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.  

More Help For Struggling Homeowners

More help for local residents struggling to keep their homes is available in upcoming workshops sponsored by several non-profit and governmental partners.

FREE Foreclosure Prevention Workshops
at Hennepin County Libraries:

At these informal sessions, homeowners and renters, can learn about the foreclosure process, what kinds of helps and assistance are available in both in Minnesota and nationally, and even meet with non-profit housing counselors (foreclosure prevention specialists), representatives from Hennepin County Taxpayer Services, and, in some sessions, attorneys specializing in real estate services. In addition, attendees will be able to set up an appointment for a more personalized, in-depth discussion at a later time.

These workshops are a partnership of several organizations including the MN Home Ownership Center, PRG Inc., Hennepin County, Hennepin County Taxpayer Services, Hennepin County Library, Twin Cities Habitat for Humanity and others.

Upcoming workshops:

• Saturday Sept 18th, 10:30am - Noon   -   Brooklyn Park Library

• Tuesday, Sept. 28th, 6:30-8:00pm  -  Rockford Road Library, Crystal

• Thursday, Oct. 7th, 6:30-8:00pm  -  Maple Grove Library
           (Click On Library Name for Google Map)

To view these, and other events the Center has scheduled, click here.

Subprime 2.0?

Edward Pinto, the Chief Credit Officer of Fannie Mae back in the 1980's, has written an Op-Ed for Bloomberg titled "Subprime 2.0 Is Coming Soon to a Suburb Near You" that talks about no-money down and lowered credit score requirements for government-backed loans.  [Fair warning: this op-ed is takes an EXTREMELY negative view of the loosened underwriting standards that became prevelant in the mid-2000's.]

One of the more interesting quotes in the article is where he cites the number of no-money down mortgages (or extremely low-money down) as a percentage of all loans:

In 1990, one in 200 home-purchase loans (all government insured) had a down payment of less than or equal to 3 percent. By 2003, one in seven home buyers had such a low down payment, and by 2006 about one in three put no money down.

Visually... this is what I've come up with:
 

Click to Enlarge

Now... Pinto believes we will to return to an environment of subprime lending that he refers to as “Subprime 2.0,” as the FHA continues to accept borrowers with low Fico scores and minimal down payments.

For example, the FHA’s average down payment is just 4 percent,” he wrote. “Even this meager amount disappears after adjusting for seller concessions and financed insurance premiums.

Pinto is calling for a return to hefty down payments - - a minimum of 20 percent down, with few exceptions, and believes documentation should be “iron-clad."

NOW, couple of questions for our readers (feel free to voice your opinion in the comments): 

• What would this mean for those of us working on affordable housing issues? 
• Would this cause more problems than it solves?
• Are there other solutions to affordable housing... that don't involve simply lowering lending standards? 

One of the conferences that takes up the issue of affordable housing... and discusses related policy issues is the "Homes For All" Conference.  You can learn more about the conference here.