Why 3% Down Mortgages Alone Won't Revive Housing

In the world of mortgage financing there is stuff that's seen and stuff that's not. Lowering down payment requirements from 5% to 3% will surely help some prospective buyers. However, in a world with roughly 4% interest rates and average sales prices that remain 11% below their 2005 peak, down payments are not the only issue to solve.

The government-sponsored enterprises have begun to accept loans with 3% down, but they're not just any old 3% loan. The GSEs want something more, and that "something" is 18% mortgage insurance coverage.

Combine the 3% down payment and the 18% insurance requirement, and Fannie Mae and Freddie Mac are following long-time industry standards by requiring at least a 20% cushion in case something goes wrong.

And while mortgage insurance is a burden, the bigger obstacle to focus on, according to a RealtyTrac home affordability analysis, is non-household debt.

In 92% of the counties analyzed, payments on a median-priced home required less than 43% of median household income, which is the maximum debt-to-income ratio allowed for a qualified mortgage by the Consumer Financial Protection Bureau.

Add in the typical student loan debt and car payment, and less than half — 48% — of U.S. housing markets are affordable for median-income earners using the 43% DTI.

Additionally, the standards for 3% loans is hardly straight-forward, meaning they are not for everyone.

For instance, Fannie Mae's MyCommunityMortgage program is only available if at least one borrower is a first-time home buyer who has completed pre-purchase education and counseling. The loan must have a fixed rate and be secured with a one-unit principal residence — meaning that duplexes, triplexes and quads are off limits. Manufactured housing is also ineligible. However, gifts can be used to bulk-up reserves, a new wrinkle. The program can also be used to refinance existing Fannie Mae loans and cash-out refinancing is also allowed.

read more: www.nationalmortgagenews.com/news/origination/why-3-down-mortgages-alone-wont-revive-housing-1057171-1.html

County health official sent $500,000 to psychic palm reader for consulting, AG says

CALHOUN COUNTY, MI -- A Calhoun County health official is facing criminal charges after he allegedly sent more than $500,000 to a psychic palm reader for "health consulting" services.

Ervin Brinker, 68, of Delton, has been charged with two counts of Medicaid fraud conspiracy and one count of embezzlement by a public officer, Attorney General Bill Schuette announced in a Wednesday press release.

Brinker was the CEO of Summit Pointe in Battle Creek until he was terminated in February. Summit Pointe is a community mental health authority, established by the Calhoun County Board of Commissioners.

Summit Pointe records show a total of $510,000 was dispersed in two separate contracts to pay a "health care consultant" in Key West, Fla. between May 2011 and November 2012, according to the news release. 

An investigation by the Attorney General's office revealed that Brinker allegedly sent the money to a Key West psychic palm reader and her husband. Brinker signed the fraudulent contracts without consulting other employees, the AG's office alleges.

The state of Michigan contracts with Summit Pointe to provide mental and behavioral health services to Medicaid consumers in the counties of Barry, Berrien, Branch, Calhoun, Cass, Kalamazoo, St. Joseph and Van Buren.

Brinker was arraigned Wednesday before Judge Richard Ball in Lansings' 54B District Court. He was released on a $25,000 personal recognizance bond. He is next due in court on Aug. 12.

Summit Pointe issued a statement Wednesday in response to the charges.

"When our Board was informed of employee concerns about irregularities in contracting and expenditures, we engaged Fraser Trebilcock as independent counsel to conduct a careful, external investigation. What we found through that process increasingly disappointed and alarmed us as a Board, and among a series of other necessary actions, we contacted the appropriate authorities. We are very appreciative of the efforts of the Attorney General...and we are relieved that this difficult chapter is finally over," said Trae Allman, Summit Pointe Board Chair.  

 

read more: www.mlive.com/news/kalmazoo/index.ssf/2015/07/county_health_official_sent_50.html

IBM Should Spin Off Its Legacy Business Of Installing Software And Consulting Services

Summary

• Installing software on premise and offering software as a service on the cloud are two incompatible businesses for IBM.
• A separation of the two helps IBM both salvage the declining legacy software business and further promote the rising cloud business.
• Having two different software operations is the natural solution, given that eventually software products will be different for on-site installation and on-the-cloud access.
• A spin off would benefit shareholders with fairer valuation on the legacy business and potentially some uncovered value for the rest of the IBM.

IBM (NYSE:IBM) has in the past been known for taking initiatives to adapt to changing technology and business environments, most notably the divestiture of its early PC operation and recent sale of its older server business. Over time, IBM has built itself into a more focused provider of software, consulting, system and data analytics. But within its narrower business realms, technological changes continue to bring new challenges. One that's in the forefront now is the shift in business software use from on-site installation with follow-on consulting services to off-site cloud subscription services via the Internet.
IBM is making strides with its own cloud offerings to tailor to the changing needs of many business clients, now preferring to purchase software with ease and flexibility on the cloud. However, the company continues to retain its old system of selling licensed-based software under this new business scheme with no real compatibility between the two. This will eventually come as a great concern for the company when its own history of many innovations at different times demands at last a similar action amid the current technological change.

see more: http://seekingalpha.com/article/3331135-ibm-should-spin-off-its-legacy-business-of-installing-software-and-consulting-services

Five Signs You Really Should Be Consulting

There is a certain kind of person who can take so much of the corporate or institutional world and no more. These people get signals from the universe that tell them “That’s it – you’re done.”

They reach a critical point after which they can’t deal with the bureaucracy any more.

They have to strike out on their own as entrepreneurs. Many of these people become consultants.

Sometimes the cubicle becomes too small and the endless corporate rules pinch and chafe too much. You get tired of pushing a rock uphill and you say “I’m going to get a business card and start peddling my knowledge for anyone who needs it.”

There are big advantages to hanging out a consulting shingle. Right here is where you may have expected me to add “but it’s not for everybody!”

I don’t agree with that sentiment. I have seen dyed-in-the-wool corporate Joes and Sallies become consultants and thrive in the entrepreneurial world.

When you ask these new consultants “Why did you hesitate to go out on your own?” they say “Because I’d heard for years that consulting is not for everybody.”

That’s hogwash! A hundred years ago most of our ancestors were entrepreneurs. Some of them were farmers and some of them had small businesses.

see more: http://www.forbes.com/sites/lizryan/2015/07/15/five-signs-you-really-should-be-consulting/

HUD clarifies rule on reverse mortgages

The Department of Housing and Urban Development's recently issued a Mortgagee Letter covering non-borrowing spouses on home equity conversion mortgages (HECM's) with case numbers issued prior to Aug. 4, 2014, and it's good news for one non-borrowing spouse who had contacted Bankrate last year.

When the woman and her husband originally got a reverse mortgage, she wasn't 62, so she couldn't be named on the deed or the note if her husband was going to be able to get a reverse mortgage. She wrote me concerned about whether the couple would have to refinance to provide a way to keep her home should her husband die before her or need to move out of the home for health reasons.

Foreclosures shouldn't have happened

What she was worried about was the non-borrower spouse faced a financial crisis when the borrowing spouse died or hadn't lived in the home for at least 12 months. If the spouse didn't have the ability to pay off the mortgage at the lower of 95% of the appraised value of the house or the mortgage balance, they faced foreclosure.

In 2011, the courts established that HUD had violated the law by triggering payment of the loan while the non-borrowing spouse was still in the house. The case, championed by the AARP Foundation, applied to two specific cases, but HUD was instructed to provide clarification and guidance for all non-borrowing spouses.

New rules for old loans

After a couple of missteps and four years of waiting, Mortgagee Letter 2015-15, titled, Mortgagee Optional Election Assignment for Home Equity Conversion Mortgages(HECMs) with an Federal Housing Administration case number assigned prior to Aug. 4, 2014. To oversimplify, it allows the lender to pursue a Mortgagee Optional Election (MOE) Assignment, which assigns the loan to HUD on the death of the borrower versus the lender pursuing a foreclosure.

Obviously, an 18-page letter can't be distilled into a sentence, and non-borrowing spouses need to know what's required to stay in the home. Meeting with a real estate attorney to discuss the requirements can provide a level of comfort to the non-borrowing spouse that he or she won't be forced out of the home.

New reverse mortgages, with case numbers issued after Aug. 4, 2014, consider the age of the non-borrowing spouse when sizing up and qualifying for a reverse mortgage.

Read more: http://www.bankrate.com/financing/senior-living/hud-clarifies-rule-on-reverse-mortgages/

CIA has paid millions to a consulting firm to help with reorganization

WASHINGTON — The CIA has paid more than $10 million to a management consulting firm advising senior U.S. intelligence officials on a broad reorganization that agency Director John Brennan began earlier this year, current and former U.S. officials said.

The agency also is requiring some of its departments to surrender portions of their annual budgets in an effort to collect enough money to cover other costs associated with the restructuring, officials said.

The payments to the firm, McKinsey & Co., have been viewed with skepticism by some at CIA headquarters and on Capitol Hill at a time when the agency is confronting significant new security threats as well as pressure to trim costs.

Several current and former U.S. officials said they were surprised by the magnitude of the consulting contract, an arrangement that officials said Brennan did not mention to workers when he announced the reorganization or explain to lawmakers in briefings.

"What is the rationale?" said a U.S. official familiar with the contract. "When you're talking about millions and millions of dollars, there ought to be a reason why the money is being spent."

The sum paid to McKinsey represents a tiny fraction of a CIA budget that is believed to exceed $12 billion annually. But current and former U.S. officials said they could not recall a previous case in which the CIA had hired an outside consulting firm at such expense.

CIA spokesman Dean Boyd declined to comment on the contract or overall cost of the reorganization, but said the agency is "implementing this plan within our existing budget and without seeking additional funds from Congress."

read more: http://www.stripes.com/news/us/cia-has-paid-millions-to-a-consulting-firm-to-help-with-reorganization-1.356105