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:

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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.

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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