Foreclosure Counseling Has Saved Minnesota Billions of Dollars

26,000 homeowners avoid foreclosure thanks to Homeownership Advisors Network since 2008

The Minnesota Homeownership Center has released its Foreclosure Counseling report for 2012.  

This report provides a summary of demographic and outcome data from the foreclosure prevention counseling program provided by the Center's Homeownership Advisors Network.

Almost 6,000 Minnesota households availed themselves of free foreclosure prevention services last year, bringing the total to almost 70,000 households since the crisis began.  

Most importantly, more than 26,000 households successfully avoided foreclosure on their home since 2008.

According to the Joint Economic Committee of the U.S. Congress, the average cost of a single foreclosure is $78,000:

• $50,000 – Lenders (recent Standard & Poor’s study breaks this down)
• $19,227 - Local government – shrinking tax base, property maintenance, utility cancellations, policing.
• $1,508 - Neighbors – (decrease in home value, home is harder to sell or refinance.)
• $7,200 - Homeowner – (loss of equity, moving expenses, legal fees, etc.)

This means that, thanks to the extraordinary efforts of the Center’s Homeownership Advisors network… foreclosure counseling has saved Minnesota (lenders, municipalities and communities) over $2 Billion. 

Even more extraordinary is the fact that, according to our most recent cost survey, conducted by the Federal Reserve Bank of Minneapolis, foreclosure counseling costs, on average, just $400 per household.

To view the full report, visit the Center's website, here:

HAMP Changes Take Effect Friday June 1

Effective Friday, June 1, 2012 HAMP “Tier 2”  -  which many people have simply referred to as HAMP 2.0  -  will roll out for the Making Home Affordable (MHA) loan modification program.  Like many MHA updates, these changes apply to non-GSE mortgages. 

The goal of HAMP 'Tier 2' is to increase eligibility for homeowners, including:

• those who did not meet the original HAMP guidelines,
• those who may have failed on a HAMP modification, or 
• those who own rental properties.

With HAMP 'Tier 2', many of the initial qualification criteria are still in place:

• loan must have been originated before January 1, 2009, 
• homeowner must be able to document a financial hardship;
• Only loans on properties with one-four units can be modified;
• there is a maximum outstanding loan amount (maximum unpaid principal balance.

But now, a borrower may also be considered for HAMP 'Tier 2' if any of the following also apply:

• they did not successfully complete (defaulted on) a HAMP 'Tier 1' modification;
• their monthly mortgage payment is below the minimum 31 percent front end Debt-To-Income ratio;
• and, most controversially, up to three seperate mortgages may be modified if they secure rental properties

No mortgage loan may be modified more than once in either Tier 1 or Tier 2. 

People interested in learning more about the HAMP program and the new 'Tier 2' changes, can visit the Making Home Affordable website, here.

The Homeownership Advisors Network will continue to focus its attention on helping owner-occupants avoid foreclosure, but may be able to answer some basic questions for rental property owners as well.

HAMP, HAMP 2.0, DTI, VPN, HARP, MHA, GSE... the 'alphabet-soup' of programs, agencies and programs can be overwhelming for struggling homeowners.  In Minnesota, there is a FREE, effective resource available: The Homeownership Advisors Network.  Trained and certified foreclosure prevention experts can work with YOU to find a solution to YOUR mortgage issues.  Don't delay, contact an advisor by visiting the Center's website today.

HARP Changes - What We Know, What We Don't

It is likely that President Obama will be announcing some major changes to the Home Affordable Refinance Program (HARP) on Monday, October 24th, 2011.  The Federal Housing Finance Agency, the agency that regulates Fannie Mae and Freddie Mac as well as the 12 Federal Home Loan Banks throughout the country, has issued a press release outlining some of the important changes to the HARP program.


What We Know:

• The goal is to prevent additional foreclosures by allowing additional underwater homeowners to refinance their mortgages at today's low interest rates and/or shortening the term of their mortgage.
• Most importantly, the current 125% Loan to Value limit (LTV Ceiling) will be removed, but there is still a MINIMUM LTV of 80%.  Borrowers that are underwater by any amount greater than 80% may be able to participate in HARP.
• Borrowers fees to participate in HARP will be reduced.
• To participate, borrowers must be current, have not been late on a payment in the last 12 months, and have a verifiable source of income.  Actual affordability ratio (how much income needed) has not been released.
• The new guidelines should waive the need for a full appraisal if a reliable Automated Valuation Model (AVM) is available on the property.
• Participation in HARP is a one-time opportunity.  If a homeowner has refinanced under the original HARP guidelines, they will NOT be able to refinance a second time under these new changes.
• Only mortgages that are owned by the Government Sponsored Enterprises (GSE's), -- Fannie Mae and Freddie Mac -- will be participating in the new program.  The mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009.  To determine if your loan is owned by Fannie or Freddie, you can use the following links:
• Fannie Mae Loan Lookup
• Freddie Mac Loan Lookup

What We Don't Know

This blog post was written on Monday 10/24/2011... and many of the details may change over time.  Please call a non-profit housing counselor for additional details about these HARP changes... or any other question you may have about your mortgage.

• When will homeowners actually be able to refinance their Freddie Mac- or Fannie Mae-backed mortgage?  Guidelines on the new program will be sent to lenders and servicers by November 15th.  After that, the lenders/servicers will have to convert those guidelines into actual policies and procedures.  This means that it may be mid-December or even early 2012 before a homeowner can actually participate.  In addition, the concept of the program is complicated by the fact that certain servicers DO NOT ORIGINATE loans and may not have the capacity to originate the new HARP loan - without extensive (and time-consuming) changes to their internal systems.  PLUS, as we've seen with the original HARP program, there may be inconsistencies from one servicer to another.
• What will happen to homeowners in the following circumstances:
• Multiple mortgages - second lien holders will have to agree to 're-subordinate' their loan to the newly refinanced loan.  While there is no risk to the junior lien holders... we don't know which, if any, second lien holders will agree re-subordinate their mortgages.
• Private Mortgage Insurance Holders - PMI holders have agreed to make the transfer of insurance from one loan to another easier... the details are still being worked out. 

Once again... as the guidelines to servicers and lenders will not be available until November 15th... it will take several additional weeks for the lenders and servicers to convert those guidelines into policies and procedures, meaning that it may a couple of months before homeowners can access this new phase of HARP.

Payment Changes With a Fixed-Rate Mortgage

I have a fixed-rate mortgage... but my payment just went up.  How can that be?

This is one of the most common questions the Center receives from recent homebuyers who are wondering what's happening...

• Are they being taken advantage of by their lender?
• Has their loan been confused with someone elses?
• Did they sign the wrong paperwork at closing? 

Using the "Ask A Question" form on the Center's website... several homeowners asked this question, leading us to create a video podcast of the possible answers:

This short video, just six minutes long, gives an overview of how a monthly mortgage payment can change - even if someone has a fixed-rate mortgage.

This is the kind of information that is covered, in-depth, in the Home Stretch workshop.  If you're thinking about buying your first home, think Home Stretch first.

If you've already bought your home... and have a question about your mortgage or your payment, feel free to contact a local housing counselor today!

NEO: The Matrices Have Been Updated

The Minnesota Home Ownership Center strives to provide information and resources that will assist Minnesotans begin, and maintain, home ownership. 

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 2011! To view the most recent version of 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.

As a quick reminder, 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 that you or your client can use to access funds in the future.

In addition, the Center has also updated its "Affordable Loan Product matrix".   The Affordable Loan Product Matrix is designed to inform housing counselors and industry professionals of affordable mortgage loans and programs available to their clients.

Home ownership is expensive and first-time buyers should never base their home-buying decision on a down-payment program or access to a specific mortgage. 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.

$600k For Housing Counseling

Homeownership Advisor Network Members Receive almost $600k in HUD Grants

The Minnesota Home Ownership congratulates members of the Homeownership Advisors Network who have received over $638k in funding from the U.S. Department of Housing and Urban Development (HUD). These funds will support the delivery of a wide variety of housing counseling services to help individuals and families in Minnesota improve their access to affordable housing, expand their homeownership opportunities, and avoid foreclosure and foreclosure rescue scams.

HUD Secretary Shaun Donovan stated, “Now, more than ever, it’s crucial that we support these agencies that are working with struggling families on a one-to-one basis to manage their money, navigate the home-buying process, and secure their financial futures.”

In Minnesota, the distribution of these funds will support:

ANOKA COUNTY COMMUNITY ACTION PROGRAM, INC (Blaine), $37,949.74
ARROWHEAD ECONOMIC OPPORTUNITY AGENCY, INC. (Virginia), $41,391.11
CARVER COUNTY COMMNITY DEVELOPMENT AGENCY (Chaska), $39,916.24
COMMUNITY ACTION DULUTH, $41,882.73
DAKOTA COUNTY COMMUNITY DEVELOPMENT AGENCY (Eagan), $61,882.73
LUTHERAN SOCIAL SERVICES/ CCCS OF DULUTH, $110,899.48
REVERSE MORTGAGE COUNSELORS, INC (St. Paul), $35,983.25
SAINT PAUL DEPARTMENT OF PLANNING AND ECONOMIC DEVELOPMENT, $89,832.47
TRI-COUNTY ACTION PROGRAM, INC. (Waite Park), $35,000.00
TWIN CITIES HABITAT FOR HUMANITY (Minneapolis), $35,500.00
WASHINGTON COUNTY HOUSING AND REDEVELOPMENT AUTHORITY (St. Paul Park), $62,865.98


Over $150k of the grant awards listed above were granted as Mortgage Modification and Mortgage Scams Assistance dollars that will be used by organizations to provide homeowners information about fair lending abuses and mortgage ‘rescue’ scams. Ed Nelson, spokesman for the Minnesota Home Ownership Center stated, “These funds will go a long way to helping the counseling agencies spread the word about dangerous, and costly, foreclosure rescue scams in Minnesota.”

The Homeownership Advisors Network is the State of Minnesota’s premier network of housing counseling agencies and is supported by the Minnesota Home Ownership Center. Members of the Homeownership Advisors Network are highly trained, certified professionals that provide advice and guidance for Minnesota families as they struggle to find and maintain stable housing.

For more information about the Homeownership Advisors Network or the statewide media campaign known as “Look Before You Leap” that continues to warn Minnesota homeowners to be on the lookout for foreclosure rescue scams, visit the Minnesota Home Ownership Center’s website at www.hocmn.org

In addition to the funds listed above granted to members of the Homeownership Advisors Network, other organizations in MN also received HUD grants:

CATHOLIC CHARITIES DIOCESE OF ST. CLOUD, $44,340.85
SOUTHERN MINNESOTA REGIONAL LEGAL SERVICES, INC. (St. Paul) 45,324
HOUSING PRESERVATION FOUNDATION (Supports National Network) $2.4mm