How To Address Foreclosure Issues With Clients

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How To Address Foreclosure Issues With Clients
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Agenda I.    Introduction to the
foreclosure crisis and the statewide counseling
and outreach response.         Julie
Gugin, Minnesota Home Ownership Center  
         II.   Overview of foreclosure
counseling, what type of help is available.  
Joanne Gilbertson, Lutheran Financial Counseling
ServiceIII.  Foreclosure and its impact on
tenants  Minnesotas legislative and
counseling response.          Matt Eichenlaub,
HomeLine Tenant Advocacy       IV.  The
statewide recovery  beyond foreclosure
counseling and other intervention
techniques, what is being done in Minnesota to
recover.         Melissa Manderschied,
Minnesota Foreclosure Partners Council
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• Growing and Sustaining
• Minnesota Home Ownership and Communities

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Their Mission

• To promote and advance successful home ownership
  in Minnesota with an emphasis on lower to
  moderate income households and emerging markets.

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Addressing Foreclosure

• Expanding available mortgage support counselors.
  
  
• Increasing public education and outreach.
• Partnering
• Family Housing Fund
• Greater MN Housing Fund
• Minnesota Housing
• Cities and counties

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Minnesotans Are Part of the Trend
Source Foreclosures in Minnesota, Housing Link
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Minnesotas ProblemsAre Projected to Continue

• More than 64,000 foreclosures occurred in
  Minnesota between 2005 and 2008
  
• 26,265 foreclosures occurred in 2008
• 80,000 Minnesotans missed at least one payment in
  2008
  
• One of every 31 Minnesota households have been
  foreclosed upon between 2005 and 2008

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New Geography of Foreclosure

• Foreclosure is moving outside of the core
• Minneapolis/ St. Paul urban areas
• 59 of Hennepin County foreclosures in 2008 were
  outside the Minneapolis city limits.
  
• Greater Minnesota foreclosures increased by 21
  in 2008.

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Why Are Minnesotans Struggling?

• Non-traditional Loans
• Changes in Life Circumstances
• A Shifting Economy

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Counseling Offers Hope for Minnesota Home Owners

• Counseling offers home owners options
• Services tailored to consumers needs
• Initial assessment and triage
• One-on-one visit with counselors
• Budget management assistance
• Guidance on federal programs
• Advocating with lenders on behalf of home owners
• But the first step is to call [phone]

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Counseling Offers Hope for Minnesota Home Owners

• 11,807 home owners served in 2008
• Foreclosures averted 5,071, 56 of cases
• Foreclosure 2478, 28 of cases

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Moving MinnesotaHome Owners Forward

• Early intervention is critical
• Asking home owners to reflect on personal
  circumstances and consider

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Moving Minnesota Home Owners Forward

• Distribution of marketing materials
• Partnership with local governments
• Media campaigns
• Training of front line staff
• Outreach to employers
• Borrowers workshops and telephone programs

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What Can You Do?

• Encourage pro-active action
• Spread the word
• Share the Checklist with friends,family,
  businesses and associations
  
• Include counseling information innewsletters and
  publications
  
• Request a presentation to your club,business or
  faith group
  
• Stay informed
• Subscribe to the Centers list serve and blog
• Visit the Centers web site

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What Can You Do?

• Contact the Minnesota
• Home Ownership Center
• Call [phone]
• Visit www.hocmn.org

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• Before I started working with a counselor, I
  couldnt get a consistent person from the
  mortgage company on the phone, let alone
  consistent answerHaving someone advocate on my
  behalf with the mortgage company and navigate me
  through the process is what made all of the
  difference. Its what kept me in my home.
• Molly, South Minneapolis

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Overview of Foreclosure Counseling What Type of
Help is Available.   Joanne Gilbertson
Lutheran Financial Counseling Service
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Foreclosure Counseling Overview

• ASSESS THE REAL PROBLEM AND DETERMINE CLIENTS
  DESIRED OUTCOME.
  
• IS THE HOUSING SITUATION AFFORDABLE, HEALTHY AND
  SUSTAINABLE?
  
• IF THE CLIENTS DESIRE IS TO MAINTAIN EXISTING
  HOUSING, AND THE HOUSING IS BOTH AFFORDABLE AND
  SUSTAINABLE, HOW CAN THE DELINQUENCY BE FIXED?
  

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Foreclosure Counseling Overview

• IF THE CLIENTS DESIRE IS TO MAINTAIN EXISTING
  HOUSING, YET AFFORDABILITY OR SUSTAINABILITY IS A
  BARRIER, WHAT ARE THE POSSIBLE SOLUTIONS?
  
• IF THE CLIENT DOES NOT INTEND ON SUSTAINING THE
  EXISTING HOUSING, WHAT IS THE BEST OUTCOME
  POSSIBLE?
  
• QUESTIONS?

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What They Do

• HOME Line provides free legal, organizing,
  education and advocacy services so that tenants
  throughout Minnesota can solve their own rental
  housing problems. They work to improve public and
  private policies relating to rental housing by
  involving affected tenants in the process.

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Foreclosure Affects Tenants

• Data can be difficult to find
• For 2006 and 2007, 61 of all foreclosures in
  Minneapolis were non-homestead properties.
  

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What Weve Seen at HOME Line

• An increase in calls
• 1068 foreclosure calls in 2008
• 377 foreclosure calls in 2007
• 72 foreclosure calls in 2006
• 215 foreclosure calls in 2009 (January and
  February only)--up from 132 for the same time in
  2008

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Foreclosure

• Lender gives notice (about 4-6 weeks) of
  Sheriffs Sale
  
• Lender likely wins the Sheriff Sale Auction
• For next 6 months, Owner/Landlord can redeem
  (pay off) the entire bid mortgage plus costs
  
• During 6 months, Landlord remains Landlord
• If redeemed, Landlord remains Landlord going
  forward
  

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Other Issues for Tenants

• Security Deposit
• Unpaid Utilities
• Repairs
• Cash for Keys

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Legislative Response

• August 2008 changes
• Notice of Foreclosure Requirement
• 60 day notice (up from 30 days)
• Security Deposit
• Pending Legislation
• Cleans up language of the 60 day notice
• Extends lease to new lender

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Federal Response

• Addresses properties financed through Fannie Mae
  and Freddie Mac
  
• They are willing to rent to tenants on a month to
  month basis
  
• Fannie Mae 1-800-732-6643

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FORECLOSURE

• Minnesota
• Foreclosure
• Partners
• Council

Fix Housing Fix the Economy
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Minnesota Foreclosure Partners Council

• The goal of the Council is to identify, fund, and
  implement coordinated statewide policies and
  programs that effectively address the impact of
  the recent surge in mortgage foreclosures on
  families, neighborhoods, and communities.
• Statewide Coordinated Plan
• Co-Chairs
• Warren Hanson, Greater Minnesota Housing Fund
• Cecile Bedor, City of Saint Paul PED

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The Problem Minnesota
Abandoned Subdivisions
Boarded Homes
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The Problem The Next Wave
70 of those with an Option Arms will fail to
make their mortgage payment. . . and many will
fail during the 3 teaser rate period . . . even
before the reset! (Tilson, 60 Minutes, 12.14.08
)
Subprime resets 1Trillion
Alt-A (1T) Option Arm (500-600M) resets
TODAY
Source Credit Suisse
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The Problem Minnesotas resets
TODAY
Source Calculations using Federal Reserve Board
estimates based on data from First American Loan
Performance, August 2008 and October 2007.
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The Problem Alt-A distribution
The past foreclosures were of subprime loans.
The next wave will be of Alt-A loans. The shaded
areas depict the zip codes with more than 25
Alt-A loans. Although concentrated in the metro
, Alt-A loans were used throughout Minnesota.
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The Solutions

• Minnesota is a national model.
• Grow existing efforts
• Develop additional mechanisms
• Maximize resources available for foreclosure
  prevention and remediation
  
• Support foreclosure counseling services
• Leverage federal to aid recovery efforts

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The Solutions Existing Efforts

• Homeowner and Tenant Counseling
• Minneapolis Advantage
• Bridge to Success Contract for Deed
• One-stop homebuyer fairs
• Home Prosperity Fund
• Homeownership Opportunity Program
• First Look Program
• Coordination
• Legislation

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The Solutions Brooklyn Park Ex.

• Brooklyn Park Foreclosure Strategies
• Prevent foreclosures
• Secure foreclosed homes
• Recover foreclosed homes
• Brooklyn Park Recovery Plan
• 3.3 million from NSP
• 600,000 from MN Housing Pilot Program
• Uses Acquisition/Rehab, Demo/Redev, and
  Homebuyer Assistance
  
• Flexible

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Legislative Proposals - Example

• Targeted Community Revitalization Program
• tool was very successful in 1980s (was URAP)
• provides specific, targeted dollars for most
  devastated neighborhoods
  
• for construction, reconstruction, alteration
  and repair of buildings, energy assistance loans
  and grants, and relocation or acquisition of real
  property
• bill expands authority to all MN cities
• 30 million requested to leverage Federal NSP

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Contact Information

• Melissa Manderschied, Kennedy Graven
• Minnesota Foreclosure Partners Council
  coordinator
  
• mmanderschied_at_kennedy-graven.com
• 612.337.9274

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MN SAVES Network

• Mission
• The Minnesota Saves Network (MN Saves) strives to
  improve the financial well
  
• being of Minnesotas families. Minnesota Saves
  works toward its goal by
  
• Identifying the barriers and challenges Minnesota
  families face in acquiring and preserving assets
  and wealth
  
• Highlighting best practices from national, state
  and local organizations and.
  
• Sharing resources and information.
• For this PowerPoint presentation or more
  information on upcoming events,
  
• information and resources, go to
• HelpMNSaves.org