2013 - home - hocmn · using the pre-crisis numbers as a guide, the homeownership center ‘s...

2013Foreclosure Counseling Program Report

Prepared by Karen Duggleby, MSW, LISW

Acknowledgements

The Minnesota Homeownership Center is profoundly grateful for the dedicated professionals working within the Homeownership Advisors Network. The many positive results identified in this report would not have been possible without their hard work, patience and dedication for serving families at risk of foreclosure.

About the Minnesota Homeownership Center

The Minnesota Homeownership Center’s mission is to promote and advance successful home owner-ship in Minnesota, with a focus on serving the needs of low- and moderate-income families and emerg-ing markets. At the core of this mission is the belief that lower income households can achieve and recognize the benefits of long-term homeownership if they enter homeownership through the right door—prepared to make wise, informed decisions for their families.

The Minnesota Homeownership Center offers a unique approach to homeownership preparedness and sustainability: using a centralized, managed structure. In its centralized role, the Center provides lead-ership for key initiatives and partnerships that promote home ownership preparedness and sustainable homeownership throughout Minnesota. The Center ensures statewide access to high quality, consis-tent services by convening the Homeownership Advisors Network, a network of agencies that deliver its home ownership education and foreclosure counseling programs.

The Center’s approach emphasizes:

• High-quality programming grounded in national best practices

• Programming that is responsive to the changing environment

• Consistency of service delivery for consumers regardless of programming location

• A leadership entity serving as a single point of contact and expertise for industry stakeholders, funders, and the broader community.

Mortgage industry stakeholders concerned with affordable, sustainable homeownership founded the Minnesota Homeownership Center in 1993. Since that time, the Minnesota Homeownership Center and its network have achieved a strong record of accomplishment across the state in helping primarily economically disadvantaged and underserved households access sustainable homeownership.

Table of Contents

The content of this report is © 2014, Minnesota Home Ownership Center. Reproduction of part or all its contents in any form is prohibited without the written consent of the Minnesota Homeownership Center.

Key Findings

1. Introduction Foreclosure Process Chart

2. Report Overview and Methodology

3. Counseling Service Statistics 2013 Households Served Map

4. Findings: Loans, Affordability and Counseling Outcomes 2013 Foreclosures Prevented Map

5. Demographic Information

Appendix A: Foreclosure Prevention Counseling: The Minnesota Model

4

57

9

1012

1320

21

23

42013 Foreclosure Counseling Program Report

Foreclosure Counseling Program ReportKey Findings2013

had mortgage payments that were more than 30% of their income (considered unaffordable)

52% fell behind due to loss or reduction in income

72% have low income (80% or below AMI)

Median Household

Income

4,246 in 201329% decrease from 2012

74,036 since 2005

34% decrease from 2012 26% decrease from 2012

of households avoided foreclosure in 2013

35,239 households have avoided foreclosure since 2005

Household Income

Households Counseled

Foreclosures (Sheriff Sales) Pre-Foreclosure Notices

Foreclosure Prevented

Mortgage Payments

Average Age46

45%

57%

$37,200


1Foreclosure Counseling Report Summary Over the past year, the number of both foreclosures and households seeking foreclosure counseling has continued to decline. These changes are likely the result of improving conditions in the housing and employment markets in Minnesota. Rising median home sale prices, strong consumer demand and a relatively low inventory of homes for sale in 2013 contributed to the ongoing recovery in the housing market (Minneapolis Area Association of Realtors®). Nationally, rising home values helped over 750,000 homeowners return to a positive equity position in the 3rd quarter of 2013 (Core Logic Equity Report, 2013).

In Minnesota, the largest portion of underwater mortgages is concentrated in outlying suburban coun-ties. Additionally, the unemployment rate dropped to 4.8% near end of 2013, the lowest level since the beginning of the recession. The improvement in the housing and economic conditions likely contribut-ed to the decline in foreclosures by improving the economic situation for many Minnesota households and by making it easier for those who are struggling financially to sell their homes before reaching the point of foreclosure.

Figure 1: Minnesota Foreclosure Sales by Year & Region

14,53215,779

13,18110,686

6,754

23,09225,673

21,298

17,895

11,834

0

5,000

10,000

15,000

20,000

25,000

30,000

2009 2010 2011 2012 2013

Twin Cities Metro Statewide

Source: HousingLink, Foreclosures in Minnesota: A Report Based on County Sheriff’s Sale Data. Feb 2014.

Note: Data not available prior to 2009

Introduction


Figure 2: Number of Pre-foreclosure Notices, by year 2009-2013

66,57071,665

54,569

39,054

28,781

0

20,000

40,000

60,000

80,000

2009 2010 2011 2012 2013

Note: Data not available prior to 2009

Overview of Minnesota’s Foreclosure ProcessForeclosure is the legal process that allows a lender to take possession of and sell a property because the borrower did not meet the terms of the loan. State laws guide the process of foreclosure, which means that laws pertaining to foreclosure vary from state to state. State laws outline the sequence of events and actions that need to take place for a foreclosure to happen. The primary method of foreclo-sure in Minnesota is referred to as non-judicial foreclosure, also known as foreclosure by advertisement. This means that most foreclosures in Minnesota occur without court intervention.

The foreclosure process typically begins after the fourth missed mortgage payment (see Figure 3, page 7). At this time, the loan transfers from the lender’s collections department to an attorney. Working on behalf of the lender, the attorney begins the foreclosure process by first notifying the homeowner that they are handling the foreclosure and then scheduling a sheriff’s sale date. The sheriff’s sale is part of the foreclosure process in which the home is put up for sale at a public auction and sold to the highest bidder, usually the lender. Once the date of the sheriff’s sale auction has been set, the law dictates that a notice of the sheriff’s sale date must be published in a local newspaper for six consecutive weeks.

The occupant of the property is served a notice of foreclosure at least four (4) weeks prior to the fore-closure sale. A formal redemption period follows the sale, which typically lasts six (6) months, during which the borrower can redeem the property by paying the amount of the foreclosure sale plus any accumulated interest, taxes, liens, or fees. For more details on the laws that govern Minnesota non-judicial foreclosure go to: www.revisor.leg.state.mn.us/stats/580.


Figure 3: Foreclosure Process Chart

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Key Activities in 2013

The Minnesota Homeownership Center’s efforts in 2013 focused on managing the transition to a stable housing environment. Some examples of this work are highlighted below.

Community RecoveryThe Homeownership Center will continue to emphasize foreclosure prevention services and related programming in 2014, as we have throughout our 20-year history. However, it’s clear that the fore-closure environment has changed from one of crisis to one of recovery.

The Homeownership Center remains resolute that homebuyer services are the best foreclosure pre-ventative and are key to a robust foreclosure recovery. Homebuyers must have the knowledge to make good homebuying decisions. In the last two years, we have tested and launched Framework®, the next phase of our work. This new online homebuyer service and change to our business model has been implemented at a time when homebuyers need to enter the mortgage lending process prepared - with a clear understanding of their credit scores, debt load, and the responsibilities of homeownership. Looking back over the last several years, we see that though it was difficult to shift both our workload and mindset from foreclosures to homebuyer services at a time when the market seemed as though it would never recover, it was the right path to take. As the demand for foreclosure services returned to normal levels in 2013, the Center was positioned to take on the next chapter – providing a diverse continuum of tools to prepare homebuyers for sustainable homeownership.

Developing relevant, consistent foreclosure prevention services for the long-termUsing the pre-crisis numbers as a guide, the Homeownership Center ‘s network can anticipate serv-ing an average of about 5,000 households a year in a stable housing environment. Partnerships and programs developed during the crisis will continue to enhance our programming over the long-term. For example, reimbursement for service relationships with Fannie Mae and Wells Fargo are indicative of relationships that will continue to sustain the Homeownership Center’s partners and clients into the future.

Over the past year, the Center has continued to look for efficient ways to provide access to foreclo-sure counseling services with declining program funding. Through the help of an RCDI grant from USDA/RD, the Homeownership Center and Arrowhead Economic Opportunity Agency are explor-ing the use of technology and best practices for providing foreclosure prevention services in rural and remote communities. The result of this work will help us to identify cost-effective, successful methods for homeowners who have the greatest difficulty accessing services.

Keeping up with new and changing regulations and standardsDespite the slowing of the foreclosure crisis, new programs, policies, and legislation that affect at-risk homeowners continue to evolve. The Homeownership Center responds to these opportunities and works to keep industry professionals and consumers apprised of any changes through public education and outreach. One example of this is the implementation of the new federal Consumer Financial Protection Bureau. The CFPB has introduced rules and regulations that affect the mort-gage and homeownership industry, including a provision that servicers provide information about HUD-approved housing counselors. The Center provides industry training that prepares organiza-tions for the adoption of new CFPB rules and regulations.


• Neighborhood Development Alliance (NeDA)• Mahube-Otwa Community Action Partnership• Northwest Community Action Program• Ottertail-Wadena Community Action Council • PRG, Inc.• Rochester/Olmstead Community Housing

Partnership• Scott County Community Development Agency• Southwest Minnesota Housing Partnership• Twin Cities Habitat for Humanity• Washington County Housing and Redevelopment

Authority• West Central Community Action Program

• Wright County Community Action Program

This report provides a summary of evaluation results for the foreclosure prevention counseling pro-gram supported by the Minnesota Homeownership Center. Through this program, local foreclosure counseling services are delivered to consumers in 24 agencies throughout Minnesota. The report sum-marizes household and loan characteristics, service usage, and outcomes for homeowners receiving foreclosure counseling during 2013.

This report includes data collected by foreclosure advisors at the 24 agencies in the Homeownership Advisors Network (see below) providing foreclosure counseling services. The report presents data and findings for all homeowners who went through a triage assessment and received either phone or in-person counseling. The triage assessment enables counselors to assess the homeowner’s situation and identify possible solutions. The process includes gathering information from the homeowner including mortgage status, reason for delinquency, mortgage product and other housing expenses, affordability and their commitment to stay in the home. Overall, 60% of the clients served went through the triage assessment and received basic counseling and another 40% received more in-depth counseling. The report does not include data on homeowners who received information and referral.

Program data was tracked using a central online reporting tool called CounselorMax™. The data for this report is based on client data from 2013 unless otherwise noted. The data was downloaded from Coun-selorMax and analyzed using SPSS and GIS software.

2Report Overview & Methodology

The following agencies provided client data for this report:

• Arrowhead Economic Opportunity Agency• Anoka County Community Action Program• Bi-County Community Action Program• Carver County Community Development Agency• CCCS of The Village Family Service Center• City of St. Paul, Planning & Economic

Development• Communidades Latinas Unidas en Servicio

(CLUES)• Community Action Partnership of Suburban

Hennepin• Community Neighborhood Housing Services• Dakota County Community Development Agency• Hmong American Partnership • Inter-County Community Council• LSS Financial Counseling


After years of waiting for the foreclosure crisis to come to an end, many signs in 2013 suggest that crisis is over. The steady decline in foreclosures that began in 2010 continued through 2013. The demand for foreclosure counseling has followed a similar trajectory. After reaching a peak of nearly 16,000 households served in 2009, the number of households seeking foreclosure counseling has continued to decline, with a steep decline occurring between 2011 and 2012 (from 10,178 households to 5,947). In 2013, 4,246 households received foreclosure prevention counseling from the Center’s network – a number that is consistent with service levels prior to the crisis. The decline in households seeking fore-closure counseling along with an overall reduction in foreclosures is good news. Added to this is the good news that more households are seeking homebuyer education and counseling before buying a home. Between 2012 and 2013, there was a 20% increase in the number of households seeking pre-purchase counseling and a 7% increase in the number of households completing homebuyer educa-tion. The growing demand for homebuyer education is encouraging and suggests that homebuyers are taking steps to become prepared and informed before buying a home. Informed consumers are the key to preventing foreclosure problems in the future.

Figure 4: Households Served

YearTotal Households

Served2005 4,245

2006 4,757

2007 4,828

2008 11,809

2009 15,868

2010 12,158

2011 10,178

2012 5,947

2013 4,246

TOTAL 74,036

3Counseling Service Statistics

Pre-crisis

Foreclosure Crisis


Figure 5: A Picture of the Foreclosure Crisis, Households Served by Quarter 2008-2013

2143

2674

3202

3790

4759

40523682

3375 34323199

2989

25382728

24502806

21941816

1449 1406 1276 13271114 977 828

0

1000

2000

3000

4000

5000

08' 108' 208' 308' 409' 109' 209' 309' 410' 110' 210' 310' 411' 111' 211' 311' 412' 112' 212' 312' 413' 113' 213' 313' 42008 2009 2010 2011 2012 2013


Minnesota Homeownership Center: Foreclosure Counseling 2013 Households Served by County

0-25 26-100 101-150 151-500 500+

Number of Households Served

00

St. Louis

Itasca

Cass

LakePolk

Beltrami

Aitkin

Pine

Cook

Koochiching

Otter Tail

Clay

Roseau

Marshall

Becker

Todd

Stearns

Kittson

Swift

Lyon

Pope

Morrison

Wilkin

Renville

Carlton

Martin

Hubbard

Rice

Wright

Norman

FillmoreMower

Crow Wing

Nobles

Murray

Grant

Sibley

Brown

Lake of the Woods

Rock

Redwood

Kandiyohi

Douglas

Jackson

Meeker

Goodhue

Winona

Isanti

Faribault

Dakota

Freeborn

Olmsted

Lincoln

Blue Earth

Scott

Stevens

Anoka

Houston

Steele

Traverse

Dodge

Wadena

Nicollet

McLeod

HennepinChippewa

Wabasha

Benton

Lac Qui Parle

Carver

Pennington

Big Stone

Cottonwood Waseca

Le Sueur

Yellow Medicine

Red Lake

Sherburne

Watonwan

Clearwater

Mille Lacs

Kanabec

Chisago

Mahnomen

Pipestone

Washington

Ramsey

2

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3

1

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28

33

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10

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23

143

1237

5159

42

1524

20

844

274

89

369

259

133

543

Households Served by Region

RegionHouseholds

Served

Metro (7-County) 2,511

Northwest 94

Northeast 410

Central 577

West Central 165

Southwest 125

Southeast 337

Outside MN 27

Total 4,246


Analysis of Loan TypeThe vast majority of the homeowners served by foreclosure counseling have fixed rate prime mortgages. This marks the continuation of a pattern that began six years ago, as the foreclosure crisis transitioned from a subprime mortgage problem to an unemployment problem. In 2008, 27% of the homeowners receiving counseling services had a subprime mortgage. In 2013, for the second consecutive year only 5% had subprime mortgages. Eighty-six (86%) percent of the homeowners served by the Minnesota Homeownership Center’s counseling network had fixed rate prime mortgages. The remaining 8% had adjustable rate prime mortgages.

Figure 6: Prime & Subprime by Loan Type, 2008-2013

0%

20%

40%

60%

80%

100%

2008 2009 2010 2011 2012

Fixed Prime Fixed Subprime

ARM Prime Arm Subprime

Figure 7: 2013 Prime & Subprime Loans

2013

Prime (<=8%) 94%

Subprime (>8%) 5%

Missing 1%

4Findings: Loans, Affordability & Counseling Outcomes


Loan StatusAbout half (44%) of the homeowners sought help from a foreclosure advisor when they were less than 90 days late on their mortgage; 20% were still current on their mortgage when they began working with their advisor. In general, homeowners who seek help early have a greater chance of averting fore-closure than those who wait until a sheriff’s sale is pending. Similar to 2012 numbers, a high share of homeowners (45%) accessed foreclosure counseling after falling behind by over 120 days on their mortgage payments. It is unclear why some homeowners wait before seeking counseling. They may be trying to sell their home first or work out loan modifications directly with their lender. Unable to achieve a result, these homeowners seek foreclosure counseling at a later stage of delinquency.

Figure 8: Loan Status at Intake, 2012-13

Loan Status 2012 2013

Current 22% 20%

30-60 Days Late 15% 15%

61-90 Days Late 9% 9%

91-120 Days Late 12% 11%

120+ Days Late 42% 45%

Figure 9: Loan Status at Intake, 2008-2013

0%

25%

50%

75%

100%

2008 2009 2010 2011 2012 2013

120+ Days Late

91-120 Days late

61-90 Days late

30-60 Days late

Current


Reason for DefaultReduction or loss of income is the primary reason for default among homeowners seeking foreclosure counseling assistance. In 2013, 52% percent of the homeowners served reported that they had either a loss or reduction of their household income. Another 24% reported life events that are associated with a loss or reduction of income (divorce/separation, health issues, death of a family member and business failure). There was a 5% decline in households reporting a reduction of income, which may be a reflection of improved employment conditions. Reduction in income refers to situations in which total household income has decreased, typically because hours available for work have been reduced, a reduction in government assistance, or loss of a part- time job. However, loss of income, which refers to homeowners who have become unemployed and have temporarily lost all sources of income, actually increased by 3%.

Figure 10: Reason for Default

Reason Percent

2012 2013

Reduction in Income 33% 27%

Loss of Income 22% 25%

Poor Budget Management Skills 11% 13%

Medical Issues 10% 12%

Increase in Loan Payment 2% 2%

Divorce/Seperation 9% 9%

Increase in Expense 7% 5%

Death of Family Member 2% 2%

Business Venture Failed .5% .9%

Other 3% 4%


Analysis of loan affordability The majority of homeowners counseled had mortgage payments that were unaffordable at the time they sought counseling. Fifty-seven (57 %) of the homeowners had a monthly first mortgage payment that was more than 30% of their household income. Payments that are at or below 30% of income are typically considered affordable. Since the primary reason for falling behind is reduction or loss of in-come it maybe that the payments were affordable at the time they took out the loan.

In 2013, the median monthly mortgage payment among the homeowners receiving counseling ser-vices was $1192, which is $26 less than 2012 and $60 less over the past two years. Nearly half (44%) of the homeowners served had a monthly payment of $1000 or less. Almost a quarter (22%) of the home-owners had first-lien loan payments that exceeded $1500; this is a slight decrease over 2012.

Figure 11: Percentage of Homeowners Income Paid to Mortgage Payment

40% 57%0%

50%

100%

Less than 30%spent onmortgage

More than 30%spent onmortgage

Note: 127 households missing either annual income or mortgage payment information were removed from data. Households with more than 100% income paid to mortgage were trimmed from data as erroneous.


Counseling Outcome SummaryBased on available outcome data, there were 1,276 foreclosures prevented among those who first sought counseling in 2013. It often takes many months to identify the outcome of foreclosure counsel-ing. As of early 2014, outcome data was available for 67% (2,824) of the homeowners who first sought counseling in 2013. Thirty-three percent (1,422) of cases opened during 2013 are still receiving counsel-ing with outcomes pending.

Over the past six years, the Minnesota Homeownership Center’s network has helped over 35,000 home-owners avoid foreclosure. During this time, the Center’s network prevented foreclosure for 56% of the homeowners served. The industry average for foreclosure prevention is 36%.

Figure 12: Number of Foreclosure Outcomes on Closed Cases

Outcomes 2012 2013

Foreclosures Prevented 2,563(46%)

1,276(45%)

Foreclosure Occurred 956(17%)

391(14%)

Outcome Unknown 2,047(37%)

1,157(41%)

TOTAL 5,566 2,824

Figure 13: Summary of Foreclosure Outcomes on Closed Cases 2005-2013

05000

10000150002000025000300003500040000

ForeclosurePrevented

ForeclosureOccurred

OutcomeUnknown

2013

2012

2011

2010

2009

2008

2007

2006

2005

35,239

15,79712,443


Foreclosures preventedIn 2013, 45% of the homeowners receiving counseling services were able to avoid foreclosure. Among those who averted foreclosure 93% were able to stay in their homes and 7% were unable to stay in their home. The most notable change between 2012 and 2013 is the 9% increase in homeowners who were able to prevent foreclosure through a mortgage modification.

Figure 14: Number of Foreclosures Prevented, by Remedy 2012-2013

Foreclosures Prevented 2012 2013

Brought Mortgage Current 601 406

Initiated Forbearance Agreement 249 167

Mortgage Modified 487 471

Bankrupcy 88 54

Mortgage Refinanced 88 62

Received Second Mortgage 2 0

Partial Claim 6 7

Entered Debt Management Plan 27 19

Pre-Foreclosure Sale (Short sale) 96 38

Sold Property 65 44

Executed Deed-in-Lieu 11 8

TOTAL 1,720(47%)

1,276(45%)

Figure 15: Percent of Foreclosures Prevented by Remedy, 2008-2013

0%

25%

50%

2008 2009 2010 2011 2012 2013

Brought Mortgage Current

Mortgage Modified

Forbearance Agreement

Short sale

Bankruptcy

Sold Property

Mortgage Refinanced

Remained in Home

Unable to Remain

in Home


Foreclosures prevented by locationMapping the foreclosures prevented by county shows that there were more foreclosures prevented in areas with higher populations. In 2013, Dakota & Hennepin counties had the highest number of foreclo-sures prevented among all Minnesota counties. The metro area counties have a higher concentration of foreclosures prevented as the counties with other large cities (Olmsted, St. Louis, Stearns). The following page shows a statewide map of foreclosures prevented by county for 2013.


MN Foreclosure Statistics

RegionHouseholds

ServedForeclosures

Prevented

Metro (7-County) 2,511 908

Northwest 94 25

Northeast 410 83

Central 578 139

West Central 165 60

Southwest 125 14

Southeast 337 36

Outside MN 25 11

Total 4,246 1,276

Number of Foreclosures Prevented

0-10 11-25 26-75 76-150 150+

Minnesota Homeownership Center: Foreclosure Counseling 2013 Foreclosures Prevented by County

00

St. Louis

Itasca

Cass

LakePolk

Beltrami

Aitkin

Pine

Cook

Koochiching

Otter Tail

Clay

Roseau

Marshall

Becker

Todd

Stearns

Kittson

Swift

Lyon

Pope

Morrison

Wilkin

Renville

Carlton

Martin

Hubbard

Rice

Wright

Norman

FillmoreMower

Crow Wing

Nobles

Murray

Grant

Sibley

Brown

Lake of the Woods

Rock

Redwood

Kandiyohi

Douglas

Jackson

Meeker

Goodhue

Winona

Isanti

Faribault

Dakota

Freeborn

Olmsted

Lincoln

Blue Earth

Scott

Stevens

Anoka

Houston

Steele

Traverse

Dodge

Wadena

Nicollet

McLeod

HennepinChippewa

Wabasha

Benton

Lac Qui Parle

Carver

Pennington

Big Stone

Cottonwood Waseca

Le Sueur

Yellow Medicine

Red Lake

Sherburne

Watonwan

Clearwater

Mille LacsKanabec

Chisago

Mahnomen

Pipestone

Washington

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Female-headed single-parent household

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Married with children

Households

Household Type Marital Status

Married with children

Single adult

Female-headed single-parent household

Married without children

Two or more unrelated adults

Male-headed single-parent household

Other

Age

Median Age = 48

Credit Score

Median Credit Score = 569

5Demographic Information

Married38%

Single24%

Divorced13%

Widow2%

Unknown23%

Education

Highest Education Achieved

Referral Sources

Top 3 Ways they heard about us:

1

2

3

Agency Outreach (36%)

Friend/Word of Mouth (19%)

Lender/Mortgage Co (17%)

5%

33%

21%

29%

5%7%

0%

100%

1

Unknown

Graduate

Bachelors

Associates

HS Grad

< HS


Percent of Area Median Income (AMI)Annual Household Income

Income

Median Annual Income= $37,200

Race

[72% are 0-80% or low income.]

75%

8%

8%

3%2% 2% 1%

White

Black

Hispanic

Asian

Multiple Race

Unknown

Am Indian/AK Native

43%

12%

17%

11%

15%

0%

100%

1

100%+

81-100%

61-80%

51-60%

0-50%3%

24%

39%

18%

8%

3%

0% 50%

<10K

10K-25K

25K-50K

50K-75K

75K-100K

100K+


Appendix

Foreclosure Prevention Counseling: The Minnesota ModelThe Minnesota Homeownership Center brings 20 years of experience in supporting the delivery of foreclosure counseling services in Minnesota. Today, homeowners in Minnesota have access to foreclosure prevention services in each of the state’s 87 counties. Using a community-based ser-vice delivery model, services are provided locally through a network of 25 organizations, called the Homeownership Advisors Network. These orga-nizations represent a mix of community-based non-profit and government organizations that are involved with some aspect of housing as part of their mission. Most of the organizations have been offering foreclosure prevention services for the past decade.

Based upon three essential elements, Minneso-ta’s foreclosure prevention model demonstrates innovation, creativity and superior effectiveness in helping homeowners avoid foreclosure.

A centralized approach: The Minnesota Home-ownership Center’s model uses a centralized, managed approach to homebuyer education and foreclosure counseling. The Center provides leadership and key services to community based homeownership agencies, including program models, certification and training, technical sup-port, data collection and evaluation, program outreach, policy leadership and fundraising. One of the organization’s most important functions is to develop and deploy a continuum of home-ownership education and counseling services, from pre-purchase to foreclosure counseling.

Statewide access to locally based services: Homeowners in Minnesota have access to fore-closure counseling services in each of the state’s 87 counties. Using a community-based service delivery model, counseling services are provided locally through a network of non-profit and lo-cal government agencies whose mission empha-sizes housing. The foreclosure advisors in this

network are both highly trained and experienced. Most of the organizations have been offering fore-closure counseling for the past decade.

Sustainable, coordinated funding: One of the strengths of the Minnesota Homeownership Cen-ter’s foreclosure counseling model is that it has a consistent, reliable funding source. The program is financed through four primary funders: the state housing finance agency (Minnesota Hous-ing); the Minnesota Homeownership Center, which receives its funding through lenders, lo-cal governments and a variety of philanthropic organizations; and two foundations – the Family Housing Fund and Greater Minnesota Housing Fund. The community-based agencies providing foreclosure counseling receive funding through a competitive process, facilitated by the Minne-sota Homeownership Center. This process avoids service duplication and ensures that high quality services are available statewide.

When the foreclosure crisis emerged, the Minne-sota Homeownership Center had the infrastruc-ture in place to conduct the rapid and extensive organizational ramp-up required to meet the growing need for foreclosure counseling. The Center improved its service delivery model, in-creased its foreclosure prevention service capac-ity, and launched a large-scale public awareness and outreach campaign. The result of this effort is a statewide foreclosure prevention system that re-sponds to consumer demand in the most efficient and effective way possible.


Achieving foreclosure prevention through effective counseling servicesForeclosure prevention advisors work with homeowners facing foreclosure and help them to understand how they got into their current situation. Then, they help these homeowners develop a plan to move forward. Often, this in-cludes asking a difficult question – Can you afford your home over the long-term? For those who can, counselors work through a series of steps to help the homeowner get back on track with their mortgage. First, they examine if there are any personal resources available, such as savings or possibly loans from family or friends. Advisors also help connect homeowners with resources available in the community.

Next, the advisors work with the mortgage com-pany to explore loss mitigation options. Loss mit-igation can include an array of solutions that help the homeowner to stay in the home. These solu-tions often include extending the loan to make up missed payments, temporarily lowering pay-ments or lowering the interest rate to make the loan more affordable.

Foreclosure Advisors work with homeowners to:

• Understand the foreclosure process

• Develop a customized plan to address their unique situation

• Improve financial management skills

• Know their mortgage product and communicate with their mortgage company

• Identify options for preventing foreclosure, including negotiating with the mortgage company for loss mitigation

• Avoid predatory practices

• Find alternative housing solutions if foreclosure is inevitable.

2013 - home - hocmn · using the pre-crisis numbers as a guide, the homeownership center ‘s...

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