The Legacy of Homeownership Prepare•Purchase•Preserve
Homeownership • Understand the hidden costs that impact Homeownership • What are your legal rights as a Homeowner • What resources are available to assist you Prepare Prepare•Purchase•Preserve www.depower.org 770.961-6900 770.961.8900
Prepare - Purchase Preserve www.depower.org 770.961-6900 770.961.8900 What are your legal rights as a Homeowner
www.depower.org 770.961-6900 770.961.8900 As a first-time homebuyer, you may be unaware that there are other expenses you need to budget for on top of the asking price. Knowing about these potential hidden expenses can help you financially prepare for your big purchase.
Know Your Rights www.depower.org 770.961-6900 770.961.8900 Buying a house is one of the most important legal transactions you'll ever undertake. It's exciting, and you can keep the stress level to a minimum if you take time to learn about your legal rights and how the home buying process works in Detroit.
Fair Housing Act www.depower.org 770.961-6900 770.961.8900 To create equal housing opportunities for all persons living in America by administering laws that prohibit discrimination in housing on the basis of race, color, religion, sex, national origin, disability, and familial status. The Office of Fair Housing and Equal Opportunity administers federal laws and establishes national policies that make sure all Americans have equal access to the housing of their choice.
Know Your Rights www.depower.org 770.961-6900 770.961.8900 You have the RIGHT to shop for the best loan for you and compare the charges of different mortgage brokers and lenders. You have the RIGHT to be informed about the total cost of your loan including the interest rate, points and other fees. You have the RIGHT to ask for a Good Faith Estimate of all loan and settlement charges before you agree to the loan and pay any fees. You have the RIGHT to know what fees are not refundable if you decide to cancel the loan agreement. You have the RIGHT to ask your mortgage professional to explain exactly what the mortgage broker will do for you.
Know Your Rights www.depower.org 770.961-6900 770.961.8900 You have the RIGHT to know how much the mortgage professional is getting paid by you and the lender for your loan. You have the RIGHT to ask questions about charges and loan terms that you do not understand. You have the RIGHT to a credit decision that is not based on your race, color, religion, national origin, sex, marital status, age, or whether any income is from public assistance. You have the RIGHT to know the reason if your loan was turned down. You have the RIGHT to ask for the HUD settlement costs booklet "Buying Your Home."
RESPA - Real Estate Settlement Procedures Act www.depower.org 770.961-6900 770.961.8900 RESPA is about closing costs and settlement procedures. RESPA requires that consumers receive disclosures at various times in the transaction and outlaws kickbacks that increase the cost of settlement services. RESPA is a HUD consumer protection statute designed to help homebuyers be better shoppers in the home buying process, and is enforced by HUD.
www.depower.org 770.961-6900 770.961.8900 ATTEND A FREE HOMEBUYER EDUCATION WORKSHOP AND LEARN THE MECHANICS OF BUYING A HOME! ANY HUD APPROVED HOUSING COUNSELING AGENCY WILL OFFER WORKSHOPS OR HOUSING COUNSELING AGENCIES. SEEWWW.HUD.GOVFOR HUD APPROVED AGENCIES IN YOUR AREA!
Prepare - Purchase Preserve www.depower.org 770.961-6900 770.961.8900 “ YOUR Credit-Ability is YOUR Credi- bility”
IMPACTING CREDIT & RESTORING CREDIT www.depower.org 770.961-6900 770.961.8900
How Can Foreclosure Impact My Credit? Foreclosure affects your credit score by 250 points. That is, if you have a credit score of 680, it will drop down to 430. So, it's better to avoid a foreclosure and request the lender for a loss mitigation plan so that you're able to keep the home or if at all you can't keep the home, then at least see that your credit doesn't get a big hit.
Impact on Credit • A foreclosure stays on your credit report for 7 years. • Once you start rebuilding your credit, it gets better with time, though it'll take almost 2-4 years to get a mortgage after foreclosure, that too at comparatively better rates of interest • Unfortunately, a low credit score virtually guarantees that you will pay higher interest rates on home and auto loans, credit cards or other forms of credit.
Impact on Credit • How much more will you pay? Experts say that a person with a low credit score, say, below 600, will likely receive mortgage interests rates that are nearly 3% higher than someone with a score above 700. • In a worst case, you may be denied credit altogether.
7 Steps to Building Your Credit 1. Start making payments on time 2. Don't Borrow Money You Don't Need 3. Check Your Report For Errors 4. Call Your Creditors 5. Pay Off Your Balances 6. Start Using Cash 7. Create A Budget www.depower.org 770.961-6900 770.961.8900
1st Start making payments on time • Noting payment history constitutes 35 percent of your total credit score. • If you don’t have money for a minimum payment by the due date, but will the following week, pay it next week. Don’t just double up your payment the next month, which a lot of people do. That makes you 30 days late and that will drop your credit score.
2ND Don't Borrow Money You Don't Need • The average American consumer carries between five and 10 credit cards in his wallet. That makes it easy to get in over your head. It also makes lenders nervous. • Don’t charge to the limit on one card. If you have multiple cards it is better to charge less on both cards with room to spare. • Get into the habit of paying off your cards in full.
3RD Check Your Report For Errors • You are entitled to a free copy of your credit report every 12 months from each of the leading consumer reporting agencies – Equifax, Experianand, TransUnion. • If you find any errors, correct them immediately. If there are things that have been paid but still show up as a collection account, or you find an old judgment or lien you thought was paid, pay off what you owe, get those off your record.
4TH Call Your Creditors • Insist on speaking with a manager and tell them you’re having financial problems.“ • Often, the manager will work with you to establish a lower monthly payment plan, freeze the interest owed, or forgive some of your debt altogether. • They would rather get 75 cents on the dollar than have you go to bankruptcy court.
5TH Pay Off Your Balances • If you have multiple cards, send in as much as you can to the one with the highest interest rate, while continuing to make minimum payments to your other cards. • Once the highest rate card is paid off, start chipping away at the one with the next highest rate—and so on. • Bringing your credit card balances to zero renders you instantly more creditworthy.
6th Start Using Cash • Stop using credit until you’ve got your financial house in order. • By handing over cold hard cash for every purchase it’s easier to keep track of how much you’re spending on a daily basis. • If you struggle with self-control, try putting your credit cards in a container of water and storing them in the freezer. "If you’re tempted to use them you have to wait until it melts and hopefully by that time the impulse is gone.
Finally Create A Budget • Write down your expenses • It’s good advice for anyone, but for those who are falling behind on their bills, the value of having a budget cannot be overstated. • If you know what it costs you to live, it’s easier to cut back here and there. • There are plenty of ways to find more money in your budget to pay off debt and clean up your credit. • Stop paying more on your cell phone for text service. Drop cable TV. Take lunch to work and print coupons for your favorite products off the Internet.
Your Credit Report Your Credit Report includes… Name, DOB, and Social Security Number Your Addresses Your Employers Your Debts Your Payment History Public Records Inquiries Collections and Charge-Offs
Know Your Credit CREDIT REPORTS AND CREDIT BUREAUS • Equifax • Experian • Trans Union www.depower.org 770.961-6900 770.961.8900
View Your Credit Report Requesting a copy of your own credit report for your personal review is strongly encouraged and does not negatively impact your credit history. Start REBUILDING Your Credit Today!
Prepare - PurchasePreserve www.depower.org 770.961-6900 770.961.8900 Resources Available for Homeowners
www.depower.org 770.961-6900 770.961.8900 President Obama's new mortgage relief plan, launched March 4th, 2009 aims to help up to 9 million borrowers qualify for more affordable mortgages and stay in their homes. The program will: • Work with lenders to modify the loan terms for up to 4 million homeowners. • Refinance up to 5 million homeowners into more affordable fixed-rate loans.
Making Home Affordable www.depower.org 770.961-6900 770.961.8900 The Making Home Affordable Program is part of the Obama Administration’s broad, comprehensive strategy to get the economy and the housing market back on track.
Making Home Affordable www.depower.org 770.961-6900 770.961.8900 The key components of the Making Home Affordable Program are: Refinancing for borrowers previously unable to take advantage of lower interest rates or a more stable mortgage product because of falling home values. $75 billion in incentives to provide loan modifications, and other foreclosure alternatives, bringing monthly payments to levels which borrowers can afford today and in the future.
Making Home Affordable www.depower.org 770.961-6900 770.961.8900 What are the Home Affordable Refinance Program (HARP) and Home Affordable Modification Program (HAMP)? HARP and HAMP are the two principal components of MHA that use refinancing and loan modifications, respectively, to reduce monthly mortgage payments to affordable levels or move borrowers to more stable mortgage products.
www.depower.org 770.961-6900 770.961.8900 Are all loan types eligible for the Home Affordable Refinance and Home Affordable Modification Programs? What about FHA/VA/USDA loans? The HARP option is currently available only for loans owned or guaranteed by Fannie Mae and Freddie Mac. Most conventional mortgages, however, including those owned by lenders or in securities, are eligible for HAMP. Any loan type may be considered for a FHA Hope for Homeowners (H4H) refinance. Treasury requires servicers to consider H4H at the same time they are evaluating a borrower for HAMP.
Making Home Affordable www.depower.org 770.961-6900 770.961.8900 What should a counselor do if a servicer says an investor is not participating in the Making Home Affordable Program? To confirm the accuracy of the statement, a counselor should first determine if the loan is owned or guaranteed by one of the GSEs. If it is, the servicer is required to consider all borrowers who meet the minimum eligibility criteria for a refinance under HARP or a modification under HAMP based on the borrower’s circumstances.
Making Home Affordable www.depower.org 770.961-6900 770.961.8900
Making Home Affordable www.depower.org 770.961-6900 770.961.8900 How does the counselor determine if a borrower’s loan is owned or guaranteed by Fannie Mae or Freddie Mac? A borrower on his or her own behalf, or a counselor with a borrower’s permission, may determine whether the borrower’s loan is owned or securitized by Fannie Mae or Freddie Mac by using the loan look up tools available at www.MakingHomeAffordable.gov or on the agencies’ websites or by calling the agencies as follows:
Making Home Affordable www.depower.org 770.961-6900 770.961.8900 How does the counselor determine if a borrower’s loan is owned or guaranteed by Fannie Mae or Freddie Mac? For Freddie Mac 1-800-FREDDIE (8am to 8pm EST Mon.-Fri.) www.freddiemac.com/mymortgage For Fannie Mae 1-800-7FANNIE (8am to 8pm EST Mon.-Fri.). www.fanniemae.com/loanlookup
Helping Hardest Hit Homeowners On June 23rd, President Obama selected Michigan as one of 5 states chosen to participate in a new program designed to prevent foreclosures. The Helping Hardest Hit Homeowners Programconsists of three options, which will assist homeowners to avoid foreclosure. • NOTE: These programs will be administered through your mortgage loan servicer beginning July 12th, 2010. To find out more about the Helping Hardest Hit Homeowners Program visit the Michigan State Housing Development Authorities Hardest Hit Fund Website www.depower.org 770.961-6900 770.961.8900
Helping Hardest Hit Homeowners • The U.S. Department of Treasury approved the Michigan State Housing Development Authority’s (MSHDA) plan to distribute a total of $498.6 million in federal funds that should help more than 49,000 Michigan households avoid foreclosure. • MSHDA was the first of the nation’s HFAs to implement its plan to help Michigan's hardest hit homeowners by providing: www.depower.org 770.961-6900 770.961.8900
Mortgage payment assistance for homeowners currently receiving unemployment compensation, • Rescue funds for homeowners who have fallen behind in their mortgage payments due to no fault of their own and who have overcome this obstacle, and www.depower.org 770.961-6900 770.961.8900
Federal matching funds for principal reductions for homeowners who can no longer afford their mortgage payments as a result of reduced income • http://www.michigan.gov/mshda/0,1607,7-141--235359--,00.html www.depower.org 770.961-6900 770.961.8900
Unemployment Crisis Three areas in Michigan posted jobless rates higher than 15%, including Detroit. The city wrecked by the collapse of the auto industry continued to lead the nation's areas of 1 million people or more with the highest unemployment rate in November at 15.4%. http://money.cnn.com/2010/01/05/news/economymetro_unemployment/ www.depower.org 770.961-6900 770.961.8900
Unemployment Mortgage Subsidy Program: When unemployed, it can become especially difficult to keep up with monthly mortgage payments. The Unemployment Mortgage Subsidy Programis meant to provide homeowners currently receiving unemployment benefits funding to ensure that mortgage payments are made to avoid foreclosures. www.depower.org 770.961-6900 770.961.8900
Unemployment Mortgage Subsidy Program: The program will help homeowners stay current with their mortgages by funding 50% (up to $750) of their monthly mortgage payments. Homeowners will continue to be responsible for the remaining 50% of their payments. The subsidy is available for up to 12 consecutive months, or until the homeowner has returned to work, whichever is less. www.depower.org 770.961-6900 770.961.8900
Loan Rescue Program: • Many homeowners may experience a temporary financial hardship such as unemployment, divorce, or illness. • When these situations cause a homeowner to miss mortgage payments, it is often difficult to get back on the right track. www.depower.org 770.961-6900 770.961.8900
Loan Rescue Program: • The new Loan Rescue Programwas created to provide funding to homeowners who have recovered from a one time crisis, but remain on the brink of foreclosure. • The program will provide up to $5,000 to homeowners who can now afford to cover their current monthly payments, but need help to catch up on past due payments or delinquent taxes. www.depower.org 770.961-6900 770.961.8900
Principal Curtailment Program The Principal Curtailment Programprovides up to $10,000 to the under-employed with severe negative equity in their homes. Under this program, the mortgage servicer must agree to match the funding given by the state to reduce the principal balance; thereby creating more affordable housing payments for the homeowner. www.depower.org 770.961-6900 770.961.8900
What to do if you are late on your Mortgage www.depower.org 770.961-6900 770.961.8900 A home mortgage is a secured debt. Secured debt is held against an asset, if the debt is not paid, the asset can be taken. If you do not adhere to your mortgage agreement, the lender can take your house. If you are having trouble, or think you may be facing future payments that you cannot afford, do everything in your power to make up the missed or late payments. Prioritize your mortgage payments.
What to do if you are late on your Mortgage www.depower.org 770.961-6900 770.961.8900 If you do fall behind and are unable to catch up then you probably cannot afford the mortgage you currently have and must act quickly. Contact your lender or loan servicer immediately. Do not ignore their letters or calls. Let them know that you are having difficulty and are willing to do whatever is necessary to stay current on payments and keep your house.
www.depower.org 770.961-6900 770.961.8900 http://foreclosuredetroit.org