After the Bust: Retired and Still Saddled With a Mortgage

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Andrey Popov/GettyAbout 30 percent of homeowners 65 and older were paying a mortgage in 2013, up from 22 percent in 2001.

By Paul Wiseman
AP Economics Writer

WASHINGTON (AP) — Al and Saundra Karp have found an unconventional way to raise money and help save their Miami-area home from foreclosure: They’re lining up gigs for their family jazz band.

They enjoy performing. But it isn’t exactly how Al, an 86-year-old Korean War vet, or Saundra, 76, had expected to spend their retirement.

Of all the financial threats facing Americans of retirement age — outliving savings, falling for scams, paying for long-term care — housing isn’t supposed to be one. But after a home-price collapse, the worst recession since the 1930s and some calamitous decisions to turn homes into cash machines, millions of them are straining to make house payments.

The consequences can be severe. Retirees who use retirement money to pay housing costs can face disaster if their health deteriorates or their savings run short. They’re more likely to need help from the government, charities or their children. Or they must keep working deep into retirement.

“It’s a big problem coming off the housing bubble,” says Cary Sternberg, who advises seniors on housing issues in The Villages, a Florida retirement community. “A growing number of seniors are struggling with what to do about their home and their mortgage and their retirement.”

The baby boom generation was already facing a retirement crunch: Over the past two decades, employers have largely eliminated traditional pensions, forcing workers to manage their retirement savings. Many boomers didn’t save enough, invested badly or raided their retirement accounts.

The Consumer Financial Protection Bureau’s Office for Older Americans says 30 percent of homeowners 65 and older (6.5 million people) were paying a mortgage in 2013, up from 22 percent in 2001. Federal Reserve numbers show the share of people 75 and older carrying home loans jumped from 8 percent in 2001 to 21 percent in 2011.

What’s more, the median mortgage held by Americans 65 and older has more than doubled since 2001 — to $88,000 from $43,400, the financial protection bureau says.

In markets hit hardest by the housing bust, a substantial share of older Americans are stuck with mortgages that exceed their home’s value. In Atlanta, it’s 23 percent of homeowners 50 and older, according to the real-estate research firm Zillow. In Las Vegas, it’s 26 percent.

In the worst cases, hundreds of thousands of older Americans have lost homes to foreclosure. A 2012 study by the AARP found that 1.5 million Americans 50 and older lost homes between 2007 and 2011.

In mid-2010, Tod Lindner lost his oceanfront home in California’s Marin County. He ran into trouble after the finance company that employed him was acquired and the new owners refused to pay him fees he contended he was owed.

Lindner had bought the house for $330,000 in the late 1980s. But he’d refinanced to pull out money to invest, swelling the mortgage to $680,000. Lindner tried to work out a modified mortgage, but his bank foreclosed instead. He and his wife sought bankruptcy protection, rented an apartment and slashed their spending.

“At age 70, I just started working for another company” in banking, Lindner says. “My plan would have been to retire.”

Seniors fell into housing trouble in varying ways. Some lost jobs. Some overpaid for homes during the housing boom, thinking they could cash in later.

Prices crashed instead.

Some made unwise decisions to refinance mortgages and pull cash out of their homes to meet unexpected costs, help their children or embark on spending sprees.

Jim, 67, and LaRue Carnes, 63, moved to Sacramento, California, in 1978 and bought a house for $54,000. For 33 years, Jim worked as a newspaper reporter and editor. They refinanced their mortgage several times and pulled money out of the house and took on higher mortgage payments. “Foolishly, like so many Americans, we used the house as a bank,” LaRue says.

In 2011, Jim was laid off, and the couple fell behind on mortgage payments. Three times, they dipped into retirement savings to fend off foreclosure. Eventually, with a $25,000 grant from a state program, Keep Your Home California, they negotiated a new mortgage they could afford.

Still, they’re still struggling. Once a month, they eat free breakfast at a church, bringing home bagels and fruit. They “never thought we would be partaking of such,” LaRue says.

The Karps, the Florida couple with the family jazz band, bought their three-bedroom home in North Miami Beach, Florida, for $77,000 in 1980. They refinanced, partly to pay down credit-card debt, and their mortgage swelled to $288,000.

Al kept working as a tax accountant into his late 70s. But Alzheimer’s disease forced him into retirement.

The couple is getting by on about $2,500 a month in Social Security and Veterans Administration benefits, plus food stamps and help from their two sons. They stopped paying the mortgage and are fighting foreclosure in court.

To ease the stress and earn some cash, they perform old musical standards as the Karp Family — Saundra on vocals, Al on sax, son Larry on keyboards.

“I’m trying desperately to stay here,” Saundra says. As for Al: “He thinks the mortgage is paid. He hasn’t got a clue.”

 

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Mortgage Rates Remain Flat at 3.78%, But Volatility Likely

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ZillowThe weekly mortgage rate chart illustrates the average 30-year fixed interest rate in six-hour intervals.

By Lauren Braun

Mortgage rates for 30-year fixed loans fell this week, with the current rate borrowers were quoted on Zillow Mortgages at 3.78 percent, down 1 basis point from the same time last week.

The 30-year fixed mortgage rate hovered around 3.74 percent for most of the week before rising to the current rate Tuesday.

“Rates were largely flat last week, but we don’t expect this recent stability to continue,” said Erin Lantz, vice president of mortgages at Zillow. “Rates should be more volatile this week as markets watch developments in Greece and Friday’s jobs report.”

Additionally, the 15-year fixed mortgage rate was 2.93 percent. For 5/1 ARMs, the rate was 2.80 percent.

Check Zillow Mortgages for mortgage rate trends and up-to-the-minute rates for your state, or use the mortgage calculator to calculate monthly payments.

 

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Mortgage Rates Edge Up to 3.79%, Remain Well Below 4%

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ZillowThe weekly mortgage rate chart illustrates the average 30-year fixed interest rate in six-hour intervals.

By Lauren Braun

Mortgage rates for 30-year fixed loans rose this week, with the current rate borrowers were quoted on Zillow Mortgages at 3.79 percent, up 2 basis points from the same time last week.

The 30-year fixed mortgage rate fell Thursday, then hovered around 3.78 percent before rising to the current rate Tuesday.

“Despite some volatility early on as markets parsed typically unimportant data for signals of the Fed’s first rate hike, mortgage rates remained flat with lenders focused on the Memorial Day holiday,” said Erin Lantz, vice president of mortgages at Zillow. “We expect these ups and downs to continue this week.”

Additionally, the 15-year fixed mortgage rate was 2.96 percent. For 5/1 ARMs, the rate was 2.91 percent.

Check Zillow Mortgages for mortgage rate trends and up-to-the-minute mortgage rates for your state, or use the mortgage calculator to calculate monthly payments at the current rates.

 

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Mortgage Rates Edge Downward to 3.77%

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ZillowThe weekly mortgage rate chart illustrates the average 30-year fixed interest rate in six-hour intervals.

By Lauren Braun

Mortgage rates for 30-year fixed loans fell this week, with the current rate borrowers were quoted on Zillow Mortgages at 3.77 percent, down 5 basis points from the same time last week.

The 30-year fixed mortgage rate fell early in the week, then hovered around 3.71 percent before rising to the current rate on Tuesday. Hawaii saw 30-year fixed rates as low as 3.67 percent.

“Rates fell late last week as a string of weak data raised concerns about the underlying strength of the U.S. economy,” said Erin Lantz, vice president of mortgages at Zillow. “This week markets will look to a few Fed speeches and minutes from April’s Federal Open Market Committee meeting for further guidance.”

Additionally, the 15-year fixed mortgage rate was 2.91 percent, For 5/1 ARMs, the rate was 2.84 percent.

Check Zillow Mortgages for rate trends and up-to-the-minute rates for your state, or use the mortgage calculator to check monthly payments at the current rates.

 

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Buying a Home When You’re Not a U.S. Citizen

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By Kirk Haverkamp

Immigrants are having a significant impact on the U.S. housing market. According to the Research Institute for Housing America, immigrants accounted for nearly 40% of the net increase in U.S. homeowners from 2000 to 2010. Meanwhile, the same group estimates that U.S. homeownership rates among Latino immigrants will hit 50% by the year 2020.

Overall, the number of immigrant homeowners is still relatively small, representing only 11.2% of owner-occupied homes in 2014, according to the Joint Center for Housing Studies. Even so, that’s up from 6.8% 20 years earlier.

So immigrants are clearly buying homes. But what sort of obstacles and challenges do they face that native-born homebuyers do not?

There are no legal barriers to foreign nationals buying property, owning homes or obtaining loans in the U.S.

Foreign investors buy U.S. property and do business with U.S. banks all the time — getting a mortgage and buying a home is simply more of the same, on a smaller scale.

“Residency of any kind is not a requirement for home ownership in the U.S.,” said Jason Madiedo, president of Alterra Home Loans, in Las Vegas. “The challenge for the consumer is to gain financing.”

Documenting Foreign Financial Info Can Be a Challenge

For a legal immigrant with an established employment and credit history in this country, the process of buying a home is much the same as it is for a citizen. However, there are still certain challenges that non-citizens may face when seeking to buy a home in the U.S. that native-born borrowers are unlikely to encounter.

“It becomes a little more difficult for a foreign national to buy an owner-occupied property unless they’re here with a job in the U.S.,” said Bill Ashmore, president of IMPAC Mortgage in Irvine, California. “The longer somebody’s here and the more they can document their income through tax returns, the better off they are.”

Even if they’ve established themselves professionally and financially in their home countries, recent arrivals may find it challenging to get a mortgage in the U.S., Ashmore said.

One of the major reasons is because the information needed to document income and credit is coming from abroad. That means the information may need to be translated into English, or may be in a different format or based on different conventions than American bankers are used to — for example, there will be no W-2s for earnings abroad.

There’s also the matter of verifying the validity of information provided by unfamiliar individuals or institutions.

“Are you going to accept the profit and loss statement of the accountant?” he asked.

As a result, many foreign nationals tend to simply pay cash for home purchases, which Ashmore termed the “path of least resistance.”

That’s not to say that foreign financial information can’t ever be used in obtaining a mortgage from a lender in this country. Ashmore said his company is developing a program in cooperation with about 25 foreign banks to enable borrowers to document assets abroad. However, potential borrowers would need to have accounts with a participating bank to benefit.

Alternative Measures of Credit, Income Sometimes Needed

Non-citizen homebuyers tend to fall into two groups, according to Madiedo, who is past president of the National Association of Hispanic Real Estate Professionals. The first group, he said, are affluent foreign nationals with the financial resources to buy property in the U.S. and the ability to come and go as they wish.

The second, he said, are the ones who come here seeking work and opportunity, people he calls “the type that this country was built on.”

“These folks have a much harder time obtaining financing,” he said.

The way some immigrants handle their finances is part of the issue, Madiedo said, given that some prefer to do their transactions in cash. As a result, they don’t build a credit history. (If you want to see if you have a credit history, you can check your free annual credit reports through AnnualCreditReport.com, and you can check your free credit report summary every month on Credit.com.)

“What we run into is, number one, a thin-credit or no-credit situation,” he said. “Many immigrants tend to be credit-adverse, which limits their options.”

For borrowers who haven’t established traditional credit, some lenders will use alternative methods of qualifying them for a loan, such as looking at rent payments, or phone and utility bills. But doing so is more labor-intensive for the lender and the loans carry higher interest rates than those done with conventional underwriting.

Another issue that sometimes arises with immigrant families is that many people may contribute to the household income, rather than the one- or two-earner households that lenders are more accustomed to evaluating.

“One of the challenges we’re seeing from an underwriting perspective is the multigenerational family,” Madiedo said.

In such a household, you may have grandparents, parents and children all working and contributing to the loan payment. Documenting all that income, and proving that everyone will be an occupant in the home, is a challenge in today’s lending environment, Madiedo said.

Not all lenders will be willing to go through the extra steps needed to underwrite such loans, although Fannie Mae, Freddie Mac and the FHA do have certain loan products that accept both nontraditional credit and varied income sources.

“The key for consumers is to be working with the right lender who understands their cultural nuances and packages the loan into whatever (product) works for them,” Madiedo said.

Nonpermanent Residents Can Still Get Loans

Another type of immigrant borrower is one who does not have permanent residency (green card) status, but who has come to the U.S. on a temporary visa because he or she has special professional skills that are in demand.

From a lender’s perspective, one concern with such borrowers is how long they will be able to remain in the country. As such, they may need to provide a statement from their employer/sponsor attesting to the expected duration of their employment, Ashmore said.

Both Fannie Mae and Freddie Mac offer mortgage programs that are available to nonpermanent residents from other countries who are here on a temporary work visa (H1B or H2B). Down payment requirements are higher than the minimums allowed on other Fannie and Freddie loans, however, and other restrictions may apply.

Nonpermanent residents from other countries may also be able to go outside of the Fannie/Freddie structures for what are called non-agency loans, which have fewer restrictions but also have higher interest rates and higher down payment requirements.

What About Undocumented Immigrants?

What about undocumented immigrants? Many are surprised to learn that even in that situation, it’s still possible to get a mortgage and buy a home.

A standard loan application will require the borrower to provide a Social Security number and indicate their citizenship or residency status. But those requirements aren’t established by law — those are requirements imposed by the agencies backing those loans, such as Fannie Mae, Freddie Mac or the FHA. And there are certain types of non-agency loans that don’t have those requirements.

For some loans, a borrower may use what is called an Individual Taxpayer Identification Number (ITIN) instead of a Social Security number. This is an alternative form of taxpayer identification that is issued to foreign nationals working in the U.S. who are ineligible for Social Security.

Lenders themselves aren’t equipped to check a person’s immigration status — Ashmore said that if a person has their financial and credit information in order, the lender really doesn’t have a way of knowing what their immigration status might be.

“If somebody’s going to come to me, I’m not going to check that their driver’s license is right, I’m going to do a fraud check,” he said. “It’s more documenting your ability to repay, rather than whether you’re illegal or not,” he said.

ITIN mortgages aren’t widely available, and are generally offered by small community lenders who are willing to put in the extra effort needed to underwrite them, according to Madiedo. Interest rates typically run about two to three percentage points above what someone would pay on a conventional 30-year loan, he said.

Madiedo said that undocumented immigrants who obtain mortgages tend to be dependable borrowers with low default rates. They also tend to keep their loans for a long time, being less likely than other mortgage borrowers to refinance to a lower rate or sell the property before the note is paid off.

“The loans perform extremely well, so it’s a good investment opportunity,” he said.

 

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How to Shop for a Mortgage Online

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By Gerri Detweiler

Ron Milman refinanced his mortgage in early 2015. A resident of an Atlanta suburb, Milman says he saved money, closed quickly, and except for one quick trip to a local bank to meet a local attorney to finalize paperwork, he never left his home office. Working strictly online and by phone, he says getting his mortgage online was a painless process for him. “I really don’t like going into an office,” he says. “It’s so much wasted time and effort.”

If you’re in the market for a home loan, whether for a purchase or refinance, you may have toyed with the idea of using an online lender. But you may be wondering what getting a mortgage online is like. How is the process different?

“The Internet provides the most convenient way for consumers to compare mortgage service offerings; as a result, a growing portion of mortgage originations are anticipated to be completed online in the years to come,” says Stephen Hoopes, an analyst with research firm IBISWorld.

It’s important to first understand that shopping for a mortgage online can be different than getting a mortgage online. In the first scenario, you may be using a service that doesn’t actually make loans but helps connect you to lenders. In the latter case, you actually apply for and complete the process largely online.

With that in mind, here are some of the differences when you get an online mortgage:

The Internet Holds Answers

Aren’t sure about a mortgage term? Need help deciding which type of loan to get, or whether to go for a longer-term loan or a shorter one? You can take a break to research it before you decide without giving a loan officer a blank stare or feeling like you are being put on the spot. Not that you can’t do that before you shop for a mortgage anyway, but apparently quite a few consumers don’t fully educate themselves on all their options when getting the largest loan of their lives.

A recent report by the Consumer Financial Protection Bureau found that almost half of borrowers seriously consider only a single lender or broker before deciding where to apply. The CFPB also says that most borrowers rely heavily on those who have a financial stake in the transaction, and less than half get a lot of their information from outside sources such as websites, financial and housing counselors, or friends, relatives or co-workers.

Of course, researching online can be a double-edged sword. You need to make sure you are getting information from reliable sources, such as independent educational websites. The CFPB is one source of free education through its Owning a Home initiative.

Do It on Your Own Time

Need to dig up a bank statement for your lender? Want to check on the status of your appraisal? With an online lender you can usually take care of those things whenever it’s convenient for you. Information about the status of your loan will be available to view online, and if you have a question, employees may be available to review your loan file and answer questions outside of the standard banking hours. “You can see (your information) 24/7 and you are not locked into business hours getting a hold of your loan officer or processor,” says Bob Walters, chief economist at Quicken Loans.

Whatever Works

While virtually the entire process can take place online, you aren’t tied to your computer. If you have to provide documentation and don’t have a fax machine or scanner, you should be able to overnight bank statements, tax returns or other documents to the lender. Certain documents will have to be notarized, and the notary will come to you or meet you in a convenient location, such as a local coffee shop. Most closings for purchase transactions take place at a title company, while closings for refinance transactions can take place anywhere you choose.

Some Things Never Change

Of course, whether you decide to work with a local lender or an online mortgage company, certain things don’t change. You will want to get your free annual credit reports to make sure they are accurate. Do this at least six weeks before you plan to apply, or earlier if possible, to give yourself time to correct mistakes. In addition, getting a free credit score will help you understand whether your credit is excellent, fair or poor. (You can get two of your credit scores for free on Credit.com.) While you are at it, if you hope to buy a home, it’s a good idea to get pre-approved for a mortgage.

And be prepared to be 100% truthful and supply documentation your loan officer may need — including copies of bank statements, tax returns, pay stubs, etc. Just because you scan documents doesn’t mean you won’t have paperwork! But you may save a few trees — and save yourself a few headaches — this way.

It goes without saying that you should make sure you are dealing with a reputable lender with a secure website. No one should be emailing a copy of your tax return or credit report back and forth to you. The last thing you want is for this kind of sensitive information to fall into the hands of a scammer.

And while rates are very important, Scott Sheldon, a loan officer with Sonoma County Mortgages and a Credit.com contributor, warns that you may get what you pay for. “Internet lenders are priced incredibly thin. Their pricing and rates can be fantastic, but they operate solely off of volume.”

He is concerned that going this route can be especially risky for homebuyers with unique circumstances or a less than “squeaky clean” file. What happens to your home purchase if the “underwriter denies your file because it wasn’t packaged properly upfront by the loan officer whose is also working on 50 other loans simultaneously?” he asks.

For Milman, at least, the process that started with a phone call in December resulted in a closed loan by mid-January. “It makes a whole lot of sense to do this online,” he says.

 

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Mortgage Rates Rise, but Predictions Remain Steady

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ZillowThe weekly mortgage rate chart illustrates the average 30-year fixed interest rate in six-hour intervals.

By Lauren Braun

Mortgage rates for 30-year fixed loans rose this week, with the rate borrowers were quoted on Zillow Mortgages at 3.61 percent on Tuesday, up 8 basis points from the same time last week. On Thursday morning, the national rate was at 3.71%.

However, the long-predicted rise in mortgage rates still appears to be on hold. After a report that economic growth slowed during the winter, the Federal Reserve signaled Wednesday it will not raise its benchmark interest rate in the near future.

According to Zillow Mortgages, the 30-year fixed mortgage rate rose early in the week, then hovered around 3.60 percent before rising to 3.61 percent Tuesday.

“Rates were essentially flat last week, remaining in the range they have been in for the past month,” said Erin Lantz, vice president of mortgages at Zillow.

Additionally, the 15-year fixed mortgage rate was 2.84 percent, and the rate for 5/1 ARMs also was 2.84 percent.

Check Zillow Mortgages for rate trends and up-to-the-minute mortgage rates for your state, or use the mortgage calculator to calculate monthly payments at the current rates.

A look at the broader mortgage rate trend for the past six months:

 

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Mortgage Rates Slightly Down at 3.53% and Holding Steady

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ZillowThe weekly mortgage rate chart illustrates the average 30-year fixed interest rate in six-hour intervals.

By Lauren Braun

Mortgage rates for 30-year fixed loans fell this week, with the current rate borrowers were quoted on Zillow Mortgages at 3.53 percent, down 5 basis points from this time last week.

The 30-year fixed mortgage rate fell early in the week, then hovered around 3.53 percent for the rest of the week.

“After dipping early last week on soft economic data, rates have been remarkably flat,” said Erin Lantz, vice president of mortgages at Zillow. “This week we expect rates to remain largely unchanged with no big data releases or economic news on the horizon.”

Additionally, the 15-year fixed rate Tuesday morning was 2.81 percent. For 5/1 ARMs, the rate was 2.73 percent.

Check Zillow Mortgages for rate trends and up-to-the-minute rates for your state, or use the mortgage calculator to calculate monthly payments at the current rates.

 

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Mortgage Rates Inch Upward to 3.58%

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ZillowThe weekly mortgage rate chart illustrates the average 30-year fixed interest rate in six-hour intervals.

By Lauren Braun

Mortgage rates for 30-year fixed loans rose this week, with the current rate borrowers were quoted on Zillow Mortgages at 3.58 percent, up 3 basis points from this time last week.

The 30-year fixed mortgage rate rose throughout the week before dipping to the current rate on Tuesday.

“Rates inched up last week as new data suggested the U.S. economy is on increasingly stable ground despite March’s weak jobs report,” said Erin Lantz, vice president of mortgages at Zillow. “Mortgage markets remain extremely sensitive to the ups and downs of economic news, but overall we expect the trend of gradually rising rates to continue this week.”

Additionally, the 15-year fixed mortgage rate this morning was 2.87 percent. For 5/1 ARMs, the rate was 2.83 percent.

Check Zillow Mortgages for mortgage rate trends and up-to-the-minute mortgage rates for your state, or use the mortgage calculator to calculate monthly payments at the current rates.

 

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Mortgage Rates Slip Lower to 3.55% After Jobs Report

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ZillowThe weekly mortgage rate chart illustrates the average 30-year fixed interest rate in six-hour intervals.

By Lauren Braun

Mortgage rates for 30-year fixed loans fell this week, with the current rate borrowers were quoted on Zillow Mortgages at 3.55 percent, down 7 basis points from last week.

The 30-year fixed mortgage rate fell throughout the week, reaching 3.47 percent on Sunday before returning to the current rate.

“Rates fell sharply around Friday’s highly anticipated jobs report, which showed much weaker job creation and modestly higher wages than expected,” said Erin Lantz, vice president of mortgages at Zillow. “Looking ahead, we expect rates to be mostly flat, with reaction to last week’s headlines and international news driving rate movement this week.”

Additionally, the 15-year fixed mortgage rate was at 2.79 percent Tuesday. For 5/1 ARMs, the rate was 2.67 percent.

Check Zillow Mortgages for mortgage rate trends and up-to-the-minute mortgage rates for your state, or use the mortgage calculator to calculate monthly payments at the current rates.

 

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