New Mortgage Disclosure Forms

Share your opinion with the Consumer Financial Protection Bureau

It’s not very often that the general public gets to weigh in on items that will affect the entire mortgage industry. Recently, the Consumer Financial Protection Bureau (CFPB) released drafts of a new one-page (two-sided) mortgage disclosure form and is asking for YOUR opinion. The final form will combine the two mortgage disclosures that are currently required -- the federal Truth in Lending Act (TILA) mortgage disclosure and the Real Estate Settlement Procedures Act (RESPA) Good Faith Estimate -- into one two-page form, down from the current five pages.

While these forms are covered in-depth in the Home Stretch workshop, they certainly can be confusing for the average homebuyer, and the CFPB is asking the general public to offer their opinion on which of the two is easier for you (or your customers) to understand.

Both versions show the key loan terms like the interest rate, the monthly loan payment, any closing costs and taxes. Borrowers can quickly see how much they'll be paying per month, and, if the loan is adjustable, how those payments might change throughout the life of the loan.

Interestingly, the form also shows the Annual Percentage Rate (APR) paid over a five-year period, along with the amount of principal you will have paid off in five years (real equity).

The CFPB will be working on these forms until July of 2012, but over the next few months, the agency will be revising and re-uploading the form(s) on its site based on the input it receives.

So… go vote! Let your opinion be heard. Then come back and let us know which one you prefer in the comments. The two forms are available here.

When comparing the forms, we recommend that you focus on what information mortgage lenders and/or brokers should share with homebuyers to make the process as easily understood and transparent as possible. Remember… our goal at the Minnesota Home Ownership Center, and of our lender and real estate partners, is successful homeownership. Which form do you think will best help potential buyers in that respect?

Are you a Minnesota resident thinking of buying your first home? Do terms like TILA, RESPA and GFE sound like a foreign language? You can learn more about these, and many more, terms, the mortgage loan process and the best steps to follow to be a successful homeowner by taking a Home Stretch workshop. For more information, click here.

HECAT Request For Proposals Available

As many of our readers know, the State of Minnesota is unique in that we are the only state in the country with a dedicated pool of funds that provides financial support to eligible non-profit organizations to deliver a variety of homebuyer/homeowner education, counseling and training services to Minnesotans. This dedicated pool is known as HECAT (The Homeownership Education, Counseling and Training Fund).

Some of the valuable services that are funded through HECAT include:

• Pre-purchase education and counseling (Home Stretch),
• Post-purchase education and counseling,
• Home equity conversion counseling (Reverse Mortgages) and
• Foreclosure prevention counseling

Funds for HECAT come from a public-private partnership of four agencies and organizations that are fully invested in ensuring that Minnesotans have access to the education and counseling tools necessary to achieve successful (sustainable) home ownership:

The Family Housing Fund,

Greater Minnesota Housing Fund,

Minnesota Housing (Finance Agency), and

Minnesota Home Ownership Center

Each of the four funding partners not only contribute financial resources they also actively participate in the grant-making process and provide technical assistance throughout the year.

The Request for Proposal (RFP) for funding for programs in 2011 and 2012 (funding year runs from October 1st through September 30th) is NOW OPEN.  The deadline for applications is 5:00pm on Wednesday, June 1st.  This is a STRICT deadline.

For more information about HECAT, or to view the RFP and even lists of award recipients from previous years, visit the Minnesota Housing website... here.

Housing Counselor Training Opportunity

Homebuyer Counseling Training and Certification

The Minnesota Home Ownership Center is offering homebuyer counseling training and certification for housing professionals that provide pre-purchase counseling in Minnesota. This training will also help Real Estate agents that work with first-time homebuyers by sharing techniques, methods and practices to resolving any barriers that first-time buyers may have to homeownership.

Activities include determining mortgage readiness, prequalification, reviewing credit reports and many other key counseling/home buying components.

Participants interested in Continuing Education credits can pursue these through the "Self-Directed" option (Individual Continuin Ed Course Approval) through the MN Dept. of Commerce.  

Participants interested in obtaining certification must complete the training and pass the in-class exam.

For additional information or to register, click here.

HECAT Funding Awards Announced

The State of Minnesota is unique in that we are the only state in the country with a dedicated pool of funds that provides financial support to eligible non-profit organizations to deliver a variety of homebuyer/homeowner education, counseling and training services to Minnesotans. This dedicated pool is known as HECAT (The Homeownership Education, Counseling and Training Fund).

Some of the valuable services that are funded through HECAT include:

• Pre-purchase education and counseling (Home Stretch),
• Post-purchase education and counseling,
• Home equity conversion counseling (Reverse Mortgages) and
• Foreclosure counseling

Funds for HECAT come from four funding partners that are fully invested in ensuring that Minnesotans have access to the education and counseling tools necessary to achieve successful home ownership:

• The Family Housing Fund,
• Greater Minnesota Housing Fund,
• Minnesota Home Ownership Center, and
• Minnesota Housing (Finance Agency)

Each of the four funding partners not only contribute financial resources they also actively participate in the grant-making process.

Additional information about HECAT can be found here.

A complete list of organizations that have been granted HECAT funds for the 2010-2011 program year is available here. (PDF Document)

Taking On Time Magazine

In the world of blogging, there's a traffic-generating trick known as 'punching upward' (or fighting upward, punching above your weight class, etc.) - in which a blog picks a fight with a highly trafficked blog or media source, in order to gather some of that blog's traffic in the ensuing battle.  While this is certainly not the primary goal of this post - we won't complain if we see an uptick in traffic as we take on Time Magazine and their most-recent cover story "Rethinking Homeownership, why owning a home may no longer make economic sense."

The actual title of the article is even more menacing "The Case Against Homeownership". 

Homeownership has been proven, over and over, to be the NUMBER ONE driver of wealth creation for low- to moderate- income homebuyers over time.  (The key being over TIME).  Even Barbara Kiviat, the article's author, understands this fact:

Homeownership has done plenty of good over the decades; it has provided stability to tens of millions of families and anchored a labor-intensive sector of the economy.

The article... which is only available in an abridged version online states that:

But the dark side of homeownership is now all too apparent: foreclosures and walkaways, neighborhoods plagued by abandoned properties and plummeting home values, a nation in which families have $6 trillion less in housing wealth than they did just three years ago.

The problem has never been - and never will be - homeownership. 

The problem stems from one of preparation, education and expectations.  BEFORE deciding to purchase, homebuyers need to fully understand the financial implications, the risks and the responsibilities of homeownership - and the information needs to come from an unbiased source... not a marketing/sales pitch from someone who has a financial stake in the decisions the homebuyer makes.  Homeownership should never be seen as a short-term vehicle to wealth creation.

In Minnesota, THE source of unbiased information about the home buying process and homeownership is HOME STRETCH.  A Home Stretch Workshop will help you become an informed, prepared consumer. The workshop offers objective, practical information to help you:

• Determine your REAL financial situation
• Understand credit, credit issues, and how credit affects the costs of homeownership
• Decide what type of mortgage is best for your needs
• Select the right home for your family
• Understand the loan closing process
• Find special programs just for first-time homebuyers

And, even though we are the HOMEOWNERSHIP CENTER... we consider it a success if someone takes a HomeStretch workshop, or speaks with a pre-purchase counselor, and decides that homeownership is not right for them.  Homeownership is NOT right for everyone... and being a successful homeowner isn't easy.

To find out more, visit the MN Home Ownership Center's website, here.

Census Bureau Releases Housing Data

This is actually a couple of days old... but I thought our readers might be interested in knowing that the U.S. Census Bureau has released the 2009 American Housing Survey, The Report covers statistics about apartments, single-family homes, manufactured housing, new construction and vacant housing units throughout the country.

According to the new survey... the nation's homeowners paid a median of $1,000 in monthly housing costs in 2009, compared with $808 for renters. However, renters usually paid a higher percentage of their household income on these costs than did owners (31 percent compared with 20 percent).

A wide range of specific topics is covered in the survey, such as the presence of air conditioning, crowding, housing costs, special living services offered to older residents, type of heating fuel used, cost of utilities and size of the home... and even 'subjective' information like satisfaction with the neighborhood. Of course, the survey also covers the demographic characteristics of the housing units' occupants.

Here are some interesting facts from the report:

• Thirty-two percent of owner-occupied units were owned free and clear,
• 66 percent had a regular and/or home equity mortgage and 2 percent had only a line-of-credit.
• The most important consideration for recent movers in choosing their homes was financial (28 percent), followed by room layout/design (15 percent) and size of home (10 percent). Furthermore, the most common reasons recent movers had for choosing their neighborhoods were convenience to job (20 percent), convenience to friends or relatives (14 percent), look/design of neighborhood (10 percent) and the house itself (10 percent).
• Ten percent of communities had secured entrances, with the likelihood somewhat higher (15 percent) in new communities. [Ed... Really? 10% of all single-family homes are in gated communities??]

Data from this survey (In MS Excel format) are available at the national and regional level, and for inside and outside metropolitan statistical areas, and urban and rural areas.

Remember... The Minnesota Homeownership Center’s goal is SUCCESSFUL homeownership. If you’re thinking of buying your first home… the Center is here to help. Workshops for first-time buyers are available throughout the state and counselors (one-on-one meetings) are also available. If you’d like to learn more, visit our website here.

Creative? Help Us Name Our Network of Counselors

As regular readers know, the MN Home Ownership Center coordinates the statewide network of home ownership education and counseling organizations.  (Pre-purchase education and counseling, foreclosure prevention services, post-purchase education and counseling, reverse mortgage services, etc.)

For years, we've simply referred to this network as "The Network" or "The Statewide Network of Housing Counseling and Education Organzations".  Neither of these are very descriptive... or easy to say, for that matter.

CALLING ALL CREATIVE TYPES!!  The Center is seeking creative and innovative ideas for a name to bring recognition to the Center’s network of home ownership education and counseling organizations.  Something that can be branded and easily understood by MN homeowners and future homeowners!

Submit your ideas to win prizes, contribute to successful homeownership in Minnesota, and win our eternal gratitude.  Fame and fortune await! (OK... maybe I'm exagerating a bit).  Let your creative juices flow and send your suggestions to: ed@hocmn.org or in the comment section below.

For more information about the contest and what we're looking for, click here. (PDF)

To learn more about the Center and its network partners, click here.

The deadline for entries is Friday, May 14, 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.

Down Payment Help and Affordable Loans in Minnesota

Earlier this week, Minneapolis Mayor R.T. Rybak and Saint Paul Mayor Chris Coleman announced that $41 million in new funding is available for first-time homebuyers to purchase homes in Minneapolis/St. Paul, and other organizations and municipalities have made similar announcements recently. 

The Minnesota Home Ownership Center has information about these programs and DOZENS of others that can be used to assist YOU or your clients purchase a home in Minnesota.  In November of 2009 we introduced our "Entry Cost Assistance Matrix" that outlines the down payment programs, closing costs assistance and other funds available to first-time buyers in Minnesota.  We've now updated the Matrix for the first quarter of 2010!  To view the matrix, click here.

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

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

The Center has also updated its Affordable Loan Product matrix.  The Affordable Loan Product Matrix can be accessed here.
 
Home ownership is expensive and first-time buyers should never base their home-buying decision on a down-payment program or tax credit. There are MANY other factors when deciding whether home ownership is right for YOU or not. Before purchasing YOUR first home... take a Home Stretch Workshop (pre-purchase education workshop) to learn what's involved, and speak with a non-profit Housing Counselor to see if you might qualify for any down-payment assistance or other first-time buyer programs.  For more information, click here.

2009 Tax Returns and the Homebuyer Credit

Back in  November, the Center highlighted information about the "Worker, Homeownership and Business Assistance Act of 2009", that extended and expanded the first-time homebuyer credit.  (Original Blog Post Here).

The law created an $8,000 tax credit available to first time buyers who are purchasing their primary residence, and a potential $6,500 tax credit for some existing homeowners who purchase another principal residence.

The IRS has issued some additional guidance regarding filing for the tax credit when homebuyers submit their 2009 tax return:

"Because of the documentation requirements for claiming the credit, taxpayers who claim the credit on their 2009 tax return must file a paper — not electronic — return and attach Form 5405, First-Time Homebuyer Credit and Repayment of the Credit" (Highlight ours)

For additional information on the documentation required when submitting a 2009 tax return, visit the IRS website here.

For an overview of information about the tax credit for first-time buyers, the Center has produced a fact sheet, here.

As we stated in November, first-time buyers should never base their home-buying decision on a tax credit. There are MANY other factors when deciding whether home ownership is right for YOU or not. Before purchasing YOUR first home... take a Home Stretch Workshop (pre-purchase education workshop) to learn what's involved, and speak with a non-profit Housing Counselor to see if you might qualify for any down-payment assistance or other first-time buyer programs.

Pre-Purchase Housing Counselor Training

The Minnesota Home Ownership Center is offering Pre-purchase Housing Counselor Training for housing professionals that provide counseling in Minnesota, or other professionals interested in pre-purchase counseling.

The training is designed for new housing counselors with some pre-purchase experience. Participants will learn to assist consumers in resolving barriers to homeownership. Activities include:

• assessing mortgage readiness,
• prequalification,
• reviewing credit reports and
• other key counseling components.
  

Participants interested in obtaining certification must complete the training and pass the in-class exam.

COSTS:
The deadline for registration, at a cost of $330 is Friday, September 4, 2009.

Late registration (with the Center's permission only) is $380.

Registration priority will be given to current Home Stretch providers.

For more information, or to register, visit: http://prepurchasecounselor2009.eventbrite.com/