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Foreclosure Mitigation

Explore foreclosure trends, housing prices, counseling services, and government programs to prevent foreclosures. Learn about HARP, HAMP, EHLP, and more initiatives to assist homeowners in financial distress.

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Foreclosure Mitigation

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  1. Foreclosure Mitigation Property Records Education Partners February 9, 2012

  2. Foreclosure Sales Housing Link, 2011 data projections only

  3. Foreclosure Trends • During 2008, a large portion of the sales were related to inflated housing values, subprime lending, and exotic mortgages • Circumstances in 2012 are related to long-term unemployment and underwater mortgages • Washington County, percent involved in foreclosure: • In 2010, 1.55% of residential properties • In 2006, 0.5% of residential properties • In 2005, 0.33% of residential properties

  4. Homes Sales Prices Cities with Highest Gains Cities with Greatest Drops Moorhead $197,847 +24.7% Excelsior $508,437 +21.7% Princeton $159,826 +11.4% Prior Lake $282,139 +10.7% Cambridge $126,335 +10.0% Virginia $68,033 -25.4% Mound $300,091 -22.3% Forest Lake $144,983 -18.3% Wayzata $423,967 -17.2% Becker $146,018 -14.2% • Average MN residential sale price = $200,181 • Average MN residential foreclosure sale price = $144,265 • Price reduction of 27.94% RealtyTrac, December 2011

  5. Housing Counseling Services • Regional Partnership Approach • The objective of foreclosure prevention counseling is to work with households to reach long-term solutions that are stable and affordable. • Outreach, Training and Education • Borrower workshops, door knocking, libraries, local media, utility bills, tax statements, direct mail & more. • Outreach to information & referral organizations.

  6. Housing Counseling Services • Information about the foreclosure process • Customized plan to address household crisis • Financial counseling • Mortgage counseling • Identify options for preventing foreclosure • Avoiding predatory practices • “Smooth Transition” counseling, as needed

  7. Housing Counseling Services • In 2010, Homeownership Advisors Network counseled 12,158 households • 66% of counselees able to avoid foreclosure • 89% stay in home • 11% unable to stay in home • Point when seeking counseling • 12% are current on mortgage but anxious • 38% are less than 90 days delinquent • 41% are over 120 days delinquent

  8. H.A.R.P. • HARP – Home Affordable Refinance Program • Eligibility • Loan through Fannie Mae or Freddie Mac • Current on mortgage payments • LTV ratio of 125% or less • Stable income • Refinance mortgage with a lower interest, fixed rate with 15 or 30 year term • Program ends December 31, 2013 • Participation by loan servicer is voluntary

  9. H.A.M.P. • HAMP – Home Affordable Modification Program • Eligibility • Loan through Fannie Mae, Freddie Mac, or participating servicer • Unpaid mortgage balance less than $729,750 • Mortgage payment greater than 31% of gross monthly income • Unaffordability caused by income or expense change • Modify mortgage with a lower interest rate so monthly payments are 31% of monthly income, term may extend up to 40 years.

  10. H.A.M.P. • Three month trial modification • If less costly than foreclosure, servicer will make a permanent modification • Interest rate fixed, as low as 2% • If below market, adjust up 1% per year after 5th year • Capitalize any late fees • Defer a portion of the unpaid principal • Incentive to pay on time of up to $5,000 • Incentives to servicers to participate

  11. Other Initiatives • FHA Short Refinance & FHA2LP • HOPE Now loan modification program • Bank/Service Specific Programs • Neighborhood Stabilization Program

  12. Progress • 962,000 HARP refinances completed • 1.7 million HAMP trial modifications began • 910,000 received permanent HAMP modifications • $9.9 billion savings in monthly mortgage payments • 1.1 million FHA Loss Mitigation interventions • 2.6 million HOPE Now modifications • NSP: 7,455 new or rehabbed units, 18,245 units cleared, and 8,494 direct homeownership assistance December 2011 National Scorecard, Departments of Treasury and HUD

  13. E.H.L.P. • EHLP - Emergency Homeowners’ Loan Program • Eligibility • Substantial (>15%) loss of income • Due to unemployment or underemployment • Caused by adverse economic conditions or medical condition • Zero interest forgivable bridge loan • Pay arrearages to bring current • Maximum 24 months or $50,000 • Secured by junior lien • Forgiven over 5-year period

  14. E.H.L.P. • Applications were taken in 2011 through lottery • Minnesota awarded 1,786 loans • 442 Greater Minnesota • 1,344 Metro • Minnesota Housing received 1,231 applications for 840 loans • Loans in process

  15. Proposed Enhancements • Blueprint for an America Built to Last • Broad Based Refinancing • Expand HARP to non-GSE borrowers • Streamline refinancing • Expand Eligibility of HAMP • Homeowner Bill of Rights • Pilot Sale of Foreclosed Property to Transition into Rental Housing • 12 Month Forbearances to unemployed borrowers

  16. Resource Links www.wchra.com www.hocmn.org www.hud.gov www.housinglink.org Melissa Taphorn Deputy Executive Director Washington County HRA mtaphorn@wchra.com (651) 458-0936

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