Wednesday, March 31, 2010

Short Sales - Facts and Fiction

Short sales are increasingly popular in Minnesota and can offer a significant bargain for buyers that understand the process. Before you jump in, there are important considerations, pitfalls and drawbacks to keep in mind.

The Minnesota Home Ownership Center has created a new Fact Sheet for home buyers titled “Purchasing a Short Sale Home” that explains the Short Sale process and explains how purchasing a Short Sale differs from traditional home purchases and outlines the advantages and disadvantages of purchasing a Short Sale.

The Center's goal is to help YOU be a successful homeowner.  We have other Fact Sheets for home buyers, here.

Not sure if purchasing a Short Sale is right for you? Not sure what your next steps to home ownership should be? Speak with a non-profit housing counselor! For more information about housing counseling and other assistance available in Minnesota... click here.

Thursday, March 25, 2010

Even Princes Have To Pay Property Taxes

According to tax records in Carver County, Minnesota's famed musical artist formerly-known-as, and now known again as, PRINCE, is delinquent on his state tax liabilities.

The Associated Press has reported that Prince's company (PRN Music Corp.) owes over $227,000 to local tax agencies, in addition to his personal tax obligations.

PRN Music houses Prince's "Paisley Park Studios" in Chanhassen. County records also list several other properties under his full name, Prince R. Nelson, as delinquent.

According to the AP, the outstanding amount Prince and PRN music owe is about $450,000!

As the Center has highlighted repeatedly... not only can a lien holder (mortgage holder) foreclose on a property... counties can too!  If Prince and/or PRN music don't pay their back property taxes, the county does have "seizure authority" and can seize the properties in order to sell them to recover owed taxes.

While the Center can't help PRN music with their taxes, it is conceivable that one of our Foreclosure Counselors may be able to assist Prince IF the property that he owes taxes on is his primary residence.  There are no income minimums or maximums to receive counseling.  And counselors can offer information and assistance to ANYONE - even Prince - if they are struggling with mortgage payments or property tax payments on their home.

If Prince (or you) would like to speak with a FREE, non-profit Housing Counselor, visit the MN Home Ownership Center's website here

Monday, March 22, 2010

MHP Releases 4th Qtr "2x4" Report

The Minnesota Housing Partnership has recently released its Fourth Quarter 2009  "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.

The press release for the report is here.

Focusing on the "Owners' Market" segment of their report shows a market that is still struggling to hold ground:

  • 8% of first mortgage holders were 60+ days late on their mortgage payments,
  • Sheriff's Sales remained high at about 6,000
The "2x4 Report" has also begun tracking the number of Pre-Foreclosure Notices that the Center's network receives.  (FYI: We'll be updating our numbers soon.)

Dollars available to purchase in rural Minnesota

Looking to buy a home in rural Minnesota?  USDA Rural Development has about $2.4 billion available to assist individual and families, who make less than 80% of their Area Median Income, become home owners in 2010. Rural Development recently began a new campaign: "All the Way to 20K" to help assist at least 20,000 families achieve homeownership in 2010 through its Direct Home Loan program.

Some of the highlights of the Direct Home Loan program include:

  • Targeted at very-low and low income applicants who do not qualify for traditional financing.
  • Non-traditional credit accepted.
  • Interest rates as low as one percent depending on income and interest rate subsidy.
  • Low or no down payment.
  • Fixed interest rates.
Are you thinking about purchasing your first home... and wondering if you might qualify for these funds through Rural Development?  Not sure what your next steps should be?  Speak with a non-profit housing counselor!  For more information about housing counseling... click here.

Friday, March 19, 2010

City of Minneapolis Utility Stuffer

On March 12th, the City of Minneapolis approved the use of a "Utility Billing Insert" that the Center created to notify Minneapolis home owners about the existence of local, FREE counseling services. 

Working with the City's Community Planning and Economic Development department, the Center designed a flyer that would link struggling homeowners to the City's 3-1-1 line, as well as linking them to other housing resources available at  These partners will, in turn, connect homeowners to the Center's network of foreclosure counselors.

(Click Image To Enlarge)
The insert should reach close to 100,000 homes in the city!

In the past few years, the Center has worked with dozens of other utility companies, municipalities and other organizations to mail over HALF A MILLION similiar flyers to homeowners throughout Minnesota.  Would your organization like to be next?  Contact Ed Nelson at the MN Home Ownership Center to talk about how your organization, company, utility or municipality can partner with the Center to get the word out about trustworthy non-profit foreclosure counseling services available in Minnesota.

Don't let your friends and neighbors get taken advantage of by unscrupulous foreclosure prevention "Agencies"... help them get connected to the Center's network of community-based (FREE!) counselors today.

Tuesday, March 16, 2010

Next Wave of Foreclosures Coming to Minnesota

I've come across two recent items that point to what we've all feared... the next wave of foreclosures is rapidly approaching Minnesota. 

While no corner of Minnesota has escaped unscathed from the from the foreclosure crisis, the urban areas of Minneapolis and St. Paul have been especially hard hit.  HOWEVER... the next wave of foreclosures will be felt the most in the outer-ring suburbs of the Twin Cities and the counties that surround the TC metro area.

The first item is a slide from MN Housing, that was presented to the members of the "Foreclosure Partners Council" (Working group of organizations on the front line of the State's response to the foreclosure crisis.  The MN Home Ownership Center is an active member of the Council.)  John Patterson, Director of Research and Evaluation at Minnesota Housing, has taken data about the number of Non-Prime Adjustable Rate Mortgages that have not yet reset (or recast) and 'heat-mapped' the state of Minnesota:

The second item is an audio presentation from Dr. Jeff Crump, Professor of Housing at the University of Minnesota, who has studied the foreclosure issue for years.  He has come to the same conclusion as John Patterson.  You can hear Dr. Crump's presentation here.

Combined with the less-than-stellar employment figures in the 'red zones' of John's "heat-map"... it's obvious that there are parts of Minnesota... like the suburban areas around the twin cities... and parts of Crow-Wing county... that are still in for quite a bit of pain.

If you have an Adjustable Rate Mortgage... and you're not sure what will happen when the rate adjusts, or if you're struggling with payments now... don't delay, contact a Foreclosure Counselor through the Minnesota Home Ownership Center TODAY to learn about your options and steps to take to avoid a possible foreclosure.  Waiting limits your options.  For information on how to contact your local, FREE Foreclosure Counselor, click here.

Friday, March 12, 2010

IRS Data On Home Buyer Credit

On Thursday, March 11th, The Internal Revenue Service (IRS) released its 2009 IRS Data Book, which contains a ton of data about the IRS's fiscal year, Oct. 1, 2008 - Sept. 30, 2009.

Of possible interest to the "numbers and data" wonks that follow this blog is Table A: First-Time Homebuyer Tax Credit for Homes Purchased in 2009, by State, FY 2009.  Remember, the Fiscal Year for the IRS ends in September.

Under the American Recovery and Reinvestment Act of 2009, taxpayers could claim the First-Time Home Buyer Credit on either their 2008 or 2009 tax returns.  The data included in the report is for buyers that claimed the credit on the 2009 return. (Jan 1, 2009 through Sept 30, 2009)

According to the IRS:
  •  10,341 taxpayers took advantage of the First-Time Homebuyer Tax Credit in Minnesota. 
  • That ranks us as the state with the 14th highest usage of the claim. 
  • Those 10,341 taxpayers claimed $76.7mm in credits,
    • Or an average of $7,417.74 per household.
You can view the full 2009 IRS Data Book, here.

As we've mentioned numerous times before... a tax credit should NEVER be the deciding factor in purchasing your first home.  If you're thinking about buying a home in Minnesota... and have questions about the process or any assistance that may be available.. including tax credits, contact a Housing Counselor today to review YOUR options.

Thursday, March 11, 2010

FHA Debating Higher Down-Payment Requrement

The Washington Post has a story regarding the fact that FHA is debating increasing the minimum down-payment on FHA Loans (currently as low as 3.5%) as their cash reserves have shrunk due to increases in defaults in the past few years.

One of the lines that caught my attention was from the FHA:

The Federal Housing Administration has concluded that its loan volume would have dipped by 40 percent in the next fiscal year and that 300,000 first-time home buyers would have been shut out of the housing market if it had raised its down payment requirements...

Here are a few questions:
  • Would those homeowners truly have been "Shut Out" of the housing market... or would they have been "postponed out" of the housing market for now until they could save the additional amount for down payment?
  • Is being "postponed" a bad thing?  Is requiring a higher down payment (10% for borrowers with a FICO score below 580) truly a barrier to homeownership?
  • Should efforts be made to get people with 580 credit scores into homes now... or better preparing them (Home Buyer workshops, financial literacy, credit repair, etc.) for FUTURE homeownership?

Just some thoughts.

I love saying this... but Minnesota is UNIQUE.  Thanks to the efforts of the MN Home Ownership Center and our partners, we are the only State that has a complete matrix of available down payment and entry cost assistance programs.  The Center's Entry Cost Assistance Matrix is available here.

If you're thinking about purchasing your first home... and are wondering about down payment requirements or any of the other steps involved in becoming a SUCCESSFUL homeowner... visit the Center's website here.

Tuesday, March 9, 2010

HAMP, HARP and Now HAFA too?

Last week we mentioned that HAMP and HARP were members of the duet known as Making Home Affordable... well... the group has added a third band member and is now a trio.

The U.S. Treasury has announced the "Home Affordable Foreclosure Alternatives" (HAFA) Program which is designed to help struggling homeowners who are unable to qualify for a mortgage modification under the Home Affordable Modification Program (HAMP).

HAFA sings backup for HAMP, and provides incentives to servicers/lenders as well as borrowers to move forward with a short sale or deed-in-lieu of foreclosure.

Just as an FYI, in a short sale situation, the mortgage holder allows the homeowner to sell the property for a price short of the balance owed on the property’s loan.

The Center will be working on a more in-depth fact sheet over the coming weeks, but the basics of the program are as follows:
  • Should speed up the Short Sale process, as it uses borrower financial and hardship information that was collected when they applied for a HAMP modification.
  • Allows borrowers to receive PRE-APPROVED short sales terms (including minimum price accepted, proceeds to owner and real estate agents, etc.) BEFORE listing the property.
  • KEY: While in Minnesota, as a non-recourse state, first mortgage debt is fully released from future liability, under HAFA, subordinate lien holders that receive an incentive under HAFA must also FULLY RELEASE that debt as well.  This means that homeowners will not have to sign a promissory note or worry about a future deficiency judgment.  (NOTE: This is ONLY if the junior, or subordinate, lien holder receives money under HAFA.
  • Unifies documents, timeframes and deadlines to speed up the process.
  • Provides financial incentives for all parties.  $1,500 to the borrower for relocation assistance and $1,000 for servicers to cover admin costs, and up to $3,000 in short sale proceeds to be shared among subordinate lien holders.  In most cases subordinate lien holders see nothing from a short sale... and have been the reason that many short sales have fallen through.  It will be interesting to see if this incentive changes their attitude.  It will be especially interesting to see if junior lien holders will be willing to trade possible FUTURE JUDGMENTS for a rather small ($3,000) incentive today.
  • Requires ALL SERVICERS participating in HAMP to implement HAFA.
  • Goes into effect on April 5th, but lenders and servicers may begin sooner if they choose.  The program is scheduled to end on December 31, 2012.
  • Homeowners that are denied for a HAMP modification MUST receive a notification from their lender/servicer, in writing, of the HAFA option and give the borrower 14 days to respond orally or in writing.
Who qualifies for HAFA?

The homeowner must meet the basic eligibility criteria for HAMP
  • the loan must be on their Primary Residence (no investors or second homes);  
  • 1 to 4 units, as long as one of the units is the owner's primary residence;
  • First lien originated before 2009 Mortgage either delinquent or in imminent danger of default,
  • Unpaid principal balance no more than $729,750;
  • Borrower’s total monthly PITIA payment exceeds 31% of gross income.

BIG QUESTIONS still remain about the program:

  • Will homeowners that won't be able to hold on to their properties go through the extra effort to sell... or simply walk away.  "Post-HAMP-Denial-Strategic-Default"
  • What effect will this new program have on already-pressured sales prices?  Short Sales already put a downward pressure on local "comps".  What will happen when there is a FLOOD of HAFA-generated short sales?
  • What procedures are in place to prevent fraud?  Real Estate Agents are being called upon to help the bank determine the price they'll accept, and once the price is set, any offer over the minimum amount MUST be accepted by the bank.  This could be a magnet attracting fraud at all kinds of levels.

Feel free to respond in the comments!

Friday, March 5, 2010

Deadline Today For SAFE Act Comments

The deadline to submit comments on the proposed Secure and Fair Enforcement for Mortgage Licensing Act  (SAFE Act) is TODAY, Friday March 5th, 2010

The federal and proposed state legislation define foreclosure counselors, including those in the Center’s network, as loan originators.

Including foreclosure counselors in the legislation will necessitate extreme costs, irrelevant education, and unreasonable redundancies, all of which could jeopardize the existence of free, unbiased, trusted, effective foreclosure prevention counseling services at a time when they are most needed.

Foreclosure Counselors should not be subject to the SAFE Act, please consider submitting comments to HUD.

For more information... including copies of the text the Center submitted to HUD, copies of the proposed rule and comment submission instructions, please visit the Center's website here.

Thursday, March 4, 2010

Foreclosure Prevention in South-East Minnesota

Today, Thursday March 4th, the Minnesota Home Ownership Center is pleased to be partnering with the SE Minnesota Association of Realtors®, Community Housing Partnership and LSS Financial Counseling to to offer a FREE foreclosure training workshop for professionals on how to help struggling homeowners.

Today's training, in Rochester, will provide an overview of the foreclosure process, where to refer homeowners and how to prepare them to talk with a housing counselor or loan servicer as well as information on national assistance programs like Making Home Affordable.

While space at the event is limited... the SE Minnesota Association of Realtors® will be offering a LIVE WEBSTREAM of the workshop! You can watch the web stream starting at 11:00am, here.

At today's event, the Realtors® association (SEMAR) will also be unveiling their new website and media campaign designed to let SE Minnesota homeowners know about ways to avoid foreclosure.  SEMAR worked closely with the MN Home Ownership Center to produce their website.

Here's the TV commercial that will run throughout SE Minnesota:

You can visit their new website, here.

Wednesday, March 3, 2010

Home Affordable Refi Program Extended

The Home Affordable Refinance Program (HARP), the lesser-known half of the "Making Home Affordable" duet, has been extended for one more year, and will now be available through June 30, 2011, according to a statement from the Federal Housing Finance Agency.

The idea behind the HARP program is to allow borrowers who owe up to 25% more than their homes are currently worth* to refinance to a quality, fixed-rate mortgage.   

The Minnesota Home Ownership Center has a fact sheet that can help understand the basics of the entire "Making Home Affordable" program, here.

ALSO... we couldn't post about loan modifications / refis with warning Minnesota Home Owners, AGAIN, to make sure that they DO NOT PAY for any third-party loan modification service. Deal directly with your lender yourself, or with one of our free, non-profit Foreclosure Counselors. For additional warnings about for-profit loan modification companies (and scams)... visit here.  To find your local non-profit Foreclosure Counselor, click here.

* While program guidelines allow for 125% Loan-To-Value (LTV) amounts... most lenders are only allowing 105% or less LTV... one of the major drawbacks to the program.