March Winds Down

Volume 13 Issue 4 April 2018

M

arch has been a very in-

teresting

month.

From an

economic perspective, the

two "headline" events

included a very strong

employment report and

the Federal Reserve Board

announcing that they were

raising rates for the fifth

time in just over two years.

And while these are very important

events shaping the economic landscape,

we have to remind ourselves that there

are many other factors in play right now.

For example, while we witnessed the

effect of the tax changes

on the stock market even

before the plan was

enacted, the economic

effects of the tax plan

are just starting to hit.

While the vast majority

of the changes in the

economy will be posi-

tive, we have already

pointed out that the price to pay

for stronger economic growth will be

higher interest rates. These rates will

affect consumers such as homebuyers,

but also the government's budget.

In This Issue P2 Rising Rates Not Deterring Buyers || P2 What Happens When a Homeowner Dies?

P3 March Winds Down || P4 Roommates Wanted

Did You Know…

Most homeowners with adjusta-ble-rate loans could experience their first interest rate increase if the low-interest-rate environment ends, according to survey results released by HSBC.

The study revealed that 87% of US homeowners have never expe-rienced a rate increase on their home loan. Also, 46% have studied switching their loan to get a better deal.

Source: National Mortgage Professional.

Thinking of switching? Contact us.

Selected Interest Rates March 22, 2018 30 Year Mortgages——–4.45%

2017 High (March 16 %

2017 Low (Sept 14)——3.78%

15 Year Mortgages—— 3.91%

5/1 Hybrid ARMs——–—–3.68%

10 Year Treasuries—–—2.83%

Sources—Fed Reserve, Freddie Mac

Note: Average rates do not include fees

and points. Information is provided for

indicating trends only and should not be

used for comparison purposes.

Continued on Page 3

THIS NEWSLETTER IS BROUGHT TO YOU BY:

What Happens When a Homeowner Dies…

W

hen home buyers go to the closing, it’s unlike-ly they’re thinking

about what happens if they die before their mort-gage gets paid off.

“It’s the last thing on their minds,” says Bernard A. Krooks, founding partner and elder law specialist with New York-based Littman Krooks LLP. “They’re thinking about wheth-er or not an inspection went well or when the contractors will get repairs done.”

But while nobody wants to think about dying, borrowers should take advance steps to ensure an outstand-ing mortgage doesn’t become a bur-den for loved ones. Unlike credit-card debt, the home loan is secured by the house, says Nanci L. Weissgold, a partner in the Washington, D.C., of-fice of Alston & Bird. Unless heirs are cosigned on a home loan, nonpay-ment can’t damage their credit score, but they should continue to pay the loan if they are able, since missed payments could incur penalties and/or lead to foreclosure, Ms. Weissgold says. She adds that when lenders are promptly notified of the borrower’s death, they usually are understanding about time needed to resolve estate issues to avoid foreclosure.

Policies about what happens when a borrower dies can vary widely among

lenders, and terms are usually buried in the fine print of mortgage contracts, Mr. Krooks says. One of the first things to check is whether a lender will even allow anyone else to assume the loan upon the bor-rower’s death. When the deceased is the

only borrower, most lenders won’t, says Ric Edelman, CEO of Fairfax, Va.-based Edelman Financial Services. Also noteworthy: If two people, typically spouses, are co-

borrowers, don’t assume that the sur-viving spouse can automatically take over the same note and terms if it’s the sole breadwinner who dies.

“If that person dies, the lender may call the loan due,” Mr. Edelman says. “At the very least, they will want the surviving spouse to demonstrate equal creditworthiness.” That may not be a problem for nonworking survivors if the breadwinner bought life insurance or left a 401(k) or other inheritance. But many lenders still will require a refinance to confirm that the heir can afford payments.

One other potential snag: Once lenders are informed of a borrower’s death, they may be reluctant to release loan information because of privacy re-strictions, Ms. Weissgold says.

Page Two

“…take advanced steps to ensure an

outstanding mortgage doesn’t become

a burden”

I f rates keep rising to break

the 5% barrier, most home-

buyers will go right ahead

with their purchase anyway.

Just 6 in 100 prospective homebuy-

ers surveyed by Redfin said they

would halt their planned home

purchase if rates were above 5%,

although a further 27% would slow

their search.

A quarter of respondents said that a

5% rate would make no difference

to their plans, 20% would speed

up their search and a similar share

would look to cheaper neighbor-

hoods or a smaller property. Three

quarters of respondents nationwide

thought home prices would contin-

ue rising in 2018.

"Tight credit, lack of inventory and

high demand are the major factors

that tell us there's no housing bub-

ble, despite rapid price increases,"

said Redfin chief economist Nela

Richardson. "There are still many

more buyers than the current hous-

ing supply can support, with no

major relief in sight. Strict lending

regulations make it much harder to

buy a house you can't afford than

during the housing boom a decade

ago. Finally, still-low interest rates

somewhat offset high prices for

some buyers."...

Source: Redfin

Rising Rates Not Deterring

Buyers

Page Three

In addition to a death certificate, survi-vors and administrators may be required to provide additional information con-firming their legal status, she adds. Required documentation will vary de-pending on lender rules and the location of the property, among other things, Ms. Weissgold says.

To smooth this process, the Consumer Financial Protection Bureau in 2014 introduced new borrower protections to make it easier for heirs to acquire ac-count information, pay off the loan, or request a loan modification after the death of a homeowner. “The new rules require servicers to promptly communi-cate with heirs after being notified of a borrower’s death, with the ultimate goal of avoiding unnecessary defaults and foreclosures,” says Samuel Gilford, a CFPB spokesman.

Here are a few more considerations when estate-planning involves real es-tate:

• Entitled or not. Whether or not a borrower is on the property title also matters. For example, a spouse listed only on the title wouldn’t see his or her credit score affected if payments ceased, but a spouse on the loan pa-perwork and not on the title would have liability, Mr. Edelman says. He recommends all borrowers be on both.

• Safeguarding against family squab-bles. If homeowners anticipate disa-greement among heirs over the fate of the property, they should put their wishes as to who inherits and/or gets to stay in the house in the will or other estate planning document, such as a trust or partnership agreement, Mr. Krooks says. For example, a will could stipulate that a second wife can live in the house for the rest of her

life, and only upon her death would the property be sold and proceeds divided among the children of the first marriage, he adds.

• Professional guidance. Because es-tate laws are complex and differ across states, consulting an estate attorney on all matters related to wills and inheritance is highly rec-ommended...

Source: The Wall Street Journal

...Before the Mortgage Is Paid Off?

©2018, All rights reserved

The Hershman Group www.originationpro.com

1-800/581-5678

March Winds Down

Continued from Page 1

“…The good news is that the economy is stronger…”

For example, in February, the feder-

al government racked up the largest

deficit in six years because of lower

tax receipts and increased spending

-- which included a higher bill for

interest on the government's debt.

Even the immigration debate and

implementation of tariffs will influ-

ence the economy. One of the great-

est needs today is more inventory

for our nation's homebuyers and

builders are complaining about the

lack of skilled labor to build our

homes. Tariffs on lumber and steel

will also have a negative effect upon

the cost of building our homes,

though it is hopeful that our domes-

tic production can step-up and cre-

ate more jobs.

The good news is that the economy

is stronger, and jobs are being creat-

ed -- plus homebuyers are waiting to

purchase your home if you are will-

ing to sell it!...

Roommates Wanted

Address Correction Requested

In This Issue:

March Winds Down

L

iving with a roommate isn’t a trend only among renters, nor is it

limited to families living in multigenerational homes. The latest U.S.

Census Bureau data reveals a growing number of adults who are

living with other adults with whom they are not in romantic partner-

ships. The trend increased after the last recession, and “nearly a decade later,

the prevalence of shared living has continued to grow,” according to a new

analysis of census data by the Pew Research Center. It was initially driven by

millennials who moved back in with their parents. But the longer-term increase

has been driven by parents moving in with their adult children or friends and

roommates moving in together to share the costs of housing.

Nearly 79 million adults—or 32% of the U.S. population—lived in a shared

household in 2017. A shared household is defined as a household with at least

one extra adult who is not the head of household, a spouse or unmarried part-

ner of the head, or an 18- to 24-year-old student. For comparison, in 1995, 55

million adults—or 29% of the population—lived in a shared household, ac-

cording to Pew Research. However, millennials living with their parents is still

a popular trend. A separate Pew report in 2016 found that for the first time in

130 years, American adults ages 18 to 34 were more likely to be living in their

parents’ home than living with a spouse or partner. Pew says that dating back

to 1880, the most common living partner was a romantic one...

Source: MarketWatch