CWC Financial Newsletter

CWC Financial

1505 Bridgeway, Suite 121
Sausalito, CA 94965
Local: 415-331-3744
Toll-free: 888 711-5454

U.S. Treasury Bonds

Maturity

Yield

Last
Week

Last
Month

5 Year	3.68	3.66	3.76
10 Year	4.47	4.43	4.58
30 Year	5.19	5.16	5.28

Treasury Market Summary:

The market has boosted itself back toward the week's highs, after yields had peaked, poking through the 4.608% 50-day moving average, briefly Tuesday, Wednesday and Thursday. The market responded quickly to the early GDP report and consolidated for a time ahead of Chicago PMI. The prices paid and employment data took the market by surprise, as prices paid fell off, but remained strong at 77.6 and the employment print showed an unexpected year low of 45.6, causing the rally to resume. typical weekend flight-to-quality trade helped support prices as did the month-end.As the market had sold off early in the week, the yield curve had steepened and has returned to its flattening trend. The 2-10-year has seen a 5-day high of 184.6 and traded off to the recent low of 177.6 and is currently 180.2. The dollar remained well bid, on expectations that upcoming data will return to printing stronger in the near future and the June malaise will be dismissed as a momentary lapse. Attention has begun to turn to the August 6 jobs data, with estimates for non-farm payroll running up near 240K. On that note, please go to our recent Bond Column and participate in our non-farm payroll survey.

Economic Indicators for this week that could impact the mortgage or real estate markets include...

Construction Spending	Aug 02
Personal Income	Aug 03
Initial Claims	Aug 05
Unemployment Rate	Aug 06
Consumer Credit	Aug 06

Home Equity Conversion & Reverse Mortgages

Eligibility & Repayment

The Home Equity Conversion Mortgage (HECM) is the only reverse mortgage insured by the federal government. HECM loans are insured by the Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD).

The FHA tells HECM lenders how much they can lend you, based on your age and your home's value. The HECM program limits your loan costs, and the FHA guarantees that lenders will meet their obligations.

HECMs Versus Other Reverse Mortgages

HECM loans generally provide the largest loan advances of any reverse mortgage. Often they provide a lot more cash than any other program. HECMs also give you the most choices in how you can have the cash paid to you.

The money you get from a HECM can be used for any purpose. Although they are not cheap, HECM loans can be much less costly than the other reverse mortgages that can be used for any purpose.

Generally, the only reverse mortgages that cost less than HECMs are ones offered by state or local governments. These loans typically must be used for one specific purpose only, for example, to repair your home, or pay your property taxes. They also generally are available only to homeowners with low to moderate incomes.

Who is Eligible

HECM loans are available in all 50 states, the District of Columbia, and Puerto Rico. (In Texas, however, HECM credit line options are not available.) To be eligible for a HECM loan:

You, and any other current owners of your home, must be aged 62 or over, and live in your home as a principal residence; your home must be a single-family residence in a 1- to 4-unit dwelling, a condominium, or part of a planned unit development (PUD). Some manufactured housing is eligible, but cooperatives and most mobile homes are not (although some cooperatives became eligible at the end of 2003); your home must be at least one year old and meet HUD's minimum property standards, but you can use the HECM to pay for repairs that may be required; and you must discuss the program with a counselor from a HUD-approved counseling agency.

Repaying a HECM

As with most reverse mortgages, you must repay a HECM loan in full when the last surviving borrower dies or sells the home. It also may become due if: you allow the property to deteriorate, except for reasonable wear and tear, and you fail to correct the problem; or
all borrowers permanently move to a new principal residence; or
the last surviving borrower fails to live in the home for 12 months in a row because of physical or mental illness; or you fail to pay property taxes or hazard insurance, or violate any other borrower obligation.

The purpose of this newsletter is to stimulate thought for our clients and those professionals with whom we network. One should consult with a qualified mortgage planning professional prior to implementing any mortgage planning strategies. If you are an real estate planning, estate, tax or insurance planning professional receiving this newsletter, please call our office and introduce yourself to us. We are always seeking to grow our referral network and expose more service professionals to our client base.