Stopping Foreclosure Scams: New FTC Rules Take Effect Today

Beginning today, homeowners in Minnesota and nationwide are benefiting from the Federal Trade Commission (FTC)'s new consumer protection rules aimed at stopping foreclosure rescue scams. The Mortgage Assistance Relief Services Rule (MARS) bans companies from making false promises in their marketing and, beginning Jan. 31, prohibiting them from charging any up-front fees for their services.

We are all well aware that these terrible scams are robbing homeowners of their savings, their home, or sometimes both. This new Rule will further our fight to end foreclosure rescue scams in Minnesota by giving the FTC the tools needed to crack down on scamming companies across the country - companies that are targeting homeowners in our state.

In addition, MARS requires mortgage modification companies to disclose key information to consumers, including:

• They must explicitly state that they are not associated with the government, and their services have not been approved by the government or the consumer’s lender;
• The lender may not agree to change the consumer’s loan; and
• If companies tell consumers to stop paying their mortgage, they must also tell them that they could lose their home and damage their credit rating as a result of this action.

For additional information about the new rules, and what it means for Minnesota homeowners, see our full press release, here.

While the new FTC Rule is an enormous consumer protection victory, homeowners still must be armed with information to recognize these scams and to protect their homes. That's why the Minnesota Home Ownership Center has created a brochure-size, two-sided consumer education piece for you to share with your networks and consumers. It equips homeowners with simple questions to ask themselves when considering outside help for a mortgage modification, and it directs them to www.LookBeforeYouLeap.org to connect with a counselor in their community.

Order Look Before You Leap Consumer Handouts Today!

Help us help Minnesota homeowners - commit to displaying this piece today! The consumer handout is the perfect size for brochure and information racks, tabling events, or including in utility bills or other mailings. We have produced materials in both English and Spanish. And, we'll provide you copies free of charge!  Visit the campaign website: www.LookBeforeYouLeap.org to download and submit an order form.

Foreclosure Counseling Proven Effective - Again

Back in November of 2009, the Washington Post had a headline proclaiming: "Counseling Helps Borrowers Avoid Foreclosure," citing a report of a study conducted by the Urban Institute of Washington D.C.

Now, thanks to a new report from NeighborWorks America on the "National Foreclosure Mitigation Counseling Program Evaluation: Preliminary Analysis of Program Effects," we can once again state that COUNSELING WORKS.

The National Foreclosure Mitigation Counseling (NFMC) program is a federally-funded program that is designed to support the rapid expansion of foreclosure intervention counseling in response to the nationwide foreclosure crisis.  MN Housing (Finance Agency) has been a recipient of NFMC funds... that support the work of the MN Home Ownership Center's network of non-profit Foreclosure Counselors.

The analysis presented in the report is based on a sample of close to 180,000 loans held by homeowners that received NFMC-funded foreclosure prevention counseling.  Here are just some of the findings:

• The NFMC program was effective at helping homeowners cure an existing foreclosure. During the first two years of the program, the relative odds of counseled homeowners curing their foreclosure were 1.7 times greater than if they had not received NFMC counseling. The resulting difference in the cure rate means that an estimated 32,000 more NFMC clients cured their foreclosure by the end of December 2009 than would have occurred without receiving services from NFMC counselors.
• Loan modifications received by NFMC clients resulted in significantly lower monthly mortgage payments than would have been received without the help of the program. Lower monthly payments may help reduce the likelihood of a subsequent recurrence of borrower mortgage problems. On average, we estimated that NFMC clients who received loan modifications in the first two program years reduced their monthly payments by $267 more than they would have without NFMC counseling.
• Homeowners who obtained a loan modification that allowed them to cure an existing serious delinquency or foreclosure were much more likely to remain current on their mortgage if their loan modification was obtained with help from NFMC counseling. For clients counseled in 2008, counseling produced a 45 percent increase in the relative odds that a post-counseling modification would be sustained through 2009.

 
There are many more advantages to Foreclosure Counseling cited in the full report.
 
Here in Minnesota, research conducted by the Federal Reserve Bank of Minneapolis showed that Foreclosure Counseling cost just under $400 per household -  $400 to save homeowners an additional $3,204 per year, improve their odds of curing foreclosure and increase the long-term success of a modification... plus many other 'intangible' benefits... seems like Foreclosure Counseling is a great investment in long-term housing stability for MN Families.
 
If you or someone you know is struggling with mortgage payments, help is available.  Visit the MN Home Ownership Center's website for more information.

Shopping For A Mortgage

According to a LendingTree/Harris Interactive survey released on December 14th, about 40% of recent home buyers obtained JUST ONE mortgage loan quote before purchasing their home.

According to the survey of just over 1,300 buyers, 70 percent of borrowers find shopping for a mortgage frustrating, citing the complexity of the terms as the number one reason people choose not to 'mortgage shop'.

The survey also reveals that although buyers recognize that their mortgage choice is a decision that will affect them financially for the next 15 – 30 years (or more!), nearly three-quarters (72 percent) of homeowners spent less than eight hours shopping for their home loan. Even more shocking? One in ten spent less than TWO MINUTES shopping for their loan.

In Minnesota... buyers have the opportunity to take a Home Stretch workshop, the homebuyer workshop recognized nationally as a proven tool to prepare homebuyers to be successful homeowners.  There is an entire section of the Home Stretch workshop dedicated to fully understanding mortgage loan terminology, how to shop for a loan, how credit affects loan payments and how to avoid being taken advantage of when choosing a loan.

In a forthcoming report from the MN Home Ownership Center, Home Stretch participants reported that help with understanding mortgages and the loan process was the MOST HELPFUL part of the workshop.  One more fact (just in case you're not convinced yet)... NINETY-FIVE PERCENT of Home Stretch participants reported that their participation in Home Stretch will help in the process of buying a home.

Are you thinking of purchasing a home in Minnesota?  You can learn more about the mortgage loan process - - and the entire home buying process by taking a Home Stretch workshop.  For more information, click here.

Update on Minnesota's Homeownership Gap

This post is a guest post by Dr. Kim Skobba, a research and communications consultant that works with the Minnesota Home Ownership Center on Affordable Housing issues and housing policy.  Dr. Skobba publishes her own blog at http://housing-sense.blogspot.com/

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Update on Minnesota's Homeownership Gap

At 73.7%, Minnesota maintains the highest overall homeownership rate in the nation. When it comes to the rate of homeowners of color, Minnesota does not fare as well. The rate of homeownership among emerging markets is 43.3% - representing the 5th largest gap in homeownership rates in the nation.

[Last] week at the EMHI Summit, Michael Grover (Federal Reserve Bank of Minneapolis) and John Patterson (Minnesota Housing) provided a summary of their research on trends in emerging market homeownership. Their analysis of American Community Survey and Home Mortgage Disclosure Act (HMDA) data identifies some apparent trends and offers a few unexpected findings.

• The rate of emerging market homeownership declined for the first time since 2000. The rate of homeownership among emerging markets held relatively steady (at about 46.5%) during 2006-2008, which was surprising given the foreclosure crisis and what is known about its affect on minority homeowners. In 2009, the emerging market homeownership rate declined to 43.3%.
• Some sub-groups of African Americans experienced particularly significant declines in their rates of homeownership. Those in the 45 to 54 age group saw a decline from 46% to 31% and those with a family income between $40,000 - $60,000 experienced a decline from a rate of 57% to 32%. Grover stated that more analysis is needed to make sense of these changes.
• Minnesota Housing's affordable loan and entry cost assistance programs are helping emerging markets buyers. In 2009, nearly one-third of Minnesota Housing's loan originations were to emerging market buyers, compared to 10.9% in the overall market.
• Subprime lending among emerging markets is on the decline. The rates of subprime lending (purchase and refinance) dropped from a high of over 40% in 2006 to well below 10% in 2009. Not much of a surprise but good news nonetheless.

The Emerging Markets Homeownership Initiative (EMHI) Summit is an annual event hosted by the Minnesota Home Ownership Center. This year's summit provided the opportunity to learn about the status of emerging market homeownership and some of the current issues facing emerging market homebuyers. Materials from this year's EMHI Summit (including the Grover and Patterson presentation) are available on the Center's EMHI webpage.

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This post was originally published on Dr. Skobba's blog: here.
Reposted with permission.

Filling the Foreclosure Funding Gap

The Good News:
Minnesota Housing announced a $1 million award to the Minnesota Home Ownership Center yesterday during a press conference held at a foreclosed property on Saint Paul’s east side. The award comes at a critical time when federal funding gaps threaten the ongoing work of 74 counselors across the state.

Coverage of the press conference can be seen here (Fox-9), here (Finance & Commerce) and here (MPR).
UPDATE: Star Tribune has also covered us: here.

“We’ve come too far and invested too much in foreclosure prevention across the state to let this funding gap damage our efforts and the infrastructure we’ve built together,” said Dan Bartholomay, Commissioner of Minnesota Housing. “Minnesota has benefited from a strong, statewide network of foreclosure counseling agencies, counseling nearly 16,000 households in 2009, and we’re here today to make sure that continues.”

Here's the situation... the foreclosure counseling network in Minnesota faces an immediate threat to the provision of services, even while facing continued, and in some areas, increased, demand foreclosure prevention counseling. Current funding has been exhausted and the next round of federal funding will not be available until March 2011, pending congressional authorization.

“Minnesota Housing has demonstrated outstanding leadership throughout this prolonged foreclosure crisis,” added Julie Gugin, Executive Director of the Minnesota Home Ownership Center. “Their latest contribution will help ensure that tens of thousands of Minnesotans have access to quality, nonbiased services that will help them avoid foreclosure. Their partnership is critical to stabilizing housing and communities throughout Minnesota.”

With this $1 million award, the Minnesota Home Ownership Center is prepared to work directly with counseling organizations to continue services.

The Bad News:
Center staff has calculated that it will take just over Five Million dollars to cover the cost of maintaining foreclosure counseling services in the state of Minnesota at current levels through the end of 2011.  We'll keep you informed about the fundraising process - and its impact on the counseling network over the coming months. 
 
For now... services will continue without interruption and MN Homeowners that are struggling with their mortgage payments - or think they may have difficulty making payments soon, should contact a non-profit (FREE!) foreclosure counselor TODAY.

NEW Foreclosure Prevention Service Map

Over the past few years of the foreclosure crisis in Minnesota, both housing industry professionals and social service agencies have requested an easy-to-use map of service areas covered by the Center's network of foreclosure counseling agencies... that they could print out and keep handy.

Now, the Center has produced a new printable map showing foreclosure counseling services provided by the Homeownership Advisors Network and the geographic or language service area they cover. This map is intended to be a reference tool for professionals as a supplement to the interactive online map.

(Click To Enlarge - Use Link Below For High Quality Print Version)

The map is available for download (print) here. 

The same information is also available in an interactive format here.

There are also other resources (including fact sheets, presentations, newsletters and more) available for professionals that may be working with struggling homeowners at the Center's website here.

Foreclosure prevention counseling services are provided free of charge by nonprofit housing counseling agencies working in partnership with the MN Home Ownership Center. Remember: there is no need to pay a private company for these services!  For more information an avoiding foreclosure, visit the Center's website.

Moving? Where are you going?

I came across a great interactive map from Forbes the other day (yes, they published the map a few months ago... but the information is great).  If you click on any county on the map it will show you the inbound and outbound movement for that county... including lines that show where people are moving to and from.

On the map... RED lines show the out-migration* from the county and in-migration* is shown in DARK GREY/Black for households that moved in 2008.  While the data is a few years old... there's no reason to think that the trend would have changed too dramatically in the last year and a half.

As an example, here's the migration map for Ramsey County:

(Click To Enlarge)

If you want to see a REALLY scary picture... click on Detroit (Wayne County, MI).

The interactive map is here.


*NOTE:  I've chosen to use the terms out-migration and in-migration instead of Emigration and Immigration... as those terms tend to refer to movement outside/into the country. The movements represented on the Forbes map show the movement of US residents only to and from OTHER US counties.

Center Board Member Recognized: Top Woman in Finance

The Minnesota Home Ownership Center is proud to publicize the fact that Muffie Gabler, long-time Center board member, has been recognized by Finance and Commerce as one of only 50 “Top Women in Finance” in Minnesota. In addition, Muffie was chosen to join Finance and Commerce’s “Circle of Excellence” as she had previously been honored as a Top Woman in Finance in 2007.

The Top Women in Finance award is given to principals, partners, executive vice presidents, CFOs, CEOs and managing directors at not only financial institutions and lenders but also leaders of businesses small and large throughout Minnesota who have shown innovation, leadership, or some other notable qualities in the area of finance.

In addition to being one of the principal drivers of the creation of the Minnesota Home Ownership Center, Muffie has been an integral part of the Affordable Housing arena in Minnesota and countless affordable housing initiatives and community development projects would never have gotten off the ground without Muffie’s assistance.

Winners were recognized during a dinner and program on November 10th at the Hyatt Regency in Minneapolis. For a complete list of honorees, visit the Finance and Commerce article here.

Pre-Foreclosure Notices Continue Unabated

The Minnesota Home Ownership Center has compiled the pre-foreclosure notices received by the statewide network of Housing Counselors through the end of the third quarter (September)... and the upward trend continues!

The most recent quarter (July through September) recorded the second-highest number of pre-foreclosure notices since the MN legislature enacted the notices in the third quarter of 2008.  Year-To-Date, the total number of pre-foreclosure notices received has now exceeded 54,000.

(Click To Enlarge)

Here's the breakdown for the number of pre-foreclosure notices received by members of the Home Ownership Advisors Network in the 7-County Metro Area:

(Click To Enlarge)

NEW:  For the first time since the Center started tracking and publishing the pre-foreclosure notice totals in June of 2009, we are now tracking the running quarterly totals of notices received to see where the trend is heading: 

(Click To Embiggen)

This information makes it hard to forecast anything but continued foreclosure activity and continued mortgage difficulties for Minnesota families.  As always... if you're struggling with your mortgage payments - or think you might fall behind soon - don't wait!  There is a network of non-profit agencies that can help.  Contact them today.  For additional information about foreclosure prevention in Minnesota - visit the Center's foreclosure prevention resource page here.

Are HAMP Improvements Possible?

On Wednesday, November 17th, MN Senator Franken joined 17 other Senators in sending a letter to Treasury Secretary Timothy Geithner asking for immediate changes to the HAMP program to help homeowners facing foreclosure. 

The complete letter is here. (PDF Document)

Here are some of the key steps the Senator(s) recommend implementing in order to improve the HAMP program:

• The creation of the Office of the Homeowner Advocate. This office would focus on assisting homeowners who believe their mortgage servicer is breaking the rules;
• Provisions that would hold servicers accountable;
• Automatically extend permanent mortgage modifications if trial modifications are completed successfully;
• Revise eligibility requirements;
• Ensure that servicers provide homeowners with necessary documentation; and
• Provide homeowners with information as to why they have been denied HAMP modification.

The Minnesota Home Ownership Center applauds any and all efforts to assist struggling homeowners... and welcomes your comments as well!

• Will Senator Franken's suggestions improve the HAMP program?
• What improvements would YOU suggest to improve the HAMP program?
• Do you have other suggestions for helping struggling MN homeowners?

Use the comments section to post your suggestions.

Fourth Annual EMHI Summit

The Minnesota Home Ownership Center is pleased to announce that the 2010 Emerging Markets Home Ownership Initiative (EMHI) summit has been scheduled for December 8, 2010 at the Continuing Education and Conference Center on the St. Paul Campus of the University of Minnesota.

The Annual EMHI Summit is a hallmark of the Center’s dedication to the EMHI mission of working to promote homeownership parity. This year's Summit will bring together industry and community stakeholders to develop tools, resources, and best practices aimed at increasing homeownership opportunities for Minnesota’s emerging markets.

The agenda will include:

• A welcome from MN Home Ownership Center Executive Director Julie Gugin;
  
• 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 markets homeownership in Minnesota. 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 economic environment has impacted effort;
  
• Representatives from the industry, including Michael A Haley, of Identity Theft Shield, Nancy Hostetler of Open Door Home Loans (Bell Mortgage) and Roxanny Armendariz of Neighborhood Development Alliance will offer practical insights into client credit issues facing members of emerging markets. Discussions will include credit repair and Fair Issac scoring;
  
• Keynote Speaker: Angela Glover Blackwell (Pending)
  
  Angela Glover Blackwell is a national leader for social justice and equity. She seeks to strenghten America by creating stronger low-income communities and communities of color. A former Sr. vice president at the Rockefeller Foundation, she has appeared on Nightline, PBS's NOW, and is a frequent commentator on public radio's Marketplace and the Tavis Smiley Show. Her articles have appeared in the New York Times, the LA Times and the San Francisco Chronicle.

The Summit is designed primarily for realtors, lenders, non-profits, elected officials, and others working in the homeownership arena, but is open to all.

The Summit is FREE and 3.5 hours of Real Estate CEU credits have been applied for.

REGISTER TODAY: http://emhisummit2010.eventbrite.com

Are you on Twitter?  Help Spread The Word!  Use Hashtag #EMHI10  (EMHI TEN)

Foreclosure Data - Another Blow

Lender Processing Services has released their most recent version of the LPS Mortgage Monitor, October 2010 Mortgage Performance Observations which contains an informative series of charts and graphs that show that while delinquent and foreclosed loans had stabilized somewhat at the end of 2009 and into the first half of 2010, new problem loans are once again picking up:

(Click To Enlarge)

The graph above shows loans that are currently 60 days or more delinquent but that were current just 6 months ago.  You can certainly see the upswing that started in the middle of 2010.

The LPS report also has some, albeit limited, information regarding Minnesota.  For example, in their table on the Delinquency and Foreclosure Rate, Minnesota ranks 42nd in the nation (that's a good thing!) in percentage of delinquent mortgages:

(Click to Enlarge)

According to the chart, our delinquency rate is about 34% lower than the national average of 9.27%.

Another chart that contains information about Minnesota shows that the average number of days delinquent for loans that are in foreclosure (time delinquent before foreclosure sale) has increased 85% since 2008, and now overages over a year - 386 days to be exact:

(Click To Enlarge)

Not only is it taking lenders/servicers longer to foreclose... the number of foreclosures is starting to increase again.  This problem is NOT going to go away soon.  Thousands of Minnesota families are still struggling every month to make their mortgage payments!  If you, or someone you know is struggling... don't wait, contact a member of the Minnesota Home Ownership Center's network of foreclosure counseling agencies TODAY.  The sooner you call, the more options you have available!

Vote Again!

No... the Minnesota Home Ownership Center is not advocating voter fraud!  :-)

We want you to vote on the consumer handout that we plan to produce for our Look Before You Leap campaign.

“Look Before You Leap” is a statewide public education campaign seeking to raise public awareness about the booming foreclosure rescue scam industry and its dangerous implications for struggling and unsuspecting home owners, and to connect struggling home owners with the Center’s network of FREE and trustworthy foreclosure counselors.

The piece we are designing will be used in mailings, handouts, counter displays, etc... and we hope to make the piece as attractive as possible so that struggling homeowners see the piece and respond.

Here are the two options:

(Click To Enlarge)


Would you take please take 30 seconds to respond to a quick on-line survey about the piece?  4 questions... 30 seconds... SURVEY HERE  

You can also leave feedback in the comments!  We'll be compiling this information through Friday, November 5th.  THANKS!

What A Difference A Decade Makes

I recently came accross a report from the Federal Reserve Bank of San Fransisco entitled "Underwater Mortgages" where the authors,  John Krainer and Stephen LeRoy, attempt to determine the point at which underwater borrowers decide to throw in the towel and walk away from their homes.

While the article has some interesting information about the 'boiling point', I found that two of the images that accompany the report are just as interesting for people working in housing in Minnesota.

The first image shows the share of underwater mortgages in the fourth quarter of 2000:

(Click To Enlarge)

According to the figure, in the fourth quarter of 2000, Minnesota was one of only a dozen states where the share of 'underwater' mortgages was less than one tenth of one percent! (between 0% and 0.1%).


However, by fourth quarter 2009, our rate of negative equity homeowners had increased to between 6% and 10%:

(Click To Enlarge)

Interestingly... NO STATE was in the 0%-0.1% category by the end of the 'aughts'.

The complete report is here.

Residential Foreclosures in Minnesota Report

Minnesota Housing has just released the Summer 2010 version of its "Residential Foreclosures in Minnesota" report, based on delinquency and foreclosure information from EVERY Zip Code in the state (through June 2010)... and there is a ton of great information for real estate and lending professionals, municipalities and elected officials and others that are working on foreclosure prevention and remediation efforts.

The report is available online here.

Here are just a handful of the highlights of the report:

• Although the number of sheriff sales in Minnesota dropped from 26,000 to 23,000 between 2008 and 2009, the 2009 level is dramatically higher than the 6,500 sales that occurred in 2005.2 In addition, the number of sheriff sales started to increase again in late 2009 and early 2010.3 Sheriff sales are expected to rise back up to the 26,000 level in 2010.
• Between 2007 and 2010, the subprime market’s share of residential mortgages in foreclosure dropped from 54% to 25% in Minnesota.  During the same period, the prime market’s share increased from 40% to 60%.
• There is concern about alt-A loans and option ARMs that will reset or recast in the next few years.

The report is full of great graphics that show exactly where the highest concentrations of delinquencies (60-day lates) and foreclosures are happening.  Here is the map of loans that are 60-days or more delinquent throughout the state of Minnesota:

(Click To Enlarge)



From this map alone... it is clear that the foreclosure crisis is continuing to move out of the core cities of Minneapolis and St. Paul, and into the outer ring communities just outside the seven-county metropolitan area, particularly in Wright, Sherburne, and Isanti counties.

The report also maps the prevalence of REO properties and homes in foreclosure (as of June, 2010).  In addition... the data is not just available in map form, but Minnesota Housing has included the information for EVERY Zip Code (where there are more than 200 residential parcels). 

Go ahead... go dig through the report... let us know if you find anything that surprises you.  Your comments are welcome!

Bank of America Halts Foreclosures in Minnesota

According to a press release on the Bank of America website, BoA has halted ALL foreclosure sales in all 50 states.  This, obviously, includes Minnesota.

The actual text of the press release is:

Bank of America has extended our review of foreclosure documents to all fifty states. We will stop foreclosure sales until our assessment has been satisfactorily completed. Our ongoing assessment shows the basis for our past foreclosure decisions is accurate. We continue to serve the interests of our customers, investors and communities. Providing solutions for distressed homeowners remains our primary focus.

The wording of their press release is interesting.  It states that they will halt "foreclosure sales" until they've finalized their internal reviews... but it does not state anything about the REST of the foreclosure process.  Will they continue all the steps PRIOR to the Sheriff's sale in Minnesota?  (For an overview of the steps, view our Foreclosure Process Infographic). 

Will other lenders follow suit?  Let us know what you think in the comments.

We will continue to monitor the situation... and let our readers know of updates as they become available.

Struggling homeowners should be aware that this decision by Bank of America will NOT, ultimately, end their financial crisis.  If you are struggling with payments - whether you are a Bank of America client or not, the best resource in Minnesota the MN Home Ownership Center's network of FREE Foreclosure Counselors.  These counselors can work with you to find individualized solutions to YOUR personal mortgage crisis and answer questions about how foreclosure related policies and programs affect you.  To find your closest counselor, click here.


UPDATE: We've received information from Bank of America... that specifically states that the ONLY part of the process that is halted is the actual sale date... and ONLY those sale dates that fall between October 9, 2010 and November 1, 2010:

First, I want to clarify that there is no moratorium in place. What we have done is postpone any scheduled foreclosure sales, that fall between 10/9 and 11/1 to a date after November 1st. This is to allow for additional time to complete necessary document reviews. All other foreclosure activity will continue as usual.

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.

Can lender access property after foreclosure sale?

This post is a guest post by attorney Jeffrey O'Brien, partner with Mansfield Tanick & Cohen, P.A. who specializes  in the areas of business and corporate law, real estate law, estate and business succession planning and probate law.

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Can a Foreclosing Lender Enter a Property
During the Redemption Period?

In Minnesota, foreclosures work a bit differently than other states. Not only does Minnesota have a non-judicial foreclosure process (unlike most states which only allow foreclosures to be brought by court action), but Minnesota is also one of only ten (10) states that provides for post-sale redemption rights.

The most significant implication of a foreclosed homeowner having post-sale redemption rights (as opposed to pre-sale redemption rights) is that the foreclosure sale does not end the process. In a way, it is only the beginning. For the next six (6) months, Minnesota law allows the homeowner to stay in possession of the property, with the understanding that up until the end of the six (6) months, the homeowner could, theoretically, pay off the foreclosing lender’s mortgage plus the costs of the foreclosure and regain ownership of the property.

This post-sale redemption period can be tricky, for a number of reasons. For example, the lender is not able to list the property for sale, based upon the fact that the homeowner can redeem the property during that period, and allowing the lender to sell the property to someone else would create a significant ownership dispute, not to mention the fact that there would seem to be little to no market for purchasing a property that could be redeemed at less than the new buyer’s purchase price for a period of time. For this reason, if the homeowner abandons the property, the lender has the option to seek a court-ordered shortening of the redemption period to five weeks.

Even if the redemption period is not shortened, the lender is not powerless to protect its property. That’s because Minnesota Statutes Section 582.031 allows the lender, in certain circumstances, to enter the property during the redemption period and take steps to protect the property. The statute provides that “if premises described in a mortgage or sheriff's certificate are vacant or unoccupied, the holder of the mortgage or sheriff's certificate or the holder's agents and contractors may, but is under no obligation to, enter upon the premises to protect the premises from waste, until the holder of the mortgage or sheriff's certificate receives notice that the premises are occupied.”

Subdivision 2 of the statute goes on to clarify what actions the lender may take to protect the premises from waste: “install or change locks on doors and windows, board windows, install an alarm system, provide a resident caretaker, and otherwise prevent or minimize damage to the premises from the elements, vandalism, trespass, or other illegal activities.” For example, given Minnesota’s harsh winters, a lender may take steps to ensure that pipes don’t freeze and burst by winterizing the property.

In order to protect the homeowner’s redemption rights (which include the right of possession of the property until the expiration of the owner’s redemption period), if the holder of the mortgage or sheriff's certificate installs or changes locks, a key to the premises must be promptly delivered to the homeowner or any person lawfully claiming through the mortgagor, upon request.

Section 582.031 is a necessary result of Minnesota’s post-sale redemption rights, and lenders should be aware of their rights during the redemption period just as much as they need to be concerned about the homeowner’s rights.

___________________________

This post was originally published on Jeff's blog: here. 
Reposted with permission.

For more information about your rights after a foreclosure sale - during Minnesota's Redemption Period - the Center has created a Redemption Period Fact Sheet, or you can visit the Center's website 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)

Open Position - Dakota County CDA

Interested in helping people begin or maintain sucessful homeownership?  Looking for a new career? 

The Dakota County Community Development Agency is seeking an experienced Homeownership professional to provide housing counseling services in the area of pre-purchase and mortgage default and foreclosure prevention. 

Duties include:  Conduct homebuyer education sessions; perform foreclosure program intake; conduct applicant interviews, determine eligibility, provide counseling services, respond to inquiries, and maintain records. 

Starting salary:  $3,284 - $3,542/mo. DOQ, plus benefits. 

This position is grant-funded through September 30, 2011 with future employment dependent on continued program funding.  Some evening and weekend hours may be required.  Requires 4 years related education and/or experience; Certified Mortgage Foreclosure Prevention Specialist preferred.  

Completed CDA application forms must be received in the CDA office by 4:30pm on October 20, 2010.  You can use their online application process here: www.dakotacda.org, or call their Jobs Line at (651) 675-4441.  The Dakota County CDA is an Equal Opportunity Employer

Foreclosure Suspensions in Minnesota?

UDPATE:  Bank of America & PNC have halted foreclosures in ALL 50 states, including Minnesota.  If other lenders join them, we'll update this blog post.


Recently a number of stories have hit the media regarding certain servicers halting or suspending foreclosures due to issues (errors) with their internal document processing and legal procedures.  The servicing companies that have voluntarily issued moratoria are GMAC and JPMorgan Chase, although many other servicers are reviewing their procedures, and others may follow suit.


The question has arisen as to whether these foreclosure suspensions/moratoria will affect any Minnesota homeowners.  The short answer is: probably not.


The key reason is due to the fact that the vast majority of foreclosures in Minnesota follow a process known as Foreclosure by Advertisement, and not the process of judicial foreclosure (where a judge must enter a judgment of foreclosure against a homeowner before the house can be auctioned/sold).  In Minnesota, no such step is required if the servicer is pursuing Foreclosure by Advertisement.


For more information about the Foreclosure by Advertisement process, the MN Home Ownership Center has created a fact sheet that highlights the steps a lien holder must take to foreclose.  That document is here.


From the NY Times:

The lender, JPMorgan Chase, said on Wednesday that it was halting 56,000 foreclosures because some of its employees might have improperly prepared the necessary documents. All of the suspensions are in the 23 states where foreclosures must be approved by a court, including New York, New Jersey, Connecticut, Florida and Illinois.  [Emphasis ours]

The Center will continue to monitor the situation, and if other servicers join the ranks of GMAC and JPMorgan Chase, we'll update the blog.  In addition... if any servicers halt foreclosures in Minnesota, we'll highlight that information as well.


If you're struggling with your mortgage payments - no matter who your lender or servicer is - getting help as soon as possible is key.  There is a network of FREE, non-biased, non-profit Housing Counselors that specialize in foreclosure prevention.  To locate your closest counselor, visit the MN Home Ownership Center's website, here.

New Fannie Mae Forbearance Program for Military Families

Fannie Mae has announced plans to give military families a break on their mortgage payments if they are struggling because of the death or injury of a service member.

Fannie says its "Unique Hardship" guidelines allow the agency to reduce or suspend borrowers' monthly payments up to six months. In addition, they will suspend reporting to credit bureaus for up to six months to minimize the impact on the borrower's credit score.

The military has established a special phone number for injured military or surviving spouses to use if they are struggling with mortgage payments: 1-877-MIL-4566.

If you or a family member are currently serving in the military... first and foremost: Thank You!  Also, there may be other helps and assistance available to you - even if your loan is not backed by Fannie Mae.  Contact a Foreclosure Counselor through the MN Home Ownership Center TODAY to learn about your options if you are struggling with mortgage payments.  To find your local non-profit, FREE Foreclosure Counselor, click here.

Training Opportunities in Affordable Housing

Need CEU's?  Interested in Affordable Housing Issues?

As part of our goal of promoting and advancing successful home ownership in Minnesota, we periodically highlight training and continuing education opportunities for real estate and housing professionals. Today, we’d like to highlight three upcoming workshops/seminars:

1. 2010 Affordable Homes Congress
Attend the 2010 Affordable Homes Congress to get the answers and information you need to succeed in affordable housing today.
     When: October 14-15, 2010
     Where: Radisson Hotel and Conference Center Minneapolis
                 3131 Campus Drive, Plymouth, MN 55441
     More Info: Online information here
                           ** CEUs have been applied for**

 2. Homes for All 2010
Homes for All 2010 seeks to build a community platform to affirm the belief that all Minnesotans deserve a safe, affordable place to call home; connect resources and stakeholders; and create sustainable communities.
     When: November 8, 2010
     Where: St. Paul RiverCentre
     More Info: http://www.homes-for-all.org/index.html

3. Fourth Annual Emerging Markets Homeownership Initiative Summit
The EMHI Summit event is designed primarily for Realtors, lenders, non-profits, government, and others working in the homeownership arena. Hear a comprehensive analysis of the current status of emerging marketing homeownership in Minnesota; learn from panelists and speakers about opportunities and successes in serving emerging markets.
     When: December 8, 2010
     Where: U of MN Continuing Education and Conference Center
     More Info: http://hocmn.org/en/emhi-summit-2010.cfm
           ** CEUs have been applied for**

Foreclosures Are Getting Worse

As we've highlighted on this blog before (here and here, for example) Minnesota is NOT out of the woods yet, and will continue to see elevated numbers of foreclosures for quite a while.

On Friday, September 17th, Minnesota's most-populated county, Hennepin County, through its Taxpayer Services department, released a fresh round of information regarding Sheriff Sale data for August, 2010... and the data does not look good.

For the county, the number of foreclosure sales (Sheriff Sales) conducted in August of 2010 exceeded the number during the same periods during each of the three preceding years - 2009, 2008, and 2007.

Here is how August 2010 compares to the three previous years: 

(Click To Enlarge)

According to Hennepin County Taxpayer Services:

If foreclosure sales continue at this pace for the rest of the this year, the number may reach the 6,000-6,300 range

If this number is reached, 2010 could outpace 2009, and even rival the record-breaking number of 7,348 set in 2008.

In actuality, August 2010 recorded the 7th highest number of foreclosures in Hennepin County in a single month since these numbers have been tracked:

Minnesota homeowners continue to struggle with mortgage payments and continue to face the specter of foreclosure.  But it's not all doom-and-gloom.  Hennepin County (Taxpayer Services, Hennepin County Library and others) continues to work with the MN Home Ownership Center and its network of Housing Counseling agencies to offer FREE trustworthy resources to avoid foreclosure.  For a complete list of information sessions hosted by Hennepin County and the Minnesota Home Ownership Center, click here.

If you can't join us at one of the sessions, but would like to learn about what resources and assistance are available to Minnesota homeowners to avoid foreclosure, you can learn more about foreclosure avoidance services that are available - FREE - at the Center's website here or by calling us at 651-659-9336. 

Don't delay... the sooner you contact a non-profit housing counseling agency, the more options you have!

Fannie Mae's National Housing Survey

Fannie Mae has released the latests findings of their National Housing Survey that polled homeowners and renters between June 2010 and July 2010. These findings were compared to a similar survey released in April  (See the Center's April 22 blog post about that here). 

The Survey has some interesting facts and figures to digest:

Regarding purchasing a home:

• 70% of Americans believe it’s a good time to buy a home - even with all of the issues we've been hearing about in the housing industry.  This number is up from 64% of respondents from the earlier survey conducted in January.
• A large majority (78%) believe home prices have either bottomed or will rise over the next year, up from 73 percent in January.

Here's a great quote from the press release of the survey:

“Although most Americans believe that home prices have bottomed, they are adopting a much more cautious approach toward buying,” said Doug Duncan, Vice President and Chief Economist, Fannie Mae.

The Center believes that potential homebuyers should ALWAYS be cautious when buying their first home.  That's why we offer the state's premier homebuyer (pre-purchase) education curriculum, Home Stretch.  To learn more about Home Stretch, and other services for homebuyers, visit the Center's website here.

The survey has interesting information about CURRENT homeowners as well:

• 22% of mortgage holders (homeowners) said that they have reduced their mortgage debt “significantly” over the past year, while 27 percent say they have reduced their non-mortgage debt significantly. (!!)
• Nearly 20% of homeowners know someone who has strategically defaulted, or stopped making their mortgage payments even when they could afford to make them.

The survey also has interesting data about housing attitudes from minority groups including African Americans and Latinos. 

For more information about the survey and to see the complete report, visit Fannie Mae's website, here.