MN 3rd in the nation for MHA Trial Modifications

Many of our readers are numbers and data fans... so I thought I'd write a short post and link to some interesting reports that we've seen that give some numbers about housing, at both the national and state level, that our readers can dig into:

First, the Treasury has released its "Servicer Performance Report Through October 2009" for the Making Home Affordable Program. The complete report is available here.

That report shows that Minnesota ranks 17th in the nation for the overall number of Trial Modifications initiated under the Making Home Affordable program:

NOW... we've also seen the most recent negative equity report from American CoreLogic (via LoanPerformace.com) ... We'll be posting on the negative equity issue in a later blog post.

The interesting point, for THIS post, is that the American CoreLogic report shows the number of outstanding mortgages, by state. Minnesota ranks # 26th in the country for the number of outstanding mortgages:

IF WE COMBINE THE TWO NUMBERS...

This is where it gets interesting! If we look at the number of Trial Modifications initiated under the Making Home Affordable program AS A PERCENTAGE of ALL outstanding mortgages... Minnesota ranks 3rd in the country!!

Any numbers/data people want to weigh-in on my math skills? (Although trained as an economist... I'm a marketing guy... not a researcher/analyst/numbers guy :) )


As they stand, these numbers speak volumes of the work that our Foreclosure Counseling network does to assist struggling homeowners... and to get the word out about programs and assistance available to Minnesota homeowners! If you're struggling with your mortgage payment, or would like more information about the Making Home Affordable program... visit the Minnesota Home Ownership Center's website here.

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.