Foreclosure Prevention in SE MN

As many of you are aware, the Minnesota Home Ownership Center has teamed up with the SE Minnesota Association of Realtors® to offer a FREE foreclosure training workshop to provide information to professionals on how to help struggling homeowners:

Thursday, March 04 ………. 11:00 AM - 12:30 PM
Ramada Hotel & Conference Center,
Rochester, Minnesota
RSVP Required: here

The training 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.

The training is specifically designed for staff from public, private, and non-profit organizations that work with struggling homeowners – but who do not normally work with mortgage foreclosure as part of their job.  For more information, or to register, click here.


EVENT WILL BE WEB-STREAMED LIVE!
Space at the event is limited... however, due to the amazing response we've received (over 150 people have already registered!)... the SE Minnesota Association of Realtors® will be offering a LIVE WEBSTREAM of the workshop!  Watch the web stream (on March 4th) here.


If you weren't aware of the workshop... it might be because you haven't signed up for our bi-weekly electronic newsletter.  You can subscribe to the newsletter here.

Another Minefield For Struggling Homeowners: Discount Payoffs

A “Discount Payoff Agreement and Release of Claim” is growing trend that the Center's Counseling Network is seeing being offered by second and other junior lien holders.

A Discount Payoff Agreement is an offer allowing homeowners facing foreclosure to pay a small portion of the total remaining principal balance on a second (or third...) mortgage in exchange for release of that mortgage. The Agreement also suggests that it will forgive all remaining debt owed on the released mortgage. This seems like a great opportunity, and mortgage holders will encourage homeowners to quickly sign the agreement and send in a check for the payoff amount.

But is it too good to be true?  Maybe.

Homeowners need to proceed with caution, and before agreeing to a "Discount Payoff" they need to consider the following:

   1. Is the Mortgage Debt REALLY Forgiven?

   2. How does the lender handle "Release of Claims"?

   3. How does the lender REALLY define a “Discount Payoff”?

The answers to these questions can really be a minefield for struggling homeowners... who may view a Discount Payoff as a life raft from a sinking ship.  BE CAREFUL... this life raft may be full of holes!

Working with the Housing Preservation Project, a non-profit legal organization, the Center has produced a fact sheet that defines and explains "Discount Payoffs" and offers advice about some of the pitfalls and the possible dangers associated with them.

For a copy of this new fact sheet... click here.

Not all "Discount Payoffs" are dangerous... and they can be a great help for struggling homeowners burdened with second or third liens.  Before signing ANY documentation from a lien holder... whether it be a Discount Payoff or any other paperwork... the Center recommends that homeowners seek the advice of a certified non-profit Foreclosure Counselor.  To find your local FREE housing counselor, click here.

Wells Fargo Home Preservation Event

I came across an interesting article at American Banking News about Wells Fargo, that I thought I'd share with you all.  The article states that Wells Fargo now performs THREE modifications for every ONE foreclosure on owner-occupied properties.  In addition, Wells has more than doubled their "Home Retention" staff in 2009 to over 15,000 people.

Yes, we know that big banks, like Wells, still have a LONG WAY to go (no flame wars, please). -  But Wells' commitment to keeping people in their homes was on display here in St. Paul at the RiverCentre on Wednesday and Thursday.  Hundreds of homeowners were able to meet face-to-face with representatives at Wells Fargo to discuss their options for avoiding foreclosure.

The event was EXTREMELY well organized... here's a "behind-the-scenes" picture of the loss mitigation scheduling chart the organizers used:  (Click to enlarge)

The Center's applauds all efforts that large banks like Wells make to openly engage with struggling homeowners, and our counseling network was pleased to be able to participate. 

Here are a few follow-up pictures of some of the Foreclosure Counselors that were on-hand during the event:

(Aliesha Kruck (L), Twin Cities Habitat for Humanity; Rock O'Bannon (R) Minneapolis NHS)

(Celeste Tometz, City of St. Paul PED)

(Dana Snell (L) from the Center speaks with Laura Carroll and Celeste Tometz of the City of St. Paul PED)

One other fun picture I thought I'd add... in the 'waiting lounge', Wells had set up a small movie screen with inflatable chairs for the kids (and grown-ups) to watch movies while they waited:

Are other lenders & servicers interested in hosting similar events? the Center would be pleased to assist.  Contact us for more information.

If you're a struggling homeowner that wasn't able to attend... or don't have a Wells Fargo loan... help is still available!  To find your local Foreclosure Counselor, click here.

Report: 23,000 Foreclosures in 2009

The Center is pleased to announce the release of its 2009 "Foreclosures in Minnesota" Report, prepared in partnership with HousingLink.


There were 23,019 foreclosures in Minnesota in 2009, making it the second highest year on record.


While the number declined 12% from 2008, it is still an extraordinarily higher rate than the number of foreclosures experienced prior to the current housing crisis. The report shows that 1.28% of all residential parcels in Minnesota experienced a foreclosure in 2009.


This means that almost 5% of all residential properties in Minnesota have experienced a foreclosure in the last five years.


To view the press release of this report, click here.


To view the report, click here.




Press sightings:


To read the Pioneer Press story on the report, click here.


To read the Star Tribune story on the report, click here.

Update:

To read the MPR story, click here.

Update II:

To read the Star News (Elk River, Otsego, Rogers, Zimmerman) story, Click here.

Foreclosure Help for Wells Fargo / Wachovia Customers

The Minnesota Home Ownership Center and its network of non-profit Foreclosure Counselors are pleased to have been invited to participate with Wells Fargo Home Mortgage (and Wachovia Mortgage) at a large-scale event that begins tomorrow, February 17th at the RiverCentre in St. Paul.

Homeowners will be able to sit down face-to-face with representatives from Wells Fargo Home Mortgage and Wachovia Mortgage to discuss their options for avoiding foreclosure.  Event planners expect hundreds of struggling homeowners will be helped at the event.

Are you a Wells Fargo or Wachovia Mortgage customer struggling with your mortgage payments? If so, you're invited get the answers:

Event Details:
February 17th and 18th
10:00am - 7:00pm
St. Paul RiverCentre, Grand Ballroom
175 West Kellogg Blvd. St. Paul, MN

Walk-Ins Welcome, but pre-registration is recommended:
www.wfhmevents.com/leadingthewayhome

For an event flyer, click here.

For a map to the RiverCentre, click here.

Representatives from the Minnesota Home Ownership Center will be on hand as well as Foreclosure Counselors from:

• Community Neighborhood Housing Services
• Community Action Partnership of Suburban Hennepin
• Minneapolis Neighborhood Housing Services
• Neighborhood Development Alliance (NeDA)
• Twin Cities Habitat for Humanity
• Washington County Housing & Redevelopment Authority

Unable to attend?  Not a Wells Fargo customer... but struggling with your mortgage?  Don't delay... contact a FREE foreclosure prevention counselor TODAY for advice and options.  To find YOUR local Foreclosure Counselor, 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.

Center Sightings: Radio & TV

The Minnesota Home Ownership Center is pleased to have been a part of TWO news stories this week on local media outlets.

The first story, covered by Minnesota Public Radio, Ed Nelson, Marketing and Communications Manager for the Center discusses the discrepancy between RealtyTrac foreclosure counts and HousingLink's foreclosure study that the Center partially funds.  You can follow that story here.

The second story, on WCCO, covers the Center's participation in next week's "Home Preservation" event with Wells Fargo at the St. Paul RiverCentre.  The MN Home Ownership Center was pleased to be invited to participate in this large scale (4 - 600 people are expected) event hosted by Wells.  We'll be following up with additional information about the event and the network of Foreclosure Counselors that will be participating in a blog post shortly.  You can see Julie Gugin, the Center's Executive Director, in the WCCO story here.

We participate in stories like these for one purpose: to let struggling homeowners know that there is a LOCAL, FREE resource available to them right here in Minnesota.  Our network of Housing Counselors is ready to assist Minnesota Homeowners with their mortgage questions.  Struggling with your mortgage?  Click here for help.

Foreclosure Prevention Workshop for Unemployed

The Minnesota Home Ownership Center, the Community Action Partnership of Suburban Hennepin County and the Minnesota WorkForce Centers are working together to offer free workshops for homeowners who are worried about making upcoming mortgage payments, are already facing foreclosure or for anyone interested in learning more about the foreclosure process in Minnesota.

The workshop will provide information on what happens during foreclosures, homeowners’ rights, and solutions for long-term housing needs. Participants will be able to ask questions and get free advice – confidentially - from local, non-profit foreclosure counselors.

The first workshop in the series will be held on Thursday, February 18th at the Hennepin South WorkForce Center (Bloomington) from 10:30am to 12:00noon.

For a map to the Hennepin South WorkForce Center, click here.

For a press release of the upcoming workshop, click here.

For a flyer you can freely distribute to help us promote the workshop, click here.

To view all upcoming workshops hosted by the Center, click here.

Housing Data: Great Info From MHP

Minnesota Housing Partnership (MHP) is a non-profit housing organization that the Center has worked with on a number of housing issues that provides resources to help community organizations, businesses, municipalities, and elected officials in Minnesota understand the housing market (both ownership and rental)... with the goal of advocating for the creation and preservation of affordable housing. MHP’s resources include research, advocacy, technical assistance, and financial tools and support.

MHP has produced their "Slideshow: 2010 Housing Facts for Advocates" that is chock full of slides and talking points that cover current statistics ranging from housing cost burden and unemployment to foreclosures and at-risk homeowners. Some of the data produced from the Minnesota Home Ownership Center's work is included in the slideshow.

There is a ton of great information on these slides that can be used to address a number of housing needs.

To view the slideshow, click here.  To view MHP's other fact sheets and talking points, click here.

SAFE ACT Threatens Foreclosure Counseling

UPDATE: Comment period extended until March 5th, 2010.

The federal Secure and Fair Enforcement for Mortgage Licensing Act of 2009 (SAFE Act) compels states to adopt a uniform process of licensing and reporting for state-licensed loan originators. Its intent is to ensure that residential mortgage loan originators act in the best interest of consumers.

Based on the definitions in the legislation and the accompanying HUD Federal Register, foreclosure prevention counselors - like those in the Center's network - likely will be considered 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.

The Center recently submitted the following comments to HUD and encourages others to do so as well:

Third party loan modification specialists should NOT be covered by the licensing requirements of the SAFE Act; specifically, those housing counselors working for nonprofit and government based organizations to provide much needed foreclosure prevention assistance at no charge to consumers.

While a housing counselor may take some information from consumers to share with lenders in negotiating a loan modification, the counselor is not using that information to underwrite a loan, but rather to assist homeowners in evaluating their position and/or re-negotiating the terms of the loan with the lender. In addition, the statutes imply that the drafters' intent was to include individuals who are in a position to have some level of "adversity" vis a vis the borrower. This is clearly not the case for foreclosure prevention counselors. Furthermore, assistance with loan modifications is a relatively small part of the counselors' job. The preponderance of their time is spent on other activities: explaining the foreclosure process, review of existing mortgage documents, budget counseling, and reviewing and negotiating loss mitigation options other than loan modification. 

I urge you to exempt foreclosure prevention counselors or allow individual states the power to exempt foreclosure prevention counselors.

Please consider submitting these, or other comments to HUD as well.

All comments are due February 16th. March 5th.   Submission instructions appear in the proposed rule: http://www.hud.gov/offices/hsg/ramh/safe/safeprule.pdf

For additional information about the SAFE Act, visit the Center's website, here.

FTC Proposes Limits on For-Profit Loan Rescue Companies

Following the lead of states like Minnesota… the Federal Trade Commission (FTC) is proposing a new rule that would prohibit for-profit loan modification companies from charging an upfront fee for services. Companies would also have to disclose to consumers that they are for-profit, total fees they will charge, clearly state that they’re not associated with the government or the lender, and the fact that there’s no guarantee that the lender will agree to a loan modification.  Many of these proposals are already in effect in Minnesota.

There is a Federal Register published and the public comment period closes on March 29.  You can view the Federal Register, here. 

For more details, visit http://www.ftc.gov/opa/2010/02/mars.shtm

The Center has repeatedly warned homeowners about exercising caution when working with ANYONE in a foreclosure situation.  We've even created a fact sheet (available here) to help homeowners. 

To find your local non-profit, FREE Foreclosure Counselor, click here. For additional information about preventing foreclosure in Minnesota, click here.

Sued - After A Foreclosure

The Minnesota Home Ownership Center's network of Housing Counselors (Foreclosure Counselors) has begun to see an uptick in lenders seeking deficiency judgments AFTER a foreclosure... and, without getting too technical in this blog post, we felt it was important to warn struggling homeowners and our partners about this new trend:

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.

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” 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!

Here’s a realistic scenario:

• If a homeowner purchased a $200,000 home in 2005 and financed the purchase 100% using an 80/20 loan (80%, or $160,000 financed with one lender who holds first lien position, 20%, or $40,000 financed with a second lender who holds second lien position).
• Now, given current market circumstances in Minnesota, the home may only sell for $150,000 at the Sheriff’s Sale.
• The first lien holder (who was owed $160,000) is wiped out. The homeowner does not owe this first lien holder any additional funds, and the first lien holder CANNOT sue the former homeowner for the ‘deficiency’ of $10,000. ($160,000 - $150,000).
• HOWEVER… the second lien holder CAN sue the homeowner for their ‘deficiency’. In this scenario… they can sue for the ENTIRE outstanding amount of $40,000. (To keep the math simple, we’re assuming that no principal was paid down in the last 5 years).

If the lender seeks a deficiency judgment, the former homeowner may find themselves having their wages garnished, tax returns withheld or garnished and other consequences.

Here’s the kicker - - - lenders can take up to THREE YEARS SIX YEARS after the Sheriff’s Sale to decide whether or not to seek judgment! THREE.YEARS. SIX.YEARS. (!)

Former homeowners may find themselves being sued for outstanding mortgage debt YEARS after a foreclosure... just as they begin to rebuild their financial lives.

Jennifer Lancour, a Housing Counselor at PRG, Inc., one of the organizations that work with the Minnesota Home Ownership Center to offer Foreclosure Prevention Counseling, stated recently:

We’ve always counseled clients about the possibility of Deficiency Judgments in situations where there is more than one lien on a property. But in the past it was unlikely that a lender would seek judgment. Since the middle of last year, we’ve started seeing more and more clients coming back to us after a foreclosure looking for assistance because they’ve been served court papers.

In addition, Homeowners also need to be EXTREMELY careful when negotiating a SHORT SALE on their property as well. If the negotiations aren’t done properly, even the FIRST lien holder can seek judgment for any deficiencies.

The MN Home Ownership Center has a helpful fact sheet on its website about deficiency judgments (with MANY thanks to the Housing Preservation Project for their work!). 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.