Why Refi? Is it right for you?

According to a new article at MarketWatch based on CoreLogic data, more than a quarter of households that refinanced between January and June of 2010, chose a 15-year fixed-rate mortgage.  This compares to only 18.5% who chose that option in 2009, and is nearly three times the 9% that chose a 15-year refi in 2007.

Why is the 15-year refi becoming so popular?

• One possible explanation is that interest rates on 15-year loans are now so low that borrowers can handle the larger mortgage payment.  If someone has a 6.5% 30-year mortgage on a $200,000 house, their monthly payment is about $1,270.  Refinancing to a 15-year fixed rate at about 4%, means a payment of about $1,480.  An extra couple hundred dollars a month and the loan is paid off over a DECADE earlier.
• Could a second explanation be a change in our national psyche?  Is it possible that we as a nation are becoming more debt-averse?  Personal finance blogs and magazines are flourishing.  Recent reports show that we owe less on our credit cards and we're even paying off our car loans.  Hmm...  Your thoughts are welcome in the comments.

Now... paying off debt is a GREAT THING.  And refinancing from a 30-year to a 15-year loan can save a tremendous amount of money in interest payments over the coming years... but refinancing can also be dangerous!  The MN Home Ownership Center oversees a network of Refinance Counselors* (Housing Counselors) that provide home owners with an opportunity to compare a current mortgage against a potential refinanced mortgage or second mortgage. Counselors take time to compare the terms with you, and to tell you what those changes will mean for your monthly finances - in real terms - without trying to sell you ANYTHING.

 
For more information about Refinance Counseling in Minnesota - or if you're thinking about refinancing your mortgage - visit the MN Home Ownership Center's website, here.
 
 
* Minnesota law requires you obtain a certificate from a qualified "Refinance Counselor" before you refinance your loan if you have a "special mortgage" - a loan from a state, local or tribal government or nonprofit organization with payments that vary with income, zero or deferred interest or other unique conditions, and is highly recommended for ANYONE thinking about refinancing their mortgage.  A small fee for this service may apply.

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.

New Survey Shows Loan Mod Problems

A new consumer survey of households accross the country that have received, or tried to receive, a loan modification from their bank or servicer shows that banks routinely make errors or blatently break the rules established by the federal Making Home Affordable program.

The survey, by ProPublica, gives empirical evidence to what many of the MN Home Ownership Center's network of Foreclosure Counselors have been hearing for the past year: trying to work with servicers to obtain a loan modification can be an EXTREMELY frustrating undertaking.

Here are some of the results from the survey:

• On average, homeowners had been seeking a modification for more than 14 months.
• Homeowners seeking modifications reported having to send the same documents nearly six times on average.
• 175 homeowners say they were advised, incorrectly, to fall behind on their mortgage in order to qualify for a modification.
• Nearly half of the homeowners reported spending more than 10 hours per month (collecting documents, waiting on the phone, etc.). Most said they call, fax or mail once a week or more.

Most frustrating for those surveyed was that many times the servicers themselves made mistakes that resulted in a denial, and many times homeowners found the reason for denial unclear.


If you've thought about seeking a loan modification with your lender, there are ways to simplify  the process (although it's NEVER easy) and you want to be EXTREMELY careful that any modification they offer is really in your LONG-TERM best interest. The Center's network of Foreclosure Counselors are ready, willing and able to work with you on applying for a modification and help you decide if it will work for you.  In addition... there may be other ways to avoid foreclosure too.  Your counselor can help.

ALSO... we couldn't post about loan modifications without warning Minnesota Home Owners AGAIN, to make sure that they DO NOT PAY for any third-party loan modification service. Deal directly with your lender yourself, or with one of our free, non-profit Foreclosure Counselors. For additional information about preventing foreclosure in Minnesota, click here.

New Foreclosure Rescue Scam

Helping to keep struggling homeowners safe from scam artists and fraudsters is a lot like the carnival game "whack-a-mole".  Now that there are tough federal and state law enforcement actions that have begun to crack down on “foreclosure rescue” and “loan modification” scams, the vultures/moles have "popped up" with a new fraud: "Forensic Loan Audits."

According to a recent "Consumer Alert" from the Federal Trade Commission, this latest fraud follows this pattern: In exchange for an upfront fee (ranging from a few hundred to a few thousand dollars), so-called 'forensic loan auditors' offer to review the homeowner’s mortgage loan documents to determine whether the lender complied with state and federal mortgage lending laws. If a violation is found, the “auditors” say their findings can be used to avoid foreclosure, accelerate the loan modification process, reduce the loan principal, or even cancel the loan.

NOT TRUE!  The FTC says that EVEN if these auditors find something wrong... it won't help with a loan modification or to avoid foreclosure.  Here's the information from their press release:

• there is no evidence that forensic loan audits will help you get a loan modification or any other foreclosure relief, even if they’re conducted by a licensed, legitimate and trained auditor, mortgage professional or lawyer.
• some federal laws allow you to sue your lender based on errors in your loan documents. But even if you sue and win, your lender is not required to modify your loan simply to make your payments more affordable.
• if you cancel your loan, you will have to return the borrowed money, which may result in you losing your home.

The Minnesota Home Ownership Center is working with dozens of national, state and local partners through its "Look Before You Leap" campaign to help struggling homeowners to spot loan modification scams, find trusted help and report illegal activity to authorities.  DON'T FALL FOR A "LOAN AUDIT" SCAM!  You can learn more about the "Look Before You Leap" campaign on our Facebook Page and our website.

 

If you, or someone you know is struggling with mortgage payments... BE CAREFUL and 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.

Foreclosures Rise Again - New Report

A report published this week by the Minnesota Home Ownership Center shows there were 13,093 foreclosures in Minnesota at the end of the second quarter, compared to 11,089 during the same period last year. If this pace continues, Minnesota will see a 13% increase in the number of foreclosures over 2009.

Even scarier... we could even rival the number of foreclosures seen in 2008, the highest number on record. In 2008 there were 26,251 foreclosures in the state.

The report is titled “2010 Semi-Annual Foreclosures in Minnesota: A Report Based on County Sheriff’s Sale Data.” It analyzes sheriff’s sale data, the foremost means of identifying foreclosures, from all Minnesota counties.

The report gives a county-by-county breakdown of foreclosures.  There are several counties that have experienced a HUGE increase in the number of foreclosures (comparing first-half 2010 to first-half 2009).  For example:

• Goodhue County . . . . . . . . 137.8 % Increase
• Kandiyohi County . . . . . . . . 128 % Increase
• St. Louis County . . . . . . . . 76% Increase
• Sherburne County . . . . . . . . 34 % Increase

Even the metro area counties have continued to see a year-over-year increase (although not as dramatic as parts of Greater MN):

• Chisago County . . . . . . . . 28.2% Increase
• Dakota County . . . . . . . . 25.2% Increase
• Hennepin County . . . . . . . . 13.2% Increase
• Ramsey County . . . . . . . . 5.6% Increase

While the numbers remain elevated... the Center remains committed to helping MN homeowners through its foreclosure counseling network!!  Remember... the sooner you or your clients seek help to avoid foreclosure, the more options they have available. If you, or someone you know is struggling with mortgage payments... don't wait (and don't EVER pay for help). To find your local non-profit, FREE Foreclosure Counselor, click here. For additional information about preventing foreclosure in Minnesota, click here.

New Fact Sheets for Homeowners Facing Foreclosure

Sir Francis Bacon once said that "Knowledge is power".  The Minnesota Home Ownership Center believes in taking that fact and putting it to work for families that are struggling with mortgage payments and/or are looking for information about how to avoid foreclosure.

We’re pleased to announce that FOUR new fact sheets are available thanks to our partnership with the legal assistance teams. (Special kudos and thanks to Stacey Keenan at Legal Services of Northwest Minnesota and Kari Rudd and Housing Preservation Project for their work!)

These fact sheets cover:

• The Tax Forfeiture Process in Minnesota
• Homeowner Association Liens
• Manufactured Home Repossessions
• Redeeming a home AFTER a foreclosure sale

The Center has compiled/created almost two dozen fact sheets, FAQ's and other flyers that can help when a homeowner is struggling with mortgage payments or facing foreclosure in Minnesota (all are available here).  Please feel free to print/distribute any of the fact sheets to homeowners that may benefit (Adobe Acrobat Reader required).

Do you have an idea for a fact sheet or FAQ that would benefit struggling MN homeowners? Feel free to email your ideas to Ed Nelson at the Center. Thanks!

2010 Continues To Outpace 2009 (Pre-foreclosure Notices)

The Minnesota Home Ownership Center has compiled the pre-foreclosure notices received by the statewide network of Foreclosure Counselors through the end of the second quarter (June)... and 2010 continues to outpace 2009:

(Click To Enlarge)

(Click To Enlarge)

The same trend continues for the Twin Cities Metro area. 2010 pre-foreclosure numbers have outpaced 2009 numbers EVERY MONTH of the quarter:

(Click To Enlarge)

Here's how the different Metro counties break down in 2010:

(Click To Enlarge)

2009 had the SECOND HIGHEST foreclosure rate ever in the state of Minnesota. Is it possible... given the fact that the number of pre-foreclosure notices issued by lenders in 2010 is outpacing the number in 2009, that 2010 will become the second highest year on record? We welcome your opinion in the comments.

As background for new readers, Minnesota State law (MN Statute 580.021) requires that the foreclosing party provide information regarding foreclosure prevention counseling services to the mortgager (homeowner) AND provide the homeowner’s name, address, and most recent known telephone number to an approved foreclosure prevention counseling agency - BEFORE filing the notice of pendency.

Once The Minnesota Home Ownership Center's network of foreclosure counselors receives notification from the lender/servicer/homeowners association, they then contact the homeowner, and track the number of notifications received during the month in their monthly reporting to the Center.