Monday, October 31, 2011

Fifth Annual EMHI Summit - Registration Open

Exciting Changes This Year!

You're invited to join us for the 5th Annual Emerging Markets Homeownership Initiative Summit on Wednesday, December 7, 2011!

This year’s annual Summit reflects the dynamic field by hosting a variety of rapid learning stations for participants to gain valuable knowledge through several 15-minute sessions. We hope our new format for the event will make you better prepared to seize opportunities and confront challenges surrounding homeownership for emerging markets.

This year’s event will be fast-paced and informative for professionals looking for insight into the current status of emerging market homeownership in the State of Minnesota.

The morning session will begin with a keynote address from Dorothy Bridges, recently-appointed Vice President of Community Development and Outreach at the Federal Reserve Bank of Minneapolis. 

Following the address, Summit participants will have the opportunity to rotate among various rapid learning stations hosted by leaders in the emerging market homeownership arena to get a snapshot of current issues and trends facing the industry. Stations will also be a time for participants to ask questions and gain best practice tips from leaders and colleagues in the profession. Some learning station topics include:

  • Financial Literacy,
  • Housing and Transportation Corridor Issues,
  • Minnesota Housing and Bond Programs, 
  • Federal Housing Administration,
  • Demographics,
  • And MANY more!

3.5 hours of Real Estate CEU credits have been applied for. 


Want to dig deeper into homeownership and emerging markets issues? 

This year we are also pleased to announce an optional afternoon session! We have invited Susan Didier, President of Thompson Associates, to teach her newly-developed course for the Minnesota Association of REALTORS® entitled, Emerging Markets: The New-American Homebuyer.  Her course covers everything from cultural diversity issues such as language barriers and cultural values to explaining real estate in the real world, which highlights topics such as buyer readiness and special first-time homebuyer products. This afternoon course counts towards 3.75 hours of CEU credits. 


Last year's Summit sold out so register early!

Thursday, October 27, 2011

Preforeclosure Notices, 3rd Quarter - A Mixed Bag

Preforeclosure Notices Send Mixed Signals for Housing in Minnesota

On Thursday, October 27th, the Minnesota Homeownership Center released its third quarter data on the aggregate number of Preforeclosure Notices received by foreclosure counselors in the Homeownership Advisors Network.  The numbers continue to show that Minnesota is slowly emerging from the foreclosure crisis, while also signaling reasons for the state to continue to make fighting foreclosures a priority: the number of preforeclosure notices received in the third quarter of 2011 signals the first uptick in quarterly notices in a year.

In the third quarter of 2011, members of the Homeownership Advisors Network received 14,586 preforeclosure notices, 23% fewer than during the same time period in 2010, but an increase of 9% from the second quarter of 2011, when 13,372 notices were received.

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Most troubling is that 85% of the increase in notices from Q2 to Q3 came from the Twin Cities metro… with 43% of the increase coming from Hennepin County alone, which saw an increase of more than 500 preforeclosure notices.  Is this a statistical outlier or the beginning of a troubling trend?  The Minnesota Homeownership Center will continue to track these notices and will report on the Q4 and year-end numbers in early 2012.

The total number of preforeclosure notices received in the state of Minnesota in 2011 now exceeds 42,000:

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Here's the breakdown for the number of preforeclosure notices received by members of the Homeownership Advisors Network in the 7-county metro area:

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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 Homeownership Center's network of foreclosure counselors receives 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.

If you or someone you know is struggling with their mortgage payment, new programs, resources and assistance are becoming available all the time. Don’t give up… contact a foreclosure counselor that is a member of the Homeownership Advisors Network today to see if there’s help available for you to avoid foreclosure. Even if you’re not yet behind, now is the time to call. To find your local foreclosure counselor, click here.

Monday, October 24, 2011

HARP Changes - What We Know, What We Don't

It is likely that President Obama will be announcing some major changes to the Home Affordable Refinance Program (HARP) on Monday, October 24th, 2011.  The Federal Housing Finance Agency, the agency that regulates Fannie Mae and Freddie Mac as well as the 12 Federal Home Loan Banks throughout the country, has issued a press release outlining some of the important changes to the HARP program.

What We Know:

  • The goal is to prevent additional foreclosures by allowing additional underwater homeowners to refinance their mortgages at today's low interest rates and/or shortening the term of their mortgage.
  • Most importantly, the current 125% Loan to Value limit (LTV Ceiling) will be removed, but there is still a MINIMUM LTV of 80%.  Borrowers that are underwater by any amount greater than 80% may be able to participate in HARP.
  • Borrowers fees to participate in HARP will be reduced.
  • To participate, borrowers must be current, have not been late on a payment in the last 12 months, and have a verifiable source of income.  Actual affordability ratio (how much income needed) has not been released.
  • The new guidelines should waive the need for a full appraisal if a reliable Automated Valuation Model (AVM) is available on the property.
  • Participation in HARP is a one-time opportunity.  If a homeowner has refinanced under the original HARP guidelines, they will NOT be able to refinance a second time under these new changes.
  • Only mortgages that are owned by the Government Sponsored Enterprises (GSE's), -- Fannie Mae and Freddie Mac -- will be participating in the new program.  The mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009.  To determine if your loan is owned by Fannie or Freddie, you can use the following links:

What We Don't Know
This blog post was written on Monday 10/24/2011... and many of the details may change over time.  Please call a non-profit housing counselor for additional details about these HARP changes... or any other question you may have about your mortgage.

  • When will homeowners actually be able to refinance their Freddie Mac- or Fannie Mae-backed mortgage?  Guidelines on the new program will be sent to lenders and servicers by November 15th.  After that, the lenders/servicers will have to convert those guidelines into actual policies and procedures.  This means that it may be mid-December or even early 2012 before a homeowner can actually participate.  In addition, the concept of the program is complicated by the fact that certain servicers DO NOT ORIGINATE loans and may not have the capacity to originate the new HARP loan - without extensive (and time-consuming) changes to their internal systems.  PLUS, as we've seen with the original HARP program, there may be inconsistencies from one servicer to another.
  • What will happen to homeowners in the following circumstances:
    • Multiple mortgages - second lien holders will have to agree to 're-subordinate' their loan to the newly refinanced loan.  While there is no risk to the junior lien holders... we don't know which, if any, second lien holders will agree re-subordinate their mortgages.
    • Private Mortgage Insurance Holders - PMI holders have agreed to make the transfer of insurance from one loan to another easier... the details are still being worked out. 
Once again... as the guidelines to servicers and lenders will not be available until November 15th... it will take several additional weeks for the lenders and servicers to convert those guidelines into policies and procedures, meaning that it may a couple of months before homeowners can access this new phase of HARP.

    Monday, October 3, 2011

    Reminder on Deficiency Judgments

    The Wall Street Journal published an excellent article this weekend on the dangers of deficiency judgments.

    A deficiency judgment is “a judgment lien against a debtor, defendant or borrower whose foreclosure sale did not produce sufficient funds to pay the mortgage in full.”

    In plain English: a homeowner can be sued for the difference between the amount the bank received when they auctioned off the house at the Sheriff’s sale, and the amount of the outstanding mortgages.

    In the Wall Street Journal article, many of the former homeowners had purchased in Florida, where judgment can be sought on ANY mortgage deficiency.  However, Minnesota is a ‘Non-Recourse’ state. This means that FIRST lien holders CANNOT seek judgment (cannot sue) former homeowners for outstanding funds*.

    HOWEVER... any “Junior”, or "Second" lien-holders CAN. If there is more than one mortgage on the property – or if there is a line of credit or HELOC taken out against the property – THOSE lenders CAN sue the former property owner for payment of any outstanding debt.

    Lenders can take up to SIX YEARS in Minnesota to decide whether or not to sue for any deficiency.  In many cases, the lender won't be the ones seeking judgment.  They'll simply sell the outstanding deficiency to collections companies, for pennies on the dollar, who will then be relentless in their efforts to collect.

    One of the scariest quotes from the article comes from a representative of one of the collection agencies:
    "We are waiting for the economy to somewhat heal so that it's a better time to go after people," says Douglas Hannah, managing director of Silverleaf.

    The MN Home Ownership Center has a helpful fact sheet on its website about deficiency judgments. You can download the fact sheet here.

    Deficiency Judgments are just ONE of the MANY considerations struggling homeowners need to think about when facing a possible foreclosure. If you, or someone you know is struggling with mortgage payments... don't wait until it's too late. To find your local non-profit, FREE Foreclosure Counselor, click here. For additional information about preventing foreclosure in Minnesota, click here.

    * There are situations in which a homeowner can open themselves up to deficiency on a first lien.  In a short sale situation, if the negotiations aren't carried out properly homeowners may unwittingly sign paperwork that allows the bank to seek judgement.  This occurs when the bank is willing to release the lien so a short sale can occur, but does not release the underlying debt.  Homeowners that are selling in a short sale situation need to be EXTREMELY careful about the documents they sign before selling.