Twin Cities Real Estate News Let's talk about the Twin Cities Real Estate Market. I will post helpful links and answer questions about real estate or mortgages. I live and work in Minnesota, so some of my ideas may focus specifically on Minnesota real estate or mortgage regulations applicable to our state.
There will be a vote on the housing bill this week-FHA mortgage loan financing might be forever impacted. If you want to continue to use DPA-down payment assistance funding in it's current format, you NEED-MUST contact your congressman/woman today!
As Realtors, we know how the housing market works. The progression of home sales within the housing market is dependent on first time home buyers starting the domino affect. Their home purchases are the catalysts that allow people to sell their existing home and then move into a new property such as a larger home, condo or townhouse. In order to keep the housing market moving forward, we need to encourage homeownership at the beginning of the cycle. Mortgage programs that are underwritten with greater flexibility regarding credit, income and down payment will create more homeowners. We need mortgage loan programs that allow you to buy a home with as little money down as possible.
As recently as March of 2008, there were conventional loans that allowed for 100% financing such as the Home Possible, My Community, and 80/20 combination first and second mortgage programs. Declining property values coupled with high mortgage delinquencies in all real estate markets have all but eliminated investors for these types of high LTV loans. In addition, due to large losses by private mortgage insurance companies (PMI) there is an unwillingness of mortgage insurers to insure these loans. Hence these loan programs have either been eliminated or now require a down payment. With Fannie Mae and Freddie Mac's current financial problems and the overall state of the mortgage markets, don't expect that they will be creating any new high loan to value zero down mortgage products anytime soon.
Herein lies the problem. Most first time home buyers lack sufficient resources for the down payment and closing costs. They often have good credit and the ability to make a payment. Until they save enough money, they are left out the housing market. FHA loans currently allow buyers to obtain down payment assistance (DPA) from a relative or from a qualified down payment assistance provider. This means that buyers without enough current resources may be able to obtain enough funds to buy a home today. There are a number of approved down payment assistance providers-some of the largest names are Nehemiah, Genesis, and Ameridream. In a nutshell, these non-profit organizations issue down payment assistance to a prospective home buyer and then collect funds from the seller of a home who has agreed to participate in this program at the time of closing. The non-profit charities charge an administrative fee of between $300 and $500 to facilitate with the assistance of this funding. FHA sometimes refers to this arrangement as seller funded down payment-which they don't allow. Although the funding is coming from a non-profit, the FHA perception is that it is actually from the seller, albeit indirectly. The problem stems from losses. According to FHA, they have experienced larger losses on portfolios of loans that were funded with DPA funds.
In fact, FHA hopes to eliminate these programs altogether through the fast tracked housing bill going through congress now. Time is of the essence! The senate version-which is the supported version-will eliminate DPA. What would this mean? Let me make this clear-if this bill passes fewer houses will be sold. More qualified homeowners will remain as renters. More homes will stay on the market and the real estate and mortgage crisis will get worse. DPA funding offers a solution to our crisis by making homeownership possible. If there are problems with the way things are being done within the current DPA program then let's work on modifying them. Let's identify solutions-such as raising the minimum required credit score on DPA funded loans. This would probably lower the defaults and match the underwriting to the risk. Elimination or outright banning of DPA programs that are currently helping our ailing housing market is foolish. As a Minnesota FHA mortgage broker who works in the market on a daily basis, I can tell you about clients who are good people who want to become homeowners. Their shot at owning a home depends on these programs. Get involved and learn more. The consequences of making the wrong decision about the fate of DPA’s will affect our entire economy.
We are always searching for new ways to get involved in our communities and the people and businesses within. People do business with people they know and trust. How would you like to be the local expert and have fun at the same time? Why not visit your local businesses and profile them on your blog. You will give the local business some free advertising and you might become recognized as providing some value within the community. You will get to know your area better and meet more people, which should translate into more business. You will also be the first hand area expert.
You will be found with local key words in the area of town in which you work. At the same time, after you've reviewed or discussed the local business, you can feature your listings or market information about the local real estate market. Have you seen what the Minneapolis board of Realtors has available? Go to http://www.mplsrealtor.com/the100.aspx Type in any city you want. This is the kind of relavent information you need to share about your marketplace. These are the statistics people need to know when deciding to buy and sell homes. Share this information along side some of the area attributes and businesses.
Here is an example of what I mean. I live in Edina Minnesota-which is suburb of Minneapolis, MN. Being that it is a beautiful 4th of July, we went to one of our city lakes today for a walk. We have a local city lake called Lake Harriet which has a local community called Linden Hills. The lakes area is very popular and by default-so is Linden Hills. If you are interested, click to learn more about the Minneapolis Lakes.
Today, my wife and I visited a local coffee shop in Linden Hills called Coffee & Tea LTD. Their website can be found at http://www.coffeeandtealtd.com We tried their coffee a few weeks ago and absolutely fell in love with it. In fact, I encourage all of you to visit his website and see how he has incorporated video into his site. Video profiling your business might be something you want to do on your personal website. Besides traditional beans, Coffee & Tea Ltd has some very rare and exotic blends. In fact, he has a very rare and unusual bean. I don't want to spoil your surprise. Go visit his site and learn about it. He does sell coffee online and by mail order
This was our first video as we walked up to the store:
These videos are unedited and our first attempt at local video. Yet, we had a blast doing it. We are going to be doing more of this in the future. It's easy and fun. We used the Flip Video camera-which is small handheld camera and costs about $100. The camera couldn't be easier to use-point and click. It even has a built in USB connector.
During our visit with the owner, we discovered that he brings his dog with him to his shop. The dog was a beautiful Rhodesian Ridgeback. We discovered that he works on the rescue effort of placing these dogs in new homes. So, if any of you are interested, he mentioned he needs to place 18 of them in the coming months-so if you know of a good home-give him a call-612-920-6344. I went to Wikipedia and learned more about the breed. These dogs are actually used as lion dogs in Africa.
Here's my advice. Focus on local-provide value-be different. Many local realtors feature local listings-anyone of us can do that via an IDX feed. Very few Realtors feature short video of the areas, the people, and the amenities.
First time buyers often have little to no credit depth, lower credit scores and a limited amount of resources for the down payment and closing costs. FHA mortgages addresses each one these issues. Let’s start with credit depth. Often a first time buyer is younger and hasn’t had the time to establish the traditional trade lines that an older borrower may have such as repayment history of student loans, car payments, and credit cards. FHA underwriting guidelines allow for what we term “non traditional credit” to be used. Non traditional credit is where a person is obligated for repayment, but the repayment history isn’t necessarily reported on the credit report. Examples include rental payments to a landlord, cellular phone bills, utility bills like gas/electric and cable TV bills.
Credit scores are always important and used in underwriting loans. FHA allows for scores as low as 580. In certain circumstances, they may even go below this number with a file that warrants an exception if the file is manually underwritten. Today we are finding most conventional mortgage guidelines are requiring a 620 credit score or higher. FHA is moving towards risk based pricing. This means lower credit scores will have to pay a higher mortgage rate but the tradeoff is homeownership will still be possible. Another HUGE advantage of FHA is that they allow for a non occupying co-borrower to go on the loan and qualify with the borrower. Together, all borrowers become one for underwriting purposes. This means we take the income and credit of the co-borrower and combine it with that of the owner occupant borrower. We always default to the lower of the combined credit scores for underwriting. Imagine the possibilities of a self employed or non employed borrower combined with a much stronger co-borrower with a strong income.
Lastly, let’s address money for the down payment and closing costs. Currently, FHA 203B loans require borrowers to put 3% of their funds into the transaction. The minimum down payment is 2.25% and the other .75 percent would be for a contribution towards closing costs or escrows for the total of 3%. Here’s the good part-the 3% can be a gift from a relative or a qualified charity. Many of the down payment assistance providers (DPA) such as Nehemiah and Genesis are able to make the down payment a reality. The underwriting provisions regarding charity down payment providers are changing. I suggest you act quickly if you intend to explore that option.
Just this afternoon, I got a transaction accepted for a buyer using the Nehemiah gift program. It is really simple. My buyer would not have been able to buy the home if we didn't use this program.The website to learn more about Nehemiah is www.getdownpayment.com Another popular gift funds provider is Ameridream at www.Ameridream.com and another is Genesis at www.thegenesisprogram.org/buyers.cfm . There are others too-check with your preferred lender and see who is on their approved list of down payment assistance providers. We provide loans in Minnesota as a MN mortgage broker and use many different mortgage loan programs- www.ventureloanapp.com
Computer literacy is key to connecting with the first time buyers-they are younger and use the computer. Are you reaching them through your efforts? How this Minnesota Realtor had an Epiphany!
Approximately 18 months ago I sold 7 condominiums to various Twin Cities investors. We collectively agreed to share the responsibilities for showing the properties as well as splitting the costs for 7 weeks. Each investor client was assigned a designated week and duty for marketing. When advertising for prospective tenants, we did the following: classified ads in the Star Tribune, classified ads in the Pioneer Press, Classified ads in the Minnesota Daily, posted flyers at all available spots at the U of M, St Thomas, St Cathrine's and Augsburg, posted at the coffee shops bulletin boards, and posted an online ad at Craig's List.
Guess where all but one of the tenants were found? Craig's list. The one tenant that came from the Star Tribune was found by the tenants parents-they were searching for places for him as he was out of town relocating back to Minnesota after college. They still read the paper because they are of that generation. I confess, I am also of that generation and but I now forgo the local paper. Since college, I've read the Wall street Journal. I do so daily and wouldn't miss it. It goes extremely well with a hot cup of coffee and my cereal in the AM. BUT, I also get my daily news from sources such as Drudge Report and Breitbart.
From this rental experience, I became aware that I needed to learn the computer better. While I wasn't incompetent, I can always improve. I enrolled in the E-Pro course that Fall. If you are a Realtor and plan on staying a Realtor, you NEED to take this course. I'm not kidding. You will learn a ton. Also, one of your assignments will be to set up your blog at RealTown. I initially let blog remain semi dormant, then I started to get into it. My advice is just start. Did you know that Yahoo loves RealTown? Prove it to yourself-write a local blog post and check for the title key words. You will be in the top 20 almost for sure. From my own observation, it appears that Google likes Activerain and will index them more often than RealTown, but they still index RealTown too. I could be wrong, but that's what I think I've noticed. Anyway, the point is you need to hone your computer skills and you need to become an E-Pro.
Another resource that I've found that you might like comes at it from an internet marketing angle. Sometimes learning a topic from another angle will give you an edge in your business-such as real estate sales. There is a guy named Eric Holmlund at http://www.ericstips.com/ He has great little 15 minute video. I think his subscriber list is about 33K people. I think he's refreshing because he provide a lot of value and isn't trying to sell you something every five seconds. That isn't to say he won't have something to sell you in the future. From his most recent blog post and video, he offered these online learning resources for the basics:
Many of us have met with prospective buyers and people who are having financial difficulty. In today's stressed economic environment you don't have to look too far. Besides the obvious reasons, sometimes "life just happens." In times like these, you might want to collect information that could be useful to help people rebuild their lives and credit. Besides doing a public service, you might be building your future pipeline of business. We are our brothers keeper.
From a business perspective, who is going to be buying homes in the next 3-5 years? It is all the people who have just lost their existing home to foreclosure. Many want to be homeowners again. If you establish relationships and are helpful today, when they are creditworthy they will remember who helped them in their darkest hour.
Like a farmer, you need to plant your seeds before you can harvest your crop. I can guarantee you won't have much competition.
I have two resources that are E-books that I provide-You are welcome to click on the link and download a copy for yourself or anyone who can benefit from the information. Here are the links to the books and the outline of the content
•Define a credit score, a credit report, and other key financial terms
•Develop a personalized credit repair plan that addresses your unique financial situation
•Find the resources and people who can help you repair your credit score
•Repair your credit effectively using the very techniques used by credit repair experts
Plus, unlike many other books on the subject, this ebook will show you how to deal with your everyday life while repairing your credit. Your credit repair does not happen in a vacuum.
* Why an e-book or how-to guide on setting up a family budget?
* Why would or do you need a family budget?
* The business case for and rationale behind family budgeting
* Benefits and advantages of a family budget
Family Budgets Defined
* What is a family budget?
* What constitutes a good family budget?
* What should it contain and look like?
The Family Budget Process
* How to set up a family budget?
* Some practical suggestions and a step-by-step summary of a family budget process
* Hints, tips, tricks and tools for setting up a family budget
* How should a family budget be used?
You must educate yourself about mortgage financing options!!
FHA loans are available to individuals currently in a chapter 13 bankruptcy-this applies to purchases or refinancing. You have to have made the past 12 months of payments on time. This is unlike conventional loan products which require a minimum waiting period from the bankruptcy discharge date. How many borrowers have you met that either are in a chapter 13 BK or have just recently had one discharged? How many borrowers have been told buy their loan officer that they had to wait or accumulate more of a down payment before they could buy a home?
If you want to sell more homes, you need to know and learn about the financing. Don't rely on what on what one mortgage company may tell you. Many banks and mortgage brokers do not finance with FHA loans. The approval requirements are higher and not everyone can or wants to go through the process. As such, you may never hear about the FHA options. You need to at least explore FHA-the down payment requirement is only 2.25% on a purchase. Total buyer contributions must be 3%. BUT, the contributions can be from a gift-of which there are down payment assistance programs available that can provide the gift. I could write a book about all the cool things FHA can do. Go to hud.gov to learn more.
I have been selling homes in MInnesota since 1986-http://www.selling.mn and a Minnesota broker associate since 1988. I have been financing homes as a Minnesota mortgage broker since 1995-http://www.ventureloanapp.com I am able to structure transactions with the maximum number of options for the borrower and seller. Too often, buyers don't know what is available. The housing crisis can be resolved quicker with better eposure to the complete set of mortgage loan financing options.
Make sure whomever you select to provide the financing that they are experienced and knowledgable about loan product choices.
For one year ONLY-FHA Rules regarding the 90 day waiting period hae been lifted!
Problem: FHA wouldn't finance a home if it had been bought and sold withing 90 days. This discouraged rehabbers from buying into areas that might have been more conducive to FHA mortgage financing. Areas that would have been prime candidates for rehab were sometimes neglected. Property inventory would increase as investors chose to move to other areas or waited out the 90 days. During this waiting period the properties and areas could fall into dis-repair. REO properties are now more appealing to investors.
Solution: Using conventional financing was the solution in the PAST. Since March of 2008, with the new rules in conventional financing and declining market limitations FHA is becoming that loan of choice. Remember that FHA allow for lower down payment-2.25% and FHA loans allow for Down Payment Assistance from a qualified DPA provider. The low down payment and opportunity to use qualified gift funds makes mortgage financing possible for many people-first time buyers and otherwise.
Net result: Lenders and investors are now incentivized to rehab property quickly. This should stabilize neighborhoods as FHA financing will now be an option for buyers!
Visit http://www.selling.mn to begin to search for next home in Minnesota. Mortgage broker-Venture Development provides more information about FHA and an FHA video information- http://www.ventureloanapp.com
MGIC-one of the nation's leading underwriters and providers of private mortgage insurance has recently created a FREE online resource for consumers. What they've done is create two online classes that will provide buyer education for first time home buyers and budding landlords. You can login and take the class at your leisure. Once you complete the class and you pass a short test, you will receive a certificate of completion. This MAY be able to be used for mortgage programs that require buyer education prior to closing your home. For example, many of the grant and bond programs provided by various agencies have home buyer education as a condition of getting the loan.
Did I mention the cost?-It's free! This is what you need to do: go to http://www.MGIChome.com and look at the class. You can start it immediately. When you are ready to take the test, you will need the lender email login. Feel free to use ours-it is: learning@ventureloanapp.com
Here is a brief synopsis of the class that I've taken from the MGIC site:
So you’ve decided to make the leap and become a homeowner. Congratulations! You’ve come to the right place to prepare yourself for what lies ahead, to ensure that you go into the home-buying process with your eyes wide open.
As you complete each chapter, come back to the Landlord Education home page to review the Becoming a Landlord Test Tips.
When you've finished studying, come back to the Landlord Education home page to take the Becoming a Landlord Test.
If you are in Minnesota, please stop by my website at http://www.selling.mn You can begin your online search at this site. You will also find a TON of info in the side bar links. To get pre-approved for a Minnesota mortgage, visit http://www.ventureloanapp.com
Besides being a real estate broker of 23 years, I also own a Minnesota based mortgage brokerage in the Twin Cities with my wife. I've owned Venture Development since 1995-visit us online at http://www.VentureLoanApp.com Now, more than ever, you need to know how to help your buyer arrange their financing-whether it be a first time home buyer or a move up buyer.
Our latest episode of "Dollars & Sense" highlights some of the FHA loan products and how they can be used-FHA 203b, FHA 203K, FHA reverse mortgages, and FHA refinancing. Don't forget-FHA loans allow for DPA-Down payment assistance programs with such providers as Nehemiah and Genesis. 100% financing options are all but non-existant, down payment assistance from relatives or qualified charities will fill the gap.
Learning more about FHA and VA loans will help you sell more homes. Conventional underwriting is changing due to pull backs from the private mortgage companies and the guidelines from GSE(government sponsored entities) such as Fannie Mae and Freddie Mac. Declining market conditions and rising foreclosures are creating the tight and conservative lending environment in which we now must do business.
Minnesota has just passed a bill that is now in effect for tax year 2008. The KEY date is July 1st of 2008 to apply for the benefit. How would you like a permanent exclusion of your home's value from property taxation?
Here are the details:
The bill is the 2008 Omnibus Tax Bill passed by the Minnesota Legislature. Veterans who have a high enough disability rating will receive an exclusion of part of their valuation from taxation. If you apply in time, you can get the exclusion for 2008. Once your approved, it will continue into 2009 and beyond.
$150,000 of market value is excluded if you are a veteran with a service connected disability rated at 70% to 100%.
$300,000 of market value is excluded for a veteran with a service connected disability rated at 100% that it considered total and permanent.
You can contact the County Veterans Service officer at 1-888-Linkvet(546-5838) for more details.
If you go to http://www.taxes.state.mn.us and look at fact sheet #13 you will see the info and steps you need to take. The form you file with the assessor's office is CR-DVHE1
This is Memorial Day weekend-Let's all be greatful for the efforts of the veterans, for the freedoms we enjoy today are a result of their efforts. Thanks guys and gals!
You can go to www.yourGmap.com and create a link for free. It takes just a minute. This could be a great tool if you want to add directions to a listing, email, or website. I found it useful so I thought I'd share it with everyone.
Watch as three brave sorority sisters do their part to help out the Leukemia foundation: YOU can visit http://lls.org to learn more about Leukemia and how you can help.
If you want to sell more homes, you NEED to understand mortgage financing and the available options. Besides being a MN real estate broker and selling homes for the past 23 years, I've owned a mortgage brokerage since 1995. I run the mortgage business-Venture Development-with my wife.
Because we are involved daily with the mortgage business, we are able to learn about mortgage programs and then educate buyers and seller on how they work. We are able to recognize more opportunities to get deals done because we know how the mortgage financing options fit into the puzzle. My challenge to you, is to locate a few good mortgage providers-lenders or brokers-and have them teach you about ratios, down payment options, arms, level ratings, credit scores, first time buyer programs, and investment property financing options. The more you learn, the more value you will provide to your buyers and sellers. We all can fill out the listing forms, being the best advisor you can be is what separates one Realtor from the next.
Let me tell you about what I believe will save the real estate industry and bring buyers back into the market. Are you ready? Here it is " Down Payment Assistance." Did you know that FHA allows a non profit organization to give a gift (called down payment assistance) to a buyer that can be used for the down payment and closing costs? Why is this HUGE? Your seller can give a give to Nehemiah(a down payment assistance provider) or similar approved 501c3 charity. The buyer of the seller's home can apply for a gift from the down payment assistance provider and use this to buy the home. How many sellers keep reducing the price of their home in order to get it to sell? Does this really help-at least today? Often it isn't the price-it's the terms. Buyer's today may be able to make the payment but can't come up with the required downpayment or closing costs. The down payment assistance programs solve this problem and allow a cash poor but otherwise qualified buyer to purchase the home.
The Twin Cities metro area has been designated a decling marketplace. This means Fannie Mae and Freddie Mac-the two purchasers of the majority of conventional loan products-are requiring buyers to put 5% down. This will make the housing crisis worse and last longer by eliminating otherwise qualified borrowers. FHA loans are sold to Ginnie Mae, and as of this writing, there is no adjustment for a declining marketplace. Now that you know about FHA and the possibility of a downpayment assistance option, you can overcome the 5% requirement.
Many mortgage brokers are not FHA approved because HUD requires audited financial statements and a net worth in the company of 63K. Not everyone can meet that threshold. So, if your favorite mortgage broker isn't FHA approved, you will need to find a broker or bank that is. It is estimated that FHA will finance 1/3 of the loans next year. If you aren't educating your buyers on a way for them to buy a home, I can guarantee you that another agent or lender will.
One of the oldest down payment assistance programs is called Nehemiah. Their website is http://www.getdownpayment.com You can go there to get the specifics. In addition, you can get a listing presentation and order free sign riders once you register at their site. You can also list your home as a participating home on their website for FREE.
When you are in competition for a listing, how many other agents are going to explain this program as a unique way to sell their home? My guess is not many-at least at this time. Grab this competitive edge while you can.
GOVERNOR PAWLENTY ANNOUNCES ADDITIONAL ACTIONS TO ASSIST HOMEOWNERS FACING FORECLOSURE
~ Includes Foreclosure Counseling Workshops, funding for mediation, lender compact ~
Saint Paul –
"With additional help, the American dream of home ownership can be kept alive for more families facing foreclosure," Governor Pawlenty said. "Foreclosures continue to hit families and our state’s economy hard. We are hopeful that connecting more homeowners with counselors and providing a neutral third-party in some cases will help keep more homeowners in their homes, without negatively impacting the availability of credit in Minnesota."
Actions announced by Governor Pawlenty today include:
• Expanded Foreclosure Counseling Workshops to be held around the state
• Creation of the Minnesota Foreclosure Prevention Compact
• Mediation funding to assist homeowners when counseling is unsuccessful
• New Commerce Department assistance hotline for counselors
To provide Minnesota homeowners with additional tools to prevent foreclosure, Governor Tim Pawlenty today announced expanded foreclosure counseling workshops to be held around the state, creation of a compact with lenders to reduce foreclosures, and state funding for voluntary third-party mediation when counseling is unsuccessful.
Expanded Foreclosure Counseling Workshops to be held around the state
Governor Pawlenty announced a series of expanded mortgage Foreclosure Counseling Workshops around the state that bring lenders and borrowers together in one location. These workshops, sponsored by the Minnesota Home Ownership Center, will be greatly enhanced with additional lender participation. Lenders are being contacted directly by Department of Commerce to participate in these events.
Mortgage lenders and servicers will meet directly with homeowners to review their individual situation, and when possible, modify the terms of the loans in an effort to prevent foreclosure.
The first four expanded workshops will be held:
Tuesday, April 22, 4:30-8:30 p.m.
Minneapolis Urban League, 2100 Plymouth Avenue North, Minneapolis
Tuesday, May 13, 4:30-8:30 p.m.
Anoka County Technical College, 1355 West Highway 10, Anoka
Tuesday, May 20, 4:30-8:30 p.m.
Buffalo Discovery Center, 301 NE Second Avenue, Buffalo
Thursday, June 5, 4:30-8:30 p.m.
Eagan Community Center, 1501 Central Parkway, Eagan
Additional workshops in St. Cloud, Rochester and Duluth are being planned. More information is available at www.hocmn.org.
At Foreclosure Counseling Workshops, homeowners can ask questions and receive free and confidential advice from non-profit foreclosure counselors and mortgage lenders. The events are free and open to the public. There is no registration required and homeowners may stop by any time during the "open-house" style events.
Lenders and servicers asked to sign Minnesota Foreclosure Prevention Compact
Governor Pawlenty is asking lenders and servicers to sign a compact and agree to efforts to reduce foreclosures in Minnesota. The Department of Commerce has been meeting with lenders and servicers regarding the compact. Principles of the Minnesota Foreclosure Prevention Compact include:
• Work with mortgage foreclosure prevention counselors, and when necessary, participate in voluntary mediation.
• Participate in all Foreclosure Counseling Workshops in Minnesota.
• Engage in a substantial and large-scale loan modification effort for subprime mortgages and adjustable rate mortgage resets.
• Identify, evaluate and make good faith attempts to contact at-risk or defaulting borrowers as soon as possible.
• Modify loans to the extent permissible within existing fiduciary, contractual or other legal obligations and in accordance with prudent mortgage lending and servicing practices.
• Report progress to the Minnesota Department of Commerce.
Mediation funding to assist homeowners when counseling is unsuccessful
Because there are times when counseling cannot resolve issues surrounding a possible foreclosure, Governor Pawlenty has directed Minnesota Housing and the Department of Commerce to work with the Minnesota Homeownership Center and lenders to provide access to mediators when housing counselors and lenders believe it would be effective in keeping families in their homes.
Lenders and counselors have indicated that on occasion their efforts could benefit from the perspective of a neutral third party with mediation skills.
Mediators will be paid for by the state through grants from Minnesota Housing.
Earlier this month, Governor Pawlenty announced a $4.3 million federal grant, the second-largest such grant made to any state, to expand foreclosure prevention counseling in the state. With this funding, 37 additional counselors are being added to the statewide counseling network, for a total of 76 counselors.
Department of Commerce establishes Minnesota Foreclosure Hotline for counselors
At Governor Pawlenty’s direction, the Minnesota Department of Commerce has established a hotline for loan counselors if they experience problems contacting or negotiating with lenders. The department will then be able to contact the lender or servicers to ensure they are responding and acting in good faith.
The counselor hotline number is (651) 296-2569. This number should only be used by counselors and mediators, not individual homeowners.
Homeowners facing foreclosure are encouraged to call the Minnesota Foreclosure Hotline toll-free at
"The last thing your lender wants is for you to fall into foreclosure," said Minnesota Commerce Commissioner Glenn Wilson. "If you are behind on your mortgage and fear foreclosure, call your lender immediately for help or call the Minnesota Foreclosure Hotline."
Foreclosures typically occur due to unemployment or other loss of income. However, the increase in foreclosures beginning in 2006 is related to an increase in subprime loans and other non-traditional loans. Additional causes include flattening housing values, home equity cash-outs, and buyers assuming too much risk.
According to the nonprofit Housing Link, there were an estimated 20,573 foreclosures in Minnesota in 2007 – an 84% increase from 2006. Housing Link is projecting between 29,000 and 37,000 foreclosures in 2008. The figures are based on sheriffs’ sales of foreclosed properties.
1-866-462-6466 for information on counseling and other resources.
Pawlenty Administration’s ongoing efforts to curb foreclosures
Today’s announcement continues efforts by the Pawlenty Administration to address foreclosures and predatory lending practices in the state:
• Earlier this month, Governor Pawlenty announced a $4.3 million federal grant, the second-largest such grant made to any state, to expand foreclosure prevention counseling in the state. With this funding, 37 additional counselors are being added to the statewide counseling network, for a total of 76 counselors. It is estimated that this will result in 7,500 foreclosures being prevented this year.
• Also this month, Governor Pawlenty announced that Marquette Financial Companies provided a $500,000 grant to Minnesota Housing for foreclosure prevention deferred loans in the Twin Cities metropolitan area. These loans will be offered to homeowners who, with a modest amount of additional assistance, will be able to bring delinquent loans to current status over the long term.
• Minnesota mortgage laws were strengthened in 2007, significantly increasing the net worth requirements for mortgage originators operating as Minnesota corporations, requiring training for loan officers, and making mortgage fraud a specific crime in Minnesota. Minnesota law also now requires originators to verify a borrower’s ability to repay a loan and prohibits negatively amortizing loans, churning, subprime prepayment penalties, and partial payment quotes. These are among the toughest such laws in the nation.
• The Pawlenty Administration requested, and the legislature agreed, to add additional investigators at the Department of Commerce. The department assigned three additional investigators to respond to the increasing volume of cases and complexity of housing and lending fraud. For FY07 and the first half of FY08, the Minnesota Department of Commerce has taken 220 enforcement actions and imposed $678,850 in civil penalties in real estate or mortgage related cases.
• Minnesota’s ongoing commitment to foreclosure prevention includes a broad partnership that provides funding for a statewide network of counselors and state funding for foreclosure prevention loans of up to $5,500. Governor Pawlenty has proposed this year to increase the maximum size of these loans to $10,000 each. These efforts received an appropriation of $1.7 million in FY 2008-09.
• In 2007, Minnesota Housing made its largest single funding award ever of $11 million dollars to fund an effort in Minneapolis to acquire, rehabilitate, and re-market foreclosed and other vacant and boarded properties. A similar award of $500,000 was provided for a similar pilot program in Saint Paul.
• In 2007, the Minnesota Department of Commerce, with the support of the Minnesota Association of Realtors, transferred $500,000 to Minnesota Housing from the Real Estate Education, Research and Recovery Fund which is funded by real estate license fees. Minnesota Housing awarded the grants to the Minnesota Home Ownership Center and the Minneapolis Urban League for an early intervention foreclosure initiative for at-risk homeowners in targeted areas.
• In November 2007, Governor Pawlenty announced state funding for early intervention efforts and foreclosure prevention counseling. The Minnesota Housing award to the Greater Minnesota Housing Fund of $1 million was part of a response to a predicted 3-5 year situation. Another $800,000 in private, philanthropic and local funds were also committed to the effort. The funding doubled the number of
foreclosure prevention counselors from 18 to 37 statewide and effectively tripled the number of households that can be served.
The Minnesota Department of Commerce also reminds borrowers to beware of predatory lending practices. Homeowners who choose to refinance their mortgage should deal with a Minnesota licensed mortgage originator; check the department’s website at www.commerce.state.mn.us to
check the licensing status. Also, call the Minnesota Department of Commerce at (651) 296-2488 or 1-800-657-3602 to report suspected mortgage fraud. To contact a foreclosure prevention counselor, call the Home Ownership Center at (651) 659-9336 or (866) 462-6466. They will identify a counselor in a specific area of the state. The web site is www.hocmn.org
I don't have a lot of information about this yet, because everything right now is preliminary. That being said, keep your eyes and ears open for a new proposal by the Bush Administration that would allow people with mortgages that exceed the value of their home to refinance. How the difference in value-ie negative equity would be handled is yet to be determined. I have talked to many home owners who are upside down. Rather than a short sale or foreclosure, they want to stay in their home. At the same time if they had an ARM, they may have a higher payment that can't be refinanced because of the loan to value. What if you could just refinance what it was worth? Wouldn't that be powerful! The biggest question would be how to deal with the evaporated equity. It will be interesting to see what can be created or if this will die as an idea that just can't be brought to the market.
The Naked Truth About Real Estate Investing-The Reality Of Buying Rental Property Fully Exposed!
You have heard of Robert Kiyosaki, Donald Trump, and Carlton Sheets to name just a few of the late night TV real estate gurus. Each of these individuals have produced excellent products-books, tapes, and seminars that teach about investing in real estate. If you haven't bought their products-you should. These experts have all been successful buying and selling real estate throughout their own careers and have valuable information to share.
At the same time, not every best selling author is in the trenches on a daily basis helping others buy and sell property on a one-on-one basis. Successful investing in rental real estate demands that you adapt quickly to the current environment. Successful investors need to have their finger on the pulse of the marketplace at all times. Too often real estate investing has been made to look too easy and somewhat hands off. The truth is the exact opposite. People need to know that not everyone can succeed at buying and selling property. False expectations will almost always lead to failure. Investors need to hear an accurate and truthful summary of what is involved in owing rental property. It was the need for more truthful and realistic information that led to the creation of this new book.
The new book "Reality Based" Real Estate Investing by John Mazzara seeks to shortcut an investor's learning curve and provide a more realistic or "Reality Based" view on building wealth through real estate. John is a real estate broker associate with RE/MAX Associates Plus in Edina, Minnesota and owner of Venture Development-Minnesota's premier mortgage broker. John is an active real estate investor in the Twin Cities, MN. John was recently quoted in Investors Business Daily for his opinion about the current foreclosure and short sale situation as it pertains to existing homeowners. John's book brings 23 years of real life experiences from the trenches. He shares successes AND failures throughout the pages of this book. You will be entertained while you learn. The analysis of today's marketplace opportunities are specific to Minneapolis/St Paul and the Twin Cities metro area. The balance of the book is all about strategies and concepts that are without boundaries. This book will be of value to investors everywhere, regardless of where they live. After reading the book you will be able to determine whether or not you should become a real estate investor.
Unlike many books on the subject of investing in investment property, John doesn't tell you it's easy. In fact, he outlines the hard work and gives you a realistic summary of what to expect and what to watch out for. John shares what he perceives are the opportunities for investing in real estate TODAY. Topics covered in the book include: goal setting, tax strategies, holding period options, analysis of a property as an investment, correct property selection, geographic and demographic concerns, lease considerations, 1031 exchanging, insurance policies, options for taking title, appropriate mortgage financing, and the next steps necessary to make it all happen. In essence, you have a blueprint with reference material that can be use again and again over time.
The goal of owning real estate is to build long term wealth. We live in interesting times where our country and economy are at a crossroads. Think about the perfect storm for qualified buyers: price compression, fear, and tight mortgage loan financing. I encourage you to review this book as I believe it will prove to be a valuable resource. Let "Reality Based" Real Estate Investing serve as one of your guides on the journey towards financial independence through investing in real estate. Carpe diem!
They have just released the new updated FHA loan limits. Go to this link and find out what your state and county limit has been changed to: https://entp.hud.gov/idapp/html/hicostlook.cfm For Minneapolis -St Paul and the majority of the Twin Cities area the loan limit for single family homes has just been increased to $365K for single family homes. Mpls-St Paul are considered hight cost areas-not everywhere in our state are we considered high cost. This means that going forward, you will be able to finance more homes using FHA financing. FHA financing is important to borrowers who want to be able to take advantage of some of the unique features of FHA mortgage loans. More borrowers and buyers will be able to benefit from this great government program. In the Wall Street Journal today, they had an article saying they anticipated that 1/3 of the loans done this year will end up being FHA. I would estimate it might even be more! Conventional zero down loans are gone in MN for at least a while.
For example, you can do a cash out refinance up to 95% loan to value.
You can finance a home downpayment with a gift program like the Nehemiah program-which essentially makes the home 100% financed.
If you had an ARM that had a teaser rate, and you were current with payments during the 2 or 3 year period before it adjusted, you may be eligible to refinance into a FHA Secure mortgage.
You can do a rehab loan combined with an initial purchase loan under the FHA 203K
The FHA ARM has 1/5 caps with annual adjusters of 1%. Most conventional ARMS are 5/2/5 or 6/2/6 caps with an annual 2% adjuster and a higher margin.
You get a flat .5% MI (mortgage insurance) factor on FHA loans. Conventional loans vary by down payment and credit score.
You can do temporary and permanent buydowns off of the interest rate.
There are product changes on FHA reverse mortgage coming too. They just aren't here quite yet.
These are some of the major differences between a conventional and FHA Loan-there are more. Call us for more information at 952-285-4319 or visit our Minnesota mortgage website
Then senate is going to have an accelerated hearing on this Tuesday. The ramifications for our industry are huge.
A cram down is where a judge can literally "cram down" new terms on an existing mortgage. The investor or owner of the mortgage has to live with it. The bankruptcy judge can force this upon the investor. During the Saving and Loan crisis of 1990 and 1991 this was done with some commercial loans in various parts of the country. The bankruptcy cram down bill S2636 is being put forth by Democrat Harry Reid.
I have to write this today to warn us all about the repercussions of America's willingness of not allowing people to fail. It is with much dismay and consternation that I see bills like this being proposed in congress that allow judges to determine the interest rate and repayment amount on a mortgage. This is simply WRONG. I don't want anybody to lose their house. At the same time, a contract was made between and investor and borrower. That contract has remedies for non payment. If the lender wants to do their own modification to the note, let it be their decision. If they want to take the property back in foreclosure, let it be their decision.
Put yourself in the shoes of the lender or investor. If any bankruptcy judge could modify a mortgage note and deprive you of your rights as an investor, would you EVER buy or invest in a pool of mortgages again? The answer is NO you wouldn't. If the investors completely leave the mortgage market, rates will need to rise to attract them back, and high loan to value mortgages will become non existent. This will worsen the housing crisis because the cost for everyone will be higher and options will be fewer.
We need more mortgage programs, not less. We can't deprive the investors of their rights. Remember there is plenty of blame to go around in this mortgage foreclosure crisis mess of today. It is easy to pass the buck and blame the investors and banks as that relieves people of any personal responsibility.
We must let the free market work. If we change the rules during game, we have a new game, and nobody will play in that game. The recent Mortgage Debt Forgiveness Act was supposed to help people work out payment solutions with their lender and not incur a 1099c for debt relief. Instead, I have witnessed in the last week alone, four individuals make the decision to go into foreclosure and live 6 months free during their redemption period. Instead of stem foreclosures, it actually encourages it by making it penalty free.
Visit our online Twin Cities real estate site at http://www.selling.mn and our Minnesota mortgage site at http://www.ventureloanapp.com
The report was just released today by the MAAR-Minneapolis Area Association Of Realtors. It is a very interesting report. It gives you a lot of data regarding what occurred within the Twin Cities metropolitan real estate market. It covers price data, median prices, unit and price sales data for each city and suburb surrounding the Twin Cities, and even price per sqft in each community. If you like data, this is YOUR report. It also shows the trend in pricing from 2001+ and the percentage change from from 2001 and 2006.
If you are a consumer, you will want to review this report when selecting an area. You can have access to the report via a download on my Minnesota Real estate site. On the lower left hand side you will see Reports/Press Releases. It is about the 5th or 6th item on the list.
On that same list, you will find the MAAR 125. This provides you with month over month and year over year data comparison. Most interesting to note is the percentage of list to sales price. You will find the range is 90-97% within most communities. The more desirable communities will hold closer to the 97% whereas the communities under more pressure will be lower. What does this mean? It means that sellers are NOT taking huge price reductions. Why is this important? YOU need to manage your expectations. I have met with some buyers recently who think that they can go in and bid whatever they want and the seller should accept it. The data doesn't lie. As a whole, sellers aren't taking huge hits in pricing. Obviously, price to offer acceptance is all about area and will be house specific. With that in mind, don't plan on stealing a house. Plan on buying a house that suits your needs. The sellers in this market are aware of the market and are pricing their home to sell.
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You can find great local Edina, Minnesota real estate information on Localism.com John Mazzara CFP CLU CHFC CEBS MBA MS CMB is a proud member of the ActiveRain Real Estate Network, a free online community to help real estate professionals grow their business.
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