Posts Tagged "CFPB"

How to Help Low-Wage Workers Pay Bills

The Consumer Financial Protection Bureau (CFPB) will host a series of webinars next month for professionals and volunteers who regularly work with low-income clients and want guidance on how to help them with their finances.

People who serve this vulnerable population may want to help but don’t always feel comfortable giving advice. CFPB has assembled an online toolkit – a companion to the webinars – filled with simple, practical solutions and suggestions about how to get clients to open up about their finances or overcome the emotional obstacles to change. The agency also supplies professionals with thought-provoking questions for their clients about a range of financial issues.

“There are no right or wrong answers,” CFPB explains.

The webinars, scheduled for March, are open to everyone, including social service case workers, legal aid providers, housing counselors, tax preparers, non-profit volunteers, financial advisers, and local government officials.

The agency’s package of tips, tools and worksheets cover the basics that can make a big difference to families on a tight budget. A couple examples are a Spending Tracker to help them manage their expenses and a Comparing Auto Loans worksheet for car shopping.

Try these links for more information:

Thinking ahead roadmap logo

How to Pick (or Be) a Retiree’s Financial Ally

If you need help managing your finances in old age, it’s a lot of work to find someone – and not a very pleasant task to think about.

But it’s crucial that retirees plan for this. As to when or whether you might need help, it really depends on your individual circumstance.

Attorney and researcher Naomi Karp cites a variety of studies that provide some clues to the different ways this process can play out. People who develop dementia obviously need what she calls a financial advocate. This might be a trusted friend, family member, lawyer or professional financial adviser.

But roughly a third of aging Americans who are experiencing natural cognitive decline are prone to making poor decisions about their money, she explained during a recent webinar sponsored by the federal Consumer Financial Protection Bureau (CFPB) where she used to work.

Financial acumen actually peaks well before retirement – at 53! – but wisdom makes up for some of that, she said. During one’s 70s and 80s, financial literacy declines, but unfortunately confidence about one’s abilities remains high. “That’s a risky situation,” Karp said.

She and other financial experts have put together an interactive website the Thinking Ahead Roadmapwith six steps to follow to find an advocate. Each step has tips, tools, and information to guide you through the process. An adult child or caregiver could also use this website if they feel the need to assume more responsibility for an elderly parent’s finances. …Learn More

A small house

Home Equity Rises. Reverse Mortgages Don’t

The housing market has shrugged off the pandemic, and home prices are rising sharply due to historically low interest rates. The market crash more than a decade ago is a distant memory.

Home Equity graphThe total value of the equity in older Americans’ homes has doubled since 2010, hitting $8.05 trillion at the end of last year. The irony is that federally insured reverse mortgages, which allow a long-time homeowner to cash in on tens of thousands of dollars of equity, aren’t very popular.

Last year, only 42,000 Home Equity Conversion Mortgages (HECMs) were sold – half as many as in 2010 – according to the U.S. Department of Housing and Urban Development (HUD).

One reason HECM reverse mortgages haven’t caught on, as the Consumer Financial Protection Bureau notes, is that they might not be suitable to homeowners who eventually sell their house. As the loans accrue interest, the “balance is likely to grow faster than their home values will appreciate,” the agency said.

But most retired homeowners never move, and HECMs are one option for people who are short on income. “We accept it as ‘normal’ to spend-down 401(k) funds, yet somehow home equity is sacrosanct,” said Dave Gardner, a former mortgage broker who sometimes handled reverse mortgages. Retirees, he said, should consider this question: “Could you achieve a better result and extend the lifespan of your nest egg with a reverse mortgage?”

To qualify for the loans, borrowers must be at least 62. They can take the reverse mortgage proceeds in the form of a lump sum, line of credit, or monthly payments – or some combination of these.

Curious homeowners can check out the federal government’s new pamphlet, which explains the basics of reverse mortgages. It’s aimed at people who already have the loans but is just as useful for people who are curious about using one themselves.

Before proceeding with any complex financial transaction, however, it’s critical to do due diligence. A reverse mortgage is no different. …Learn More