April Is Financial Literacy Month

Did you know that April is officially "National Financial Literacy Month"? 

It's not often we get to quote the President of the United States on our home ownership blog, but in his press release on the announcement about Financial Literacy Month, the President had this to say:

While our Government has a critical role to play in protecting consumers and promoting financial literacy, we are each responsible for understanding basic concepts: how to balance a checkbook, save for a child's education, steer clear of deceptive financial products and practices, plan for retirement, and avoid accumulating excessive debts. [Emphasis Added]

and

I call upon all Americans to observe this month with programs and activities to improve their understanding of financial principles and practices.

Looking for 'programs and activities' to help you understand the financial concepts necessary for successful homeownership?  Perhaps you are struggling with your mortgage payment or trying to balance all your financial obligations?  The MN Home Ownership Center's website is a great resource!  Visit our site today. 

Foreclosure Rescue Scams

Over the coming weeks, the Center will be highlighting on this blog, and it's web page, a number of posts about the rising number of scams and dangerous programs that are popping up throughout the state and country looking to separate distressed homeowners from their money.

Scam #1: Foreclosure Rescue Scams (Loss Mitigation Agents/Foreclosure Consultants)

In many cases these are the same predatory loan officers and agents that sold Minnesota homeowners a dangerous or unaffordable loan in the last few years, that have rebranded themselves as being able to "help" homeowners arrange a repayment plan or a reduced monthly payment on their existing home mortgage. The 'agent' will charge anywhere from $500 to $5000 dollars or more - promising to make some kind of payment arrangement with the lender. In other cases, the salesperson is working as an agent of "attorneys that specialize in real estate law" - many times located in another state.

In either situation, there are two MAJOR problems working with these kinds of programs:

1. EVEN IF the 'agent' or 'specialist' is able to work out some kind of repayment plan with the lender... the service they offer is available FREE OF CHARGE to Minnesota homeowners through the Center's network of foreclosure counselors. In addition... the Center's network of non-profit counselors has MANY additional resources available to homeowners above and beyond what any for-profit 'agent' or attorney can offer. If our network of counselors determines that legal assistance is necesary, they have access to non-profit consumer advocate law firms that can help.
2. In MANY cases these companies take desperate homeowners money up-front and do very little to help - and actually make the situation WORSE. In most cases these companies tell consumers to STOP contacting their lender - which is always bad advise - stating that they will handle all conversations with the bank going forward. In addition, they require homeowners to sign a "Power of Attorney" which grants them 'permission' to do just about anything they want with the home. As if that weren't enough... many times these companies take the money up front, and offer NO HELP at all to homeowners, leaving them in a WORSE situation with their lender, and with even LESS money than before.

This situation is becoming so pronounced throughout the country, including Minnesota, that a number of governmental agencies have even put out warnings to distressed homeowners:

1. To view President Obama's warning about rescue scams, visit the President's "Financial Stability" page: www.financialstability.gov/makinghomeaffordable/
2. To view Attorney General Lori Swanson's warning, visit the Attorney General's website.

What are some of the warning signs of a potentially dangerous foreclosure scam?

• Calls offering you buyback or lease-to-own options
• Offers to provide "Walk-Away" services
• Requests for your social security number
• 'Counseling' that requires fees for services
• Offers for quick and easy fixes.
• Requests to sign binding contracts - including Power of Attorney - from sources other than your mortgage lender or a Center, or HUD-Approved, Foreclosure Counselor.

Home owners can avoid potential foreclosure scams by working with the Minnesota Home Ownership Center’s network of Foreclosure Counselors. The Center and our network of counselors at 24 non-profit partners throughout Minnesota are recognized by the Department of Housing and Urban development (HUD) for their high quality and dedicated service - and their help is absolutely FREE.

Updated info on "Making Home Affordable Plan"

The Center has updated its website to include additional information about the "Making Home Affordable Plan," whose details were announced earlier today by President Obama. Most importantly, it includes information on where homeowners should turn for next steps.

Feel free to visit the new page: www.hocmn.org/Making-Home-Affordable.cfm

Food For Thought - Private Investor Foreclosures

Here’s some food for thought… President Obama’s Homeowner Affordability and Stability Plan, the details of which will be available next week, focuses heavily on Fannie Mae and Freddie Mac backed mortgages.

However, according to a presentation given by James Lockhart , the Director of the Federal Housing Finance Agency (FHFA), to the Association of Government Accountants on the 19th of February, third quarter 2008 national default information shows that while private label (private investor) backed mortgages are only 16% of all outstanding mortgages, they account for 62% of all seriously delinquent mortgages.

The FHFA report defines seriously delinquent as a payment that is at least 90-days past due.

In addition, Freddie and Fannie account for 56% of all outstanding mortgages, but only 19% of seriously delinquent mortgages.

PLUS, mortgages held in a bank’s portfolio account for 16% of all outstanding mortgages, and only 6% of seriously delinquent mortgages.

Can we infer anything from this information? Prior to 2008, and now again in 2009, Fannie and Freddie required that their home buyers complete a certified Home Buyer Education Workshop - - known as Home Stretch in Minnesota.

Many of the bank portfolio loans – especially first-time buyer programs and low- to moderate-buyer programs, ALSO required home buyer education - - especially in Minnesota. Is this a fair inference? Feel free to discuss in the comments.

The Minnesota Home Ownership Center believes that Home Stretch, homebuyer education and counseling is key to making informed decisions about the important choices related to homeownership. Is homeownership right for YOU? Home Stretch can help answer that question.

Are you having difficulty making a payment? Whether your mortgage is owned by Fannie Mae or Freddie Mac - - or any other lender or servicer, the Minnesota Home Ownership Center’s network of Foreclosure Counselors can help. Click here for more information.

Center Media Recap

The announcement of President Obama's Homeowner Affordability and Stability Plan yesterday brought a flurry of media requests to the Center. Here is a recap of the Center's media exposure regarding the President's announcement so far:


KARE-11 News, February 18th
Foreclosure facts: President's advice for homeowners in MN

View the article here: http://tinyurl.com/cv65sq

Video:

In addition, network counselors where highlighted on the KARE-11 Phone bank on the 4:00, 5:00 and 6:00 news. See a different post for a listing of the participating counselors and agencies.


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KARE-11 News
Take KARE of your MONEY: Avoid foreclosure
(Segment from 2/11 was re-run on 4:00 news on 2/18)

View the article here: http://tinyurl.com/al6t7b

Video:

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Fox9 News, February 18th 2009
Minnesotans Look for Help in Obama's Mortgage Plan

View Article Here: http://tinyurl.com/ahbxqc

Video:

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WCCO - Don Shelby Show - Tuesday February 18th, 2009
Mortgage Rescue Plan

We can't embed the audio here, but you can listen to Dana Snell from the Center as she speaks with Jeanette Trompoter about the President's announcement.

Listen to the audio segment here: http://tinyurl.com/cqcnap



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Star Tribune, Thursday February 19th, 2009
Local housing agencies ready for flood of calls about relief plan


Read the full article here: http://tinyurl.com/crzo2p


This article also includes a quote by a member of the Minnesota Home Ownership Center's Board of Directors, Chris Galler.

In addition, the online version of the article includes a "Mortgage Help" sidebar that lists the Minnesota Home Ownership Center as the first resource for homeowners... and includes a link to the Center's website.

We'll update this post as we become aware of any additional spots. It's going to be a busy day for the statewide network of foreclosure counselors!

MN Home Ownership Center on WCCO Radio @ 3:45

Dana Snell, Program Director at the MN Home Ownership Center, will be interviewed live on WCCO Radio at 3:45. Dana will be responding to questions regarding foreclosures, President Obama's announcement and the foreclosure counseling services that are available in Minnesota.

Once WCCO has the segment up on their site, we'll add the link to the blog.

UDPATE:
Here is the audio link to Dana's segment on WCCO's the Don Shelby Show (Hosted by Jeanette Trompeter): http://tinyurl.com/cqcnap

Housing Stimulus: $8000 Home buyer tax credit for first time home buyers

Yesterday, President Obama signed into law the American Recovery and Reinvestment Act (ARRA). There is important news for future homebuyers included in this legislation: an $8,000 home buyer tax credit (also known as a housing tax credit) available to first time buyers!

Here are some important details of the home buyer tax credit included in the ARRA:

1. This tax credit is only available to first time buyers. The law defines a first-time buyer as someone who has not owned, or been included on title to, a property in the last three years. All home buyers who will be on title need to be first time buyers (for married couples BOTH spouses must qualify as first-time buyers).

2. Both resident and non-resident aliens who are not U.S. citizens can qualify for this tax credit.

3. The house must be purchased between January 1, 2009 and December 1, 2009.

4. The tax credit is actually calculated as 10% of the purchase price of the home, up to a maximum of $8,000.00. To qualify for the full $8,000 – the property price must exceed $80,000.00

5. There are income limits on this tax credit. First-time buyers with gross annual income of $75,000 or less will qualify for the full benefit. The credit is scaled (reduced) for gross individual incomes between $75,001 and $95,000, and individual home buyers with gross incomes greater than $95,000 cannot claim any of the tax credit. Married taxpayers will qualify for the full benefit with incomes less than $150,000. The credit is reduced for incomes between $150,000 and $170,000 and reduces to zero for gross household incomes in excess of $170,000.

6. This is a refundable tax credit – not a tax deduction. First-time buyers that meet all criteria can deduct the full $8,000 from their federal income tax owed. A refundable tax credit means that if you owe less than $8,000 in federal income tax, you can actually get a REFUND for the balance.

7. DOES NOT NEED TO BE REPAID. The biggest difference between the Home Buyer Tax Credit included in the ARRA and last year’s Employment and Economic Stability Act is the fact that this tax credit does not need to be repaid! The housing tax credit in 2008 was basically an interest-free loan to first-time buyers that needed to be repaid in 15 years. THIS home buyer tax credit does NOT have to be repaid to the federal government.

The Minnesota Home Ownership Center is in the process of creating a printable FACT SHEET with this, and other, information regarding the Home Buyer Tax Credit. As soon as that becomes available, information will be posted on the Center’s website at www.hocmn.org and this blog.

Is homeownership right for you? Will this tax credit help you purchase your first home?? The Minnesota Home Ownership Center's HOME STRETCH Counselors can set up an appointment to discuss if NOW is the right time for YOU to begin your home buying process.

MN Home Ownership Center Tracking President's Foreclosure Announcement

The Minnesota Home Ownership Center is tracking all announcements from the President regarding the details of the latest federal foreclosure prevention program.

Check back here throughout the coming days for additional information as it becomes available!

Our network of foreclosure prevention specialists will also be fully versed in the details of the program - in addition to any other helps, assistance and resources that are currently available to Minnesota homeowners. To find your local non-profit foreclosure specialist, visit: http://www.hocmn.org/knowyouroptions.cfm