That enabled NextEra Energy to move ahead with the hiring of The Boston Consulting Group.

 

The cost of The Boston Consulting Group’s services were redacted in the document.

 

Both NextEra Energy and Hawaiian Electric also have added more team members to establish a core integration management office, which established guiding principles and a preliminary team structure. The office also began culture assessment planning and started to develop its first executive steering committee.

see more: http://www.bizjournals.com/pacific/news/2015/06/23/nextera-energy-hires-the-boston-consulting-group.html

Membership: Club Membership Req, Equity Purchase Req

Drug makers “regularly pay physicians for various types of work, such as speaking, consulting and clinical research,” The Wall Street Journal notes. But a new study led by Cleveland researcher Susannah Rose “finds female physicians received noticeably less than their male counterparts for the same activities.”

From the story:

For instance, men were paid $41 more, on average, than women for meals; they were also paid nearly $2,900, on average, more than women for speaking and about $2,400 more, on average, than women for consulting. Similarly, men were paid $15,000 more, on average, than women for industry-sponsored research, according to study in PLOS ONE.

Overall, of the $17.9 million paid to nearly 221,000 physicians by drug makers in 2011, just 24.9% went to women. Female physicians, on average, received fewer total dollars — nearly $3,600 — per person than men. The study analyzed publicly reported financial relationships among 747,603 physicians and 432 pharmaceutical, device and biomaterials companies in 2011.

The study authors say the findings “suggest that female physicians are not reaping the benefits of industry support at a time when government funding for research has been declining,” according to the story.

“It’s troubling because this may place women at a distinct disadvantage,” Rose, the study’s lead author, tells The Journal.

She is director of bioethics research and policy at the Cleveland Clinic and an assistant professor of medicine at Case Western Reserve University.

The Journal says Rose notes that previous studies “have found that women also receive less funding from the NIH than men.” In addition, the study found that disparities “were generally larger at institutions — such as academic medical centers — with better reputations, which are seen as more desirable by industry.”

However, the authors “were not able to cite reasons for the disparities,” The Journal says. They speculate that “industry could be biased; women may not work in medical specialties were the most research is conducted; industry may believe audiences at educational events respond better to male speakers; or women may be less inclined to work with industry.”

Spotlight on police unions

CityLab.com uses Cleveland as the focal point to explore what it calls “the paranoia of police unions” in response to reform efforts.

The website notes that Steve Loomis, head of the Cleveland Police Patrolmen’s Association, “has said that officers feel uneasy after recent decisions handed down concerning the department — decisions that have put police officers’ lives in danger.”

Never mind, says CityLab.com, “that each of the judgments in question represents an effort to bring accountability to law enforcement in Cleveland.”

Loomis’ logic, as articulated in recent comments to The Plain Dealer, amount to saying that efforts to reform police practices embolden criminals,

see more: http://www.crainscleveland.com/article/20150618/BLOGS03/150619785/female-physicians-receive-less-pay-than-males-for-speaking

Charlie Garfinkel’s Racket Sports: Area tennis greats pay tribute to Bowen

 

Seth Bowen, 54, a Nichols School and University of Arizona tennis great, passed away unexpectedly on May 29 in Laguna Beach, Calif.

In 2000, Bowen was ranked sixth by the Buffalo News in the top 10 tennis players from the years 1950-2000. Some players who were ranked ahead of him were Jimmy Arias and Bobby Banck, who went on to be ranked fifth and 200th, respectively, on the men’s pro tour, and Rauno Suominen, who was formerly on the Finnish Davis Cup team.

As the saying goes, “Not too shabby.” Bowen was inducted into the Buffalo Tennis Hall of Fame in 2006 and was ranked 409th in singles and 334th in doubles on the ATP tour. He was a beloved competitor in the WNY tennis scene due to his outstanding talent and personality. He will be greatly missed.

The following tributes are from local tennis players who were close friends of Seth:

Tom LaPenna (Director of the High Performance Tennis Program at the Village Glen): La Penna started teaching and playing tennis at the Buffalo Tennis Center in 1975 where he first met Bowen. LaPenna is responsible for most of the success that Bowen achieved. “Even at the early age of 13 it was evident that Seth was going to be a great player,” LaPenna said. “He had a great attitude and a wonderful disposition. He never took a win or a loss too seriously. It was uncanny that he had such an understanding of the game at such an early age. His size, quickness , and athleticism made him an outstanding player.

He stressed that Bowen’s serve and volley game were nonpareil. He had one of the best first and second serve combination of any player in WNY annals.

“I had the good fortune to play quite a few doubles tournaments with Seth, both locally and out of town,” LaPenna said. “We won the New York State Hard Court Doubles Championship in 1979. The trophy said Bowen-Lapenna as winners. We didn’t win it. Seth won it!”

“Seth always respected everyone that he came into contact with,” LaPenna said. “He was the first student that I ever coached and was a class act.” “He will never be forgotten and I still can’t get over the shock that he is no longer with us.”

source: http://www.buffalonews.com/city-region/charlie-garfinkels-racket-sports-area-tennis-greats-pay-tribute-to-bowen-20150613

MBA: U.S. Mortgage Applications Rise; Rates at Highest Since Nov.

Applications for U.S. home mortgages rose last week, while interest rates hit their highest level since November 2014, an industry group said on Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, rose 8.4 percent in the week ended June 5.

The MBA's seasonally adjusted index of refinancing applications rose 7.0 percent, while the gauge of loan requests for home purchases, a leading indicator of home sales, rose 9.7 percent.

"Mortgage application volume rebounded strongly in the week following the Memorial Day holiday, indicating that the holiday had a larger impact on business activity than originally assumed," Mike Fratantoni, MBA's chief economist, said. "Strong job gains in May and initial signs of wage growth are supporting the purchase market."

The refinance share of total mortgage activity was unchanged from the week before, at 49 percent of applications.

Fixed 30-year mortgage rates averaged 4.17 percent in the week, the highest level since November 2014. They were up 15 basis points from 4.02 percent the previous week.

The survey covers over 75 percent of U.S. retail residential mortgage applications, according to MBA.

read more: http://www.foxbusiness.com/investing/2015/06/10/mba-us-mortgage-applications-rise-rates-at-highest-since-nov/

Approach reverse mortgages with caution

KIMT News 3 – You’ve no doubt seen the commercials and heard the advertisements, but chances are there is still a lot about reverse mortgages you may not know.

Their ads are hard to miss, but it’s what’s not being said that has financial experts warning us about tempting reverse mortgage loan offers.

These mortgages are known for being popular options for seniors looking to supplement their retirement funds. Finance experts say, many ads can leave homeowners with the impression that they’re risk-free.

These experts say that in many cases, people are unaware that there are costs associated with the loan that uses equity on your home for collateral.

“Be careful and do your research. We ask family members to be involved. Make sure that it is something that is going to be workable, so that you’re not signing something that you would be stuck in. We always ask that you be very careful about what you do,” said Kathye Gaines, Branch Manager with Consumer Credit Counseling.

The loan is available for those 62 and older and only if the youngest person in the household is 62 as well.

One negative aspect of the loan maybe that some outlive their loan money, forcing the responsibility of paying the loan on their family.

One common misconception experts say is that the loan is some type of government benefit. In reality, reverse mortgages have fees and compounding interest that must be repaid just like other home loans.

“You are able to stay in your home and you actually receive money from the equity that you have built in to your home,” said Gaines.

If you default on your loan however, the bank you finance with can foreclose on your home.

see more: http://kimt.com/2015/06/08/approach-reverse-mortgages-with-caution/

Cost of consulting contracts again questioned

A version of a bill to reduce the state’s consulting contracts that was unanimously passed by both chambers of the Legislature last year before being vetoed by Gov. Bobby Jindal appears to be heading back to his desk.
This is the fourth attempt by the duo of Treasurer John Kennedy and Rep. Dee Richard, No Party-Thibodaux, to cut the amount of money the state spends on professional, personal and consulting service contracts.

Earlier efforts suggested across-the-board reductions to such contracts, but the House Appropriations Committee approved without objection last week the latest incarnation.

HB 30 would instead allow lawmakers on the Joint Legislative Budget Committee to reject or approve practically any consulting contract with an annual value of $40,000 or more. The money saved by rejecting contracts would then be placed into the proposed Higher Education Financing Fund.

If approved, Kennedy said the bill would allow lawmakers to have the final say on as many as 1,700 contracts worth $2 billion, based on an annual report from the Division of Administration, which reviews contracts. Division officials, however, said the number would be closer to 150 or so contracts valued at $21 million.

read more: http://theind.com/article-21086-cost-of-consulting-contracts-again-questioned.html