At *THIS* point, the fingerpointing at reasons & causes is irrelevant…
IT IS TIME TO ROLL YOUR CRITICAL MONEY OUT OF 401Ks… *LIKE YESTERDAY*!!!!

Pay the mordida (tax bite) now, while tax rates are still low, and get it out into tax-free accounts IMMEDIATELY! ROTHs and IULs are the ticket!

Capitol Hill politicians are assessing tax changes that could let the Internal Revenue Service lay claim to a portion of the $18 trillion sitting in 401(k) accounts and other tax breaks used by middle-class workers, including cutting the mortgage tax deduction.

http://www.nypost.com/p/news/business/plunder_CrD9s6MElVsEIJj2IVgHuK#ixzz1vvkCMiuo

Mortgage Rates Steady At All-Time Lows Thanks To Europe And The Fed

http://www.mortgagenewsdaily.com/consumer_rates/259479.aspx

Mortgage Rates are steady to slightly improved today following as Europe’s fiscal woes continue providing downward pressure on US interest rates. The forces at work keeping rates low were joined today by “minutes” from the most recent FOMC meeting. All told, several notable lenders are offering their all-time lowest interest rates while others remain close.

My views;

2012-05-17 FNMA 3_5 Quarterly Ratewatch

Best executables as of this afternoon;

FHA
30 FRM @3.25% paying 0.993% rebate

5/1 ARM @2.75% paying 1.018 rebate

Conforming
30 FRM @3.375% paying 0.289% rebate

5/1 ARM @2.5% paying 0.698% rebate

This is simply amazing… and we are within stone’s throw of 30 FRMs in the high TWOS!!!!

David Donhoff, Advisor
Leverage Planners
(425) 223-4520 desk
(425) 652-1001 cell

Most of you probably already know the basics about reverse mortgages, and the truths that kill the fallacies (the bank does not become the owner, nobody is “losing equity,” etc. etc.)

From a STRATEGIC FINANCIAL perspective… reverse’s give us & our clients the potential access to *EXTREMELY LOW* costs of money.  Much lower than alternatives, and at no risk of foreclosure.

Here is how & why;

A reverse mortgage can be made on approximately 70-75% of the current appraised value of a home.  The current fixed rates on a reverse are in the mid-4%s to low 5%s (but the *REAL* costs of a fixed rate reverse DROPS after 7-8 years… I’ll show how & why.)

A reverse mortgage line of credit has a variable interest rate, and can be currently in the 2%s.  This appears attractive on its face value immediately, *and* a senior may even feel that we are unlikely to see rising interest rates to create much risk… and as you see the explanation below, the *REAL* risks and costs to the senior *DROP* over time.

Here is why;

The reverse lender can only *COLLECT* their interest from the eventual sale of the home.  Further, they can *EXCLUSIVELY* collect from the actual NET sale proceeds, and not a dime more.  If they accrued more interest charges during the borrower’s lifetime than the homesale actually can pay for, those additional charges are not enforceable against the estate, and must be *ignored* as uncollectable by the lender.

EXAMPLE;

$100,000 home. $75,000 reverse taken out @ 5%

After 5 years the accrued interest is $25,507… If the property has zero appreciation, the $507 is uncollectible, and the loan is *FREE* from that point forward.

If the near future years have a 1% annual *APPRECIATION* in equity value;

(Also not incredibly unrealistic, going forward,) then the accrued interest overcomes the actual equity remaining at middle of year 7… FREE MONEY from year 8 onwards.

If the near future years have a 2% annual *APPRECIATION* in equity value;

(I consider this unlikely and wishful going forward,) then the accrued interest overcomes the actual equity remaining at beginning of year 9… FREE MONEY from year 10 onwards.

The actual final cost of money from a reverse mortgage can only be determined by the eventual measure of appreciation from today forward until the senior passes away or moves out & the heirs re-sell the home… but in no realistic case will the final actual interest collected from the proceeds come anywhere near the initial fixed rates of 4.5% to 5%…

If a senior uses a reverse line of credit, and rates stay low, they may never actually consume all of their real home equity… or, if they extend complete consumption of the equity out many years into the future (due to future appreciation,) they’re real interest costs remain extremely low.

ALL THE WHILE this frees up cashflow… which is exactly what many folks need.

Cheers,
David Donhoff, Advisor
David@LeveragePlanners.com
425-223-4520 Desk
425-652-1001 Cell
206-338-5856 Secure Fax

Leverage Planners
www.LeveragePlanners.com
No Bull Financial, LLC
www.NoBullFinancial.com

413 14th Ave West
Kirkland, WA 98033

Banks PAYING Homeowners Avoid Foreclosures

http://www.businessweek.com/news/2012-02-08/banks-paying-homeowners-a-bonus-to-avoid-foreclosures-mortgages.html

Now *THIS* is a very interesting reversal of trend!!!

<SNIP>

Karen Farley hadn’t made a mortgage payment in a year when she got what looked like a form letter from her lender.

“You could sell your home, owe nothing more on your mortgage and get $30,000,” JPMorgan Chase & Co. said in the Aug. 17 letter obtained by Bloomberg News.

<SNIP>

“I wondered, why would they offer me something, and why wouldn’t they just give me the boot?” Farley, 65, said in a telephone interview. “Instead, I’m getting money.”

Tom Kelly, a JPMorgan spokesman, declined to comment on the company’s incentives.

I smell a falling-out at a much higher level… there’s a much deeper reason for the banksters to not only pull off the brakes, but actually *PAY* to accelerate the process….

There is *OPPORTUNITY* here!!!

David Donhoff, Advisor
David@LeveragePlanners.com
425-223-4520 Desk
425-652-1001 Cell
206-338-5856 Secure Fax

Leverage Planners
www.LeveragePlanners.com
No Bull Financial, LLC
www.NoBullFinancial.com

413 14th Ave West
Kirkland, WA 98033

This question arrived from Peter Thelander, CPA;

http://www.fer-cpe.com/thelander.asp
http://www.manta.com/c/mthg2gq/peter-h-thelander-cpa

I’m in the midst of tax season, talking to a lot of clients. It seems that 2011 was the year to work out financial difficulties. I can’t believe the number of my clients who have done short sales, had houses foreclosed, or filed bankruptcy.

One question I’m hearing a lot is: How will my [BK, foreclosure, short sale] affect my ability to buy something (or refi) over the next couple of years?

Hi Peter,

If the bankruptcy is Chapter 13 and in good standing the waiting period is currently* 1 year with FHA.  If it is discharged the current* waiting period to qualify for a mortgage is 2 years.  If it was dismissed, the waiting period is currently* 4 years.

If the bankruptcy is Chapter 7 the waiting period is currently* 2 years with FHA, 4 years with Fannie/Freddie.

The waiting period after foreclosure, for conforming (Fannie/Freddie) loans is currently* 5 years (reduceable to 3 years with acceptable “extenuating circumstances” such as death of a critical person, illness, job transfer or accident resulting in serious injury.)

The waiting period after a “deed-in-lieu” foreclosure, for conforming (Fannie/Freddie) loans is currently* 4 years (reduceable to 2 years with acceptable “extenuating circumstances” such as death of a critical person, illness, job transfer or accident resulting in serious injury.)

The waiting period after short-sale, for conforming (Fannie/Freddie) loans is currently* 2 years.  If the short-sale occured via negotiation-only, and the borrower had no late payments greater than 30 days, there is no waiting period to qualify.

(* “current” is, of course, time relevant.  Congress and/or the Whitehouse may whimsically change these timeframes at any point.)

Hope that helps!

David Donhoff, Advisor
David@LeveragePlanners.com
425-223-4520 Desk
425-652-1001 Cell
206-338-5856 Secure Fax

Leverage Planners
www.LeveragePlanners.com
No Bull Financial, LLC
www.NoBullFinancial.com

413 14th Ave West
Kirkland, WA 98033

Rising Rents plus Dropping Interest Rates Mean Investors WIN!   Its easy to see that FannieMae Mortgage Bond market prices are climbing. As bond prices rise, mortgage rates drop. This results in bond investors earning less. It also means lower mortgage rates for borrowers.  Yesterday’s wild market action was confirmed today;
http://content.screencast.com/users/LeveragePlanner/folders/Jing/media/49b79821-a97b-4359-a309-7446edd69f66/2012-01-26_0851.png

Real-world inflation (the kind normally hidden by government in mainstream reports)

Real-world inflation (the kind normally hidden by government in mainstream reports) is already climbing as the costs of food, gas, rents, and other everyday living expenses visibly rise… as rents rise they increase income to the landlords, and as costs of mortgage interest drops the net profits to landlords also increases. This means the value of rental property ownership is climbing, while the face costs of most real estate is still flat or dropping.

All of this EVENTUALLY translates to an increase in ALL real estate prices itself (even if property prices currently appear to be flat or still softening.)

Rental Real Estate Is Essentially Free

When you add all the current and future income increases available from rental real estate, and subtract the low cost of “other people’s money” (mortgage leverage,) I think its safe & fair to say that strategically owned real estate is essentially free at this point in the game. The current and future revenues, even before considering potential appreciation, are greater than the long-term costs. This is likely to go further in favor of ownership in the near future as well. Rising rental income allows an owner to simply “sit and wait” for the eventual and inevitable return of asset price increase.

To add further to the opportunities for the buyer/owner of income real estate… the low returns to the mortgage bond investors is also happening to *ALL* the safe investment markets. This results in many private individuals holding huge accumulations of money getting very low returns. These investors become frustrated that they cannot find a place to invest that gives them an equivalently safe return with a sense of security and control. The rental investor’s opportunity arises by DIRECTLY offering loans to these private individuals at terms and interest rates beneficial to both, but especially favorable to the investor of the income property.

With rents now universally recognized as starting a relentless upwards trend, there is an abundance of long-term home-run opportunities in the markets for directly-owned income real estate.

Update Your Real Estate Investor Education

If whatever you’re currently doing isn’t paying off to your satisfaction, NOW might be time to get up to speed in old school “roll up the sleeves” hands’ on real estate investing.

ONE source of excellent coaching and education for real estate investors is Greg Pinneo, of Reach Returns.  I’ve met Greg, I have thoroughly reviewed and studied his methods and content, and I heartily endorse his offerings.

Finding The Money To Invest

We find money you’re losing to Wall Street & the IRS by accident or inefficiency (kind of like the “Occupy” movement… but for responsible adults that own homes, and jobs, and families.) We often recover money equal to 3-15% of gross annual income… sometimes more.  Once we’ve recovered and stopped your Wall Street and IRS losses, we can show you how to safely put them back to work WITHOUT the previous risks and exposures.  You can also engage them in high-opportunity investment real estate.  Our fees are on a sliding-scale, but we sometimes offer free reviews.  Is that something you want? Click to us now!

Luck all!
David Donhoff, Advisor
David@LeveragePlanners.com
425-223-4520 Desk
425-652-1001 Cell
206-338-5856 Secure Fax

Leverage Planners
www.LeveragePlanners.com
No Bull Financial, LLC
www.NoBullFinancial.com

413 14th Ave West
Kirkland, WA 98033

The American Institute of CPAs

http://www.cpaweb.org/Content/media/PRODUCER_CONTENT/Newsletters/Articles_2012/Wealth/Life_Insurance_2012.jsp

Index Universal Life Insurance
Beware of a possible new scam.
January 19, 2012
by Peter Katt, CFP, LIC

<SNIP>

The problem is that index premiums collected are not being invested in the S&P 500. For example, one company selling a good deal of index universal life has an investment portfolio containing 97 percent fixed income instruments. The sellers of index universal life claim they are able to provide such high potential returns by using various hedging techniques to cover returns that are much larger than what their investment portfolios appear could be produced. Even if companies have actually designed hedging formulas, such exotic strategies are notoriously inaccurate. MF Global being the most recent example of how financial wizards often outsmart themselves. They certainly are an unfair mirage advantage over conventional current assumption universal life policies.

<SNIP>

They ask for a rating between 5 (excellent) to 1 (poor.)

I answered [1], *VERY* poor.

My response to the editors (we’ll see if they publish it):

PeterKatt says; The problem is that index premiums collected are not being invested inthe S&P 500.

He moves on to “example” but never justifies *why* heproposes a non-correlated investment is a “problem.”

For example, one company selling a good deal of index universal lifehas an investment portfolio containing 97 percent fixed income instruments.

*MOST* companies actually have even less…. Most have 93-94% of initial principal invested in high grade bonds and other secure yieldinstruments, generally generating a safe annual yield around 6.3% to 6.5% This yield ensures that each year the resulting mature position is returned to 100% of the original principal invested. *THIS* allows the 6%+yield to subsequently be employed in a more aggressive growth capture strategy.

The sellers of index universal life claim they are able to provide suchhigh potential returns by using various hedging techniques to cover returnsthat are much larger than what their investment portfolios appear could beproduced.

True, and easily proven. A simple Bull Call Debit Spread on the S&P500 (buying the ATM 1 yearCall, and simultaneously selling a 12% Out-Of-The-Money 1 year Call) can be priced by anyone at the CBOE, and costs roughly… wait for it…. 6.3% (Whoa… can you imagine that???) This is a simple and perfectly safe way tocapture the future growth value of the S&P500, in advance, in a manner that cannot decay or be lost.

ANYBODY can do it… even privately in their own account(assuming they can get sufficient yield on the safe bond side.) The downside is that a DIY approach does not get the tax-free policy loan access that funds in an IUL get, at interest rates lower than the IUL yield (even net of total costs, including the death benefit.) Further, a DIY’er won’t get tax deferral on growth. These 3 features(net cost-free liquidity on up to 90% of principal, tax-deferred growth, andtax-free distribution,) can be quantified to be worth much more in savings thanthe internal loads, fees, and costs of insurance… in effect making the death benefit a freebie. No “premium financing” is even required!!!

Even if companies have actually designed hedging formulas, such exoticstrategies are notoriously inaccurate.

This statement, unfortunately, displays a clear ignorance of simple hedging methods. These are not speculations begging for hopeful growth, these are carved in stone once placed.

MF Global being the most recent example of how financial wizards oftenoutsmart themselves.

This is professional “character assassination,” at best. MF Global (along with Madoff) were dishonest thieves with corrupt funds accounting practices… which couldn’t be further from the realities of annually audited statutory reserve insurance companies.

They certainly are an unfair mirage advantage over conventional currentassumption universal life policies.

If we remove the “mirage” reference, this statement gets it right…. The IUL advantages are significant, and quite “unfair” in advantage to the client.

Cheers,
David Donhoff, Advisor
David@LeveragePlanners.com
425-223-4520 Desk
425-652-1001 Cell
206-338-5856 Secure Fax

Leverage Planners
www.LeveragePlanners.com
No Bull Financial, LLC
www.NoBullFinancial.com

413 14th Ave West
Kirkland, WA 98033

Mortgage Lending in Other Countries (Part I of II)

An interesting BLOG post, I think;
http://www.stratmorgroup.com/RobChrismansBlog/tabid/83/Article/37/mortgage-lending-in-other-countries-part-i-of-ii.aspx

Many in the industry continue to oppose the increasing amount of government direction, regulation, and interference in the housing market in the United States. To one degree or another, however, the U.S. government in this country has always had an interest in housing, with varying effects. The U.S. has a relatively high rate of homeownership but it is not the highest among major developed markets. In this comparison, Australia, Ireland, Span and the U.K. all have higher rates of homeownership and Canada’s rate is comparable to that of the U.S. And interestingly, these countries provide far less government support for homeownership than the U.S. Can we learn anything from looking at home ownership, and mortgage lending, in other countries?

Most western European countries have lower rates of homeownership in part due to strong social rental systems but southern European countries like Italy, Greece and Spain have higher rates of homeownership reflecting cultural values, discriminatory policies towards private rental housing and weaker support of social rental housing. During the early 2000’s the US had an unprecedented run-up of house prices, but values in other countries actually increased more. And then Australia and the U.S. were the first of the bubble countries in which house prices fell, the U.S. more than other countries, although the Australian housing market has since recovered.

Read more here;
http://www.stratmorgroup.com/RobChrismansBlog/tabid/83/Article/37/mortgage-lending-in-other-countries-part-i-of-ii.aspx

David Donhoff, Advisor
David@LeveragePlanners.com
425-223-4520 Desk
425-652-1001 Cell
206-338-5856 Secure Fax

Leverage Planners
www.LeveragePlanners.com
No Bull Financial, LLC
www.NoBullFinancial.com

413 14th Ave West
Kirkland, WA 98033

(NAPSI) Although life insurance has been with us for hundreds of years, Indexed Universal Life is a revolutionary new product quickly becoming extremely popular.

Indexed universal life grows cash values to match a market index. These products offer tax advantages, death benefits, low costs, and easy liquidity.

Only a few companies offered indexed universal life products in 1997.  Nine companies offered the product by 2005, and in the past couple of years the number of providers has ballooned to 46. Sales approached $800 million in 2011 alone, quite a contrast to the $667 million sold over the six-year period from 2000 through 2005.

The reason for such growth? Indexed universal life is perfect for consumers seeking market participation without market loss risks, at a fraction of the cost of similarly tax-preferred accounts, like 401k’s, 403b’s, SEP-IRA, ROTH-IRA and traditional IRA accounts.

See comparison:

Retirement Advantaged Benefits of IUL

Indexed universal life performance is typically linked to a major stock index such as the S&P 500. Generally, these policies include an annual cap on the upside ranging between 10 and 14 percent, and a floor positive credit guarantee should the index drop in value.

“Consumer needs and preferences change, and so do market opportunities,” said David Donhoff of Leverage Planners, a leading provider of indexed universal life since 2001. “Our indexed universal life products are battle tested through all conditions. During two of the worst bear markets in recent history [early 2000s and 2008−09], none of our indexed universal life policyholders lost any accumulated value in their policies because of a declining stock market.”

Through the first three quarters of 2011, the life insurance industry saw modest 5 percent growth, however indexed universal life accounts grew a whopping 38 percent over the same period. The only other life insurance product hitting double-digit sales increase during that time frame was whole life, with a 10 percent jump.

“Relative to other products in the industry, indexed universal life is fairly new,” Littlefield said. “It’s the fastest-growing product in the life insurance business because its cash accumulation features, death benefit protection and flexibility are simply a great fit for many consumers.”

Approaching the previous all-time highs;

It certainly fits with the negative European treasury rates theme…

I don’t see how American consumers could ever see a negative retail rate (getting paid, cash, to borrow,) but it seems inevitable we’re going to see mortgage (and unsecured?) borrowing rates dive even further south than they are today.

We locked a 30 FRM at 3.75% last week, paying the client 2.75% rebate points (and that’s only because the lender couldn’t/wouldn’t drop their lowest rate coupon even lower to reach a no-points “par” rate.)

I seriously think we may tease the top edge of the 2-3% boundary this year, on LONG-term funding.

Not that this means anything on its face… costs of leverage are so low, a 20-50% discount is actually fairly irrelevant at conumer borrowing levels….

It *IS* a piece of the puzzle to factor in on the macro-level though.

Luck all!
Dave Donhoff
Leverage Planner