Foreclosure Prevention Counseling Works

"Counseling Helps Borrowers Avoid Foreclosure"... that's the headline from the Washington Post yesterday, reporting on a new study conducted by the Urban Institute of Washington D.C.

The study has found that borrowers who sought out counseling, even though they were already seriously delinquent on their mortgages, were SIXTY PERCENT MORE LIKELY to avoid foreclosure after meeting with a counselor than those who don't.

In addition... those clients that worked with a non-profit housing counselor, and received a loan modification from their lender, had their payments reduced... on average $454.00 MORE than those homeowners that received a loan modification without the assistance of a counselor.

None of this surprises us here at the MN Home Ownership Center. The Center's Executive Director, Julie Gugin says:

We've known through our extensive work with foreclosure prevention that personalized counseling is the most cost-effective way to address the mortgage crisis. This report underscores the work of dedicated non-profit counselors throughout the country.

If you, or someone you know, is struggling with to keep up with their mortgage payments, or is worried about a FUTURE payment... don't delay contact a Housing Counselor that specializes in foreclosure today! To contact your local Counselor, click here.

Entry Cost Assistance Matrix Released

The Minnesota Home Ownership Center is pleased to announce the release of its much-anticipated "Entry Cost Matrix". The Matrix outlines down-payment and entry cost assistance programs that are available to residents of the state of Minnesota. The Center would like to thank the Minnesota Assocation of Realtors for their financial support of the creation of the Matrix.

While the Matrix is available to anyone... we recommend that if you're thinking of purchasing your first home in Minnesota - and are looking for down-payment help or entry cost assistance, that you speak with a certified Home Stretch (pre-purchase) counselor. Remember, homeownership is a HUGE undertaking.

The Matrix is organized geographically, which allows readers to quickly find the area of the state that they are most interested in.

Funding for down-payment assistance and entry-cost help is FLUID. The information may change. Please contact a program adminstrator to see if funds are available, and, if not, if there is a waiting list for access to the funds.

OUR ASK OF YOU: If you are aware of an error on the Matrix... or if you know of any additional programs, funds or assistance that are NOT included in the Matrix, please contact the MN Home Ownership Center with that information. Together we can help break down the barriers to first-time home ownership!

The Matrix can be downloaded here.

Homebuyer Tax Credit Extension

UPDATE: Bill has been signed into law.

The extension, and expansion, of the $8,000 tax credit for first-time buyers is just about a done deal. The bill, H.R. 3548, now moves to President Obama's desk and is awaiting his signature. He has stated his intention of signing the bill into law, but remember... until he signs... it is NOT a law.

The Center is currently working on updating its Fact Sheet "Tax Incentives for First-Time Homebuyers" and will post the new fact sheet as soon as the bill is signed into law. For now, here's a brief overview of the contents of the bill:

• The $8,000 tax credit is available to first time buyers who are purchasing their primary residence.* The law defines a first-time buyer as someone who has not owned, or been included on title to, a property in the last three years.
• Buyers must sign a purchase agreement before May 1, 2010 and close on the property no later than July 1, 2010.
• If joint purchasers are not married, at least one of the purchasers must qualify as a first-time buyer. For married buyers, both must qualify as first-time buyers. With this extension, all buyers must be at least 18 years of age.
• There are income limits to claim the credit. The tax credit phases out for single taxpayers with adjusted gross income of $75,000 to $125,000. For married couples who file jointly, the phase-out is $150,000 to $225,000. (These are increases over previous tax credits).
• This tax credit can be claimed on either the 2009 or 2010 tax return. You must submit a copy of the signed HUD-1 statement with your tax return.
• NEW: There is also a $6,500 tax credit for some EXISTING homeowners who purchase another principal residence. However, they must have lived in their EXISTING principal residence for 5 consecutive years during the last 8 years.
• For either first-time or existing (sometimes called 'move-up' buyers - but the credit allows for 'downsizing' buyers too) the newly purchased property MUST be their principal residence.
• For members of the Armed Forces on duty outside of the U.S... the credit is extended an additional year (sign purchase agreement by May 1, 2011).

According to many reports... this may be the last time the credit will be extended... but homeowners, especially first-time buyers, should never base their home-buying decision on a tax credit. There are MANY other factors that play into whether home ownership is right for YOU or not. Before purchasing YOUR first home... take a Home Stretch class to learn what's involved, and speak with a non-profit Housing Counselor to see if you qualify for any down-payment assistance or other first-time buyer programs.

Remember - It's not a law until it has the President's signature on it!

MHA Loan Modifications and Credit Scores

An interesting article on the SFGate blog from the San Francisco Chronicle highlights new guidelines adopted by the "Consumer Data Industry Association" (the organization that represents credit bureaus - the people that track our credit scores).

Under the new guidelines, lenders should report loan modifications made under the Making Home Affordable (MHA) program as "loan modified under a federal government plan".

Until now, individual lenders reported modifications to the credit bureaus differently. Some reported them "paid as agreed" which didn't affect scores, while others reported them as "partial payment" which can have an extremely negative impact on credit scores - - as much of an impact as a short sale or even foreclosure.

If homeowners fall behind (one of the requirements for a MHA modification) lenders will still report the delinquent payments (30 day late, 60 day late, 90 day late, etc.) so there is no way to avoid at least SOME damage to a credit score with a modification - but if a homeowner is current during the trial period - banks should report those modified payments as "current."

HOWEVER... here's the catch... FICO, the country's best-known provider of credit scores (the famous "FICO Score") has said that they will, over the coming years, analyze "accumulated data" to see if there is any predictive value of the new "loan modified under government plan" on payments... which will determine how much the new category affects a credit score IN THE FUTURE. For now, the category does not either help or hurt a credit score.

Regardless of the impact on score... homeowners need to understand that a creditor might deny them credit (car loan, store credit, rental agreement, etc.) if they see the "loan modified under governement plan" on a credit report. Just something to keep in mind.

If you are falling behind in payments... and think a modification might work for you, contact a free, non-profit Housing Counselor in your area for assistance with a modification... or to see if there may be any other help or assistance available to you. For help in Minnesota, click here.

Helpful Fact Sheets - Foreclosure Prevention

The Minnesota Home Ownership Center has worked for years to create over a dozen fact sheets, FAQ's and other flyers that can help when a homeowner is struggling with mortgage payments or facing foreclosure.

NOW... all of these fact sheets have been compiled in one location on the Center's website! (www.hocmn.org >> Stay in Your Home >> Helpful Fact Sheets)

Feel free to print/distribute any of the fact sheets to homeowners that may benefit (Adobe Acrobat Reader required).

Do you have an idea for a fact sheet or FAQ that would benefit struggling MN homeowners? Feel free to email your idea to Ed Nelson at the Center. Thanks!

Foreclosure Postponement Video

Effective June 15, 2009 Minnesota state law allows homeowners that have fallen behind on their mortgage payments to delay, or postpone, the Foreclosure Sale (also known as the “Sheriff’s Sale” or "Sheriff's Auction") of their home by five months.

Postponing the Foreclosure Sale gives homeowners five more months to bring their mortgage current. The tradeoff - is that it also reduces the redemption period to five weeks. (Standard MN redemption period for a foreclosure by advertisement is 6 months).

Previously, the Center had created a fact sheet and affidavit to assist homeowners that might be interested in postponing their Foreclosure Sale.

Now the Center has created a video (available on our YouTube Channel here), that helps homeowners understand the Foreclosure law, the steps to take and other important aspects of foreclosure postponement in Minnesota:

Click here to view video on our YouTube Channel if embedded video is unavailable.

Event Reminders

Just a short post to remind everyone about the upcoming events that the Center is either hosting or will be present at:

For Professionals:

• Foreclosure Prevention Information Training for professionals working in Minnesota's SE Asian Communities. Last day to register! More info, click here.
• Emerging Markets Homeownership Initiative Third Annual Summit and Entry Cost Assistance Matrix Training. Space is limited! More info, click here.

For Homebuyers:

• Before you buy... Think HomeStretch! Homebuyer education and counseling that covers, start to finish, EVERYTHING that's involved in becoming a homeowner. Understand your rights and responsibilities throughout the entire process. More info, click here.
• Thinking of buying in Minneapolis? Join us at the City's Housing fair(s) - TWO DATES - 10/20 and 10/21. More info here.

For Homeowners:

• Stuggling with payments? You don't have to wait for an event... you can contact a FREE, non-profit Foreclosure Specialist today. Click here.
• Like to learn more about foreclosure in Minnesota - and the help and assistance that is available to Minnesota residents? Learn more at a confidential workshop at your local library. Additional information here.
• Live in Minneapolis? You can also visit the one of the City's two housing fairs (Tuesday October 20 and Wednesday, October 21) to learn more. More info here.

MN Housing Partnership - 2x4 Report

The Minnesota Housing Partnership has recently released its updated report (known as the "2 x 4 Report") that studies two indicators for each of four key housing areas:

• the home ownership market,
• the rental market,
• homelessness, and
• the housing industry.

The report is a great resource for housing information, and is designed to provide a concise, easy-to-digest, graphic overview of the state of housing in the state of Minnesota.

The complete report is available here.

Focusing on the "Owners' Market" segment of their report, it shows that just over 7% of primary (first lien) mortgages were delinquent in the second quarter of 2009 - up from about 6% in the fourth quarter of 2008.

When taken in combination with the increase in pre-foreclosure notices that we highlighted in our post on Tuesday (Pre-Foreclosure Notices, September 2009) we repeat can our assessment from Tuesday: MN still has a LONG way to go before we reach the end of the foreclosure crisis.

Pre-Foreclosure Notices, September 2009

It was brought to our attention (Thanks, Aaron!) that we hadn't updated the numbers of pre-foreclosure notices that our counseling network has received for a couple of months.

If the number of pre-foreclosure notices are a leading indicator of future foreclosures (which is a fairly safe assumption)... MN still has a LONG way to go before we reach the end of the foreclosure crisis.

As background for new readers, Minnesota State law (MN Statute 580.021) requires that the foreclosing party provide information regarding foreclosure prevention counseling services to the mortgager (homeowner) AND provide the homeowner’s name, address, and most recent known telephone number to an approved foreclosure prevention counseling agency - BEFORE filing the notice of pendency.

Once The Minnesota Home Ownership Center's network of foreclosure prevention agencies recieves notification from the lender/servicer/homeowners association, they then contact the homeowner, and track the number of notifications received during the month in their monthly reporting to the Center.

Here are the January through September, 2009 STATEWIDE Pre-Foreclosure Numbers:

(Click On Either Image To Enlarge)

Here are the January through September, 2009 Twin Cities Metro Pre-Foreclosure Numbers:

(Click On Either Image To Enlarge)

We've added trend lines to both charts to help readers see where we seem to be heading.

Once again, we have to tip our hats to the statewide network of Foreclosure Counselors! 6,411 families received notification of their services in September alone!

This brings the annual total of pre-foreclosure notices received to:

• Twin Cities Metro: 31,487 (!)
• Minnesota Statewide: 49,985 (!!)

If you're falling behind with your mortgage payments... or think you may fall behind soon... don't delay, contact a Housing Counselor that specializes in foreclosure today! To contact your local Counselor, click here.

Foreclosure Sale Postponement Info in Spanish

In order to postpone the foreclosure sale of their property, Minnesota state law requires that homeowners complete several steps. The first step in the process is to completely fill out an "Affidavit of Postponement".

This can be a confusing, if not impossible, undertaking for non-English speakers.

To assist Spanish-speaking homeowners that might be interested in postponing their foreclosure sale, the MN Home Ownership Center has created a "Cheat-Sheet" that helps explain the information the Affidavit is requesting.

Information about foreclosure postponement in Minnesota can be found here (in English) and here (in Spanish).

To see the new Affidavit description sheet in Spanish (The 'Cheat-Sheet')... click here.

Before deciding to postpone a Foreclosure Sale, homeowners are encouraged to consult with a foreclosure specialist to understand the pros and cons of a postponement, and to see if there are any other resources or assistance available to them. To find their local foreclosure specialist, homeowners should click here.

Third Annual EMHI Summit

New This Year: Entry-Cost Assistance Training!

The Minnesota Home Ownership Center is pleased to announce that the 2009 Emerging Markets Home Ownership Initiative (EMHI) summit has been scheduled for November 9th, 2009 at the Continuing Education and Conference Center on the University of MN Campus.

The Third Annual EMHI Summit, and the first since the MN Home Ownership Center adopted EMHI programming earlier this year, is a hallmark of the Center’s dedication to the EMHI mission of working to promote homeownership parity by leading and convening industry and community stakeholders to develop tools, resources, and best practices to increase homeownership opportunity for Minnesota’s emerging markets.

The event is designed primarily for realtors, lenders, non-profits, elected officials, and others working in the homeownership arena. The agenda will include:

• Keynote address from St. Paul City Council Member Melvin Carter III and State Representative Jeff Hayden. They’ll discuss the impact of homeownership on their constituency base and address public policy topics that support EMHI’s mission.
• Michael Grover, community affairs manager from the Federal Reserve Bank of Minneapolis, and John Patterson, director of research and evaluation at Minnesota Housing, will provide a comprehensive analysis of the current status of emerging marketing homeownership in Minnesota using the soon to be released American Community Survey data. A traditional part of the EMHI Summit, this presentation will offer thought-provoking insight into the status of emerging markets homeownership and how the current environment has impacted efforts.
• Representatives from the industry, including Michael Haley, Assistant Commissioner of Minnesota Housing; Teddy Bagley, Affordable Housing Manager for Guaranteed Rate; Umbelina Cremer, Emerging Markets Officer for Achieve Homeownership; and Kim Quayson of MidCountry Mortgage. Panelists will offer practical insights into how their organizations have successfully emerging market homebuyers and the lessons they’ve learned.
• Jacqueline King, Assistant Vice President and Community Affairs Officer at the Federal Reserve Bank of Minneapolis and founding board member of the Emerging Markets Homeownership Initiative, will close the agenda with a call to action and partnership to the industry to continue striving for EMHI’s mission.

CEU credits have been applied for.

To register, or for more information, click here.

Premiere training: taking the confusion out of entry cost assistance programs and affordable loan products

Following the EMHI Summit and a networking lunch on November 9th, the MN Home Ownership Center, in partnership with the Minnesota Association of Realtors, will be hosting a training and unveiling newly developed tools offering comprehensive information about entry cost and affordable loan programs throughout the state. As Minnesota begins to recover from the recent foreclosure crisis, municipalities, lenders, non-profits, and others have developed programs designed to promote homeownership. This proliferation of programs has led to confusion among industry professionals at they attempt to keep current on optimum opportunities for their clients.

This 3-hour training session will include:

• Details about accessing and using the MN Home Ownership Center’s brand new Entry Cost Assistance Matrix, including a panel of speakers highlighting some of the most frequently used programs in the state. Neighborhood Stabilization Programs will be featured.
• Information about accessing and using the MN Home Ownership Center’s Affordable Loan Product Matrix. Recently released to the public for the first time, the matrix includes valuable information about first-time homebuyer and other affordable loan programs. Lending representatives will be on hand to discuss their programs.
• The Entry Cost Assistance Matrix and Affordable Loan Product Matrix are is the first of their kind in Minnesota and highlight the Center’s commitment to working in partnership with Realtors®, lenders and other professionals to enhance home buying for Minnesotans.

Space is limited and registration is required.

CEU credits have been applied for the afternoon session as well.

To register, or for more information, click here.

Foreclosure Forum with Congressman Keith Ellison

Monday night October 5th, the Minnesota Home Ownership Center and its network of foreclosure prevention counselors were invited to participate in a public forum hosted by Representative Keith Ellison entitled "The Foreclosure Crisis: Identifying Problems and Sharing Solutions" that was held in Minneapolis.

The first hour of the forum included a resource fair where dozens of struggling homeowners were able to speak with the non-profit foreclosure specialists to help them determine their next steps.

During the next two hours, consumers and constituents heard from the Congressman, State Representatives, Housing Counselors and even lenders about what is being done to help struggling Minnesota families.


Here Congressman Keith Ellison introduces Cheryl Peterson from Twin Cities Habitat for Humanity and Ed Nelson from the MN Home Ownership Center:

(Click to Enlarge)

Here Ed Nelson speaks about the new Foreclosure Postponement law in Minnesota. State Representative Jeff Hayden is on the right:

(Click to Enlarge)

Additional photos of the event can be found on the Center's photo gallery here.

Affordable Loan Product Matrix Available Online

For over a decade the MN Home Ownership Center has produced the “Affordable Loan Product Matrix”, to inform non-profit housing counselors of affordable loan programs available to their clients.

Designed to assist low- to moderate-income homeowners with the purchase of their first home, the matrix generally includes loan programs that have flexible underwriting guidelines, allow higher LTV limits, lower buyer investment and require homebuyer education and/or counseling.

Now, for the first time, the Center is making the Affordable Loan Product Matrix available to the general public - - and will be an especially helpful tool for real-estate industry and lending professionals.

The matrix can be found on the Center's website here.

If you are a homeowner interested in purchasing your first home... feel free to browse the matrix - - but we also recommend that you speak with a housing counselor to see which, if any, of the programs listed are best suited for YOU. A non-profit housing counselor (also known as a Home Stretch Counselor) can work with you to make sure that you are ready for successful home ownership. For more information, click here.

The Center continues to develop an Entry Cost Assistance Matrix (Down-payment and closing cost assistance, grants & programs) as well. More information will be posted soon.

Fox-9 Community Connection Focuses on Foreclosure

With the help of Roxanny Armendariz from the Neighborhood Development Alliance, homeowners Jose and Juana Gonzalez, along with their 4 children, were able to avoid foreclosure after Roxanny was able to mediate an affordable loan modification for the Gonzalez family.

Their story - including the difficulties the Jose and Juana experienced while trying to work with their lender is part of the focus of the most recent "Community Connection" segment on Fox-9.

For additional information about the segment... including links to an on-line interview with Roxanny about the work she does assisting clients, click here.

The segment will air again on Saturday, October 11th at 9 a.m on WFTC channel 29.

If you're facing a possible foreclosure... and struggling to work with your lender - - the Center's network of FREE, non-profit foreclosure counselors can help. To find your local counselor, click here.

Foreclosure Postponement on Kare-11

Minnesota's foreclosure postponement law was the focus of the "Take KARE of Your Money" segment on Wednesday, September 24th on the Kare-11 news.

Cheryl Peterson from Twin Cities Habitat for Humanity - one of the Center's partners in foreclosure prevention - was interviewed for the piece.

You can view the segment, on the Kare-11 website, here.

The Center is currently working on a video Q & A segment about foreclosure postponement that will be available soon!

For additional written information about foreclosure postponement, including the steps to take to request a postponement and the required paperwork, click here.