2012 - HOCMN

Prepared by Karen Duggleby, MSW, LISWMinnesota Homeownership Center

2012 Foreclosure Counseling Program Report

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 home ownership 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 home ownership.

Table of Contents

The content of this report is © 2013, 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 2012 Households Served Map

4. Findings: Loans, Affordability and Counseling Outcomes 2012 Foreclosures Prevented Map

5. Client Demographic Information

Appendix A: Foreclosure Prevention Counseling: The Minnesota Model

4

57

9

1011

1218

19

21


Foreclosure Counseling Program ReportKey Findings2012

accessed counseling after falling behind over 120 days.

The earlier homeowners seek help, the more time they have to resolve their mortgage problems.

3 out of 5 had mortgage payments that were more than 30% of their income (considered unaffordable).

55% fell behind due to loss or reduction in income

70% have low income (80% or below AMI)

Median Household

Income

5,947 in 201241% decrease from 2011.

69,790 since 2005

16% decrease from 2011. 28% decrease from 2011.

of households avoided foreclosure in 2011

26, 431 households have avoided foreclosure since 2008

Household Income

Households Counseled

Foreclosures (Sheriff Sales) Pre-Foreclosure Notices

Foreclosure Avoided

Mortgage Payments

Average Age47

42%

The foreclosure advisor was able to talk with the mortgage company that I couldn’t get

through to, and they were able to get answers I never could. Having someone to advocate

on my behalf with the mortgage company and to navigate me through the process is

what made all the difference. It’s what kept me in my home.—Participant“ ”

47%

$37,296


1The Foreclosure Crisis in Minnesota In 2012, foreclosure numbers showed some signs of improvement with fewer foreclosures than 2011, 17,895 sheriff sales compared to just over 21,000 in 2011. Nevertheless, this number is still alarming-ly high. High levels of unemployment and depressed home prices also indicate that the crisis is not over. Recent decreases in pre-foreclosure notices, which are sent to homeowners who are two to three months past due, suggest that mortgage foreclosures will continue to threaten the housing stability of many families in 2013. Over 39,000 homeowners in Minnesota received pre-foreclosure notices in 2011.

Unemployment and a weak housing market with declining home values continue to be a major part of the foreclosure problem. Prior to the housing crisis, homeowners faced with a loss of income could sell their home to avoid foreclosure. Today, declining home values and a relatively weak housing market mean that many homeowners owe more than their home is worth, making it difficult to sell a home quickly, especially at a time when there are fewer prospective buyers.

It is likely that the foreclosure crisis will continue at or near 2012 levels for the near future. Homeowners will continue to struggle and the need for foreclosure counseling services will remain strong.

Figure 1: Minnesota Foreclosure Sales by Year & Region

14,53215,779

13,18110,686

23,09225,673

21,298

17,895

0

5,000

10,000

15,000

20,000

25,000

30,000

2009 2010 2011 2012

Twin Cities Metro Statewide

Source: HousingLink, Foreclosures in Minnesota: A Report Based on County Sheriff’s Sale Data. Feb 2013.

Introduction


Figure 2: Number of Pre-foreclosure Notices, by year 2009-2012

66,57071,665

54,569

39,054

0

20,000

40,000

60,000

80,000

2009 2010 2011 2012

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 2, 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 2012The Minnesota Homeownership Center’s efforts in 2012 focused on implementing strategies to im-prove consumer outcomes while directing the most efficient use of resources. Some examples of this work are highlighted below.

Ongoing work with NFMCThe Minnesota Homeownership Center has played an integral role in helping Minnesota Housing secure state funding from the National Foreclosure Mitigation Counseling program (NFMC). The NFMC program is a special federal appropriation that is designed to support a rapid expansion of foreclosure intervention counseling in response to the nationwide foreclosure crisis.

Over the past several years, the Minnesota Homeownership Center’s network success in serving at-risk borrowers, combined with strong philanthropic support of local corporations and founda-tions has provided an important source of leverage. As a result, Minnesota has been able to secure the third highest level of NFMC funding among all state housing finance agencies. Taken together, this local and national funding has allowed the Center’s network to expand its capacity to meet the demand for foreclosure prevention services.

Fannie Mae Help Center to Fannie Mae Help NetworkThe Center continued its partnership with Fannie Mae to ensure an expedited, effective process for loss mitigation for Fannie Mae clients. The program, the first of its kind in the country, has served as a model for similar programs in other states. The relationship has dramatically decreased the turn-around time for resolutions with servicers and has created a reimbursement for service program to help sustain foreclosure prevention programming.

Early Resolution Counseling Portal (ERCP)After a successful pilot in 2011, the ERCP program was rolled out to dozens of the Center’s partners in 2012. ERCP is a partnership between the Center, Housing Partnership Network and Wells Fargo that brings together the strengths of all organizations to expedite and increase the long-term suc-cess of loan workouts. Through this partnership, housing counselors help borrowers complete a detailed package of documents, which are then submitted to a designated Wells Fargo represen-tative. Counselors work with borrowers on household budgeting and other concerns to improve long-term success of the loan workout. As with the Fannie Mae program, ERCP includes a reim-bursement for service.

Advanced OutreachIn 2012, the Center implemented advanced outreach techniques to get more consumers connect-ed to the Homeownership Advisors Network. On the internet, the Center used enhanced Search Engine Optimization (SEO) and Search Engine Marketing (SEM) and banner advertising to reach over 4 million Minnesota consumers, more than doubling the access to the Center’s web site. These techniques will help the Center’s visibility long-term, with benefits far outlasting the end of the campaign.

The Center also re-introduced its Foreclosure Scam Alert campaign (Look Before You Leap) with a month-long public awareness effort specifically targeted to Latino homeowners in the Twin Cities Metro Area. Communications included direct mail to over 11,000 Hispanic homeowners, bus stop posters, call-in radio programs and radio ads, and print ads in the Spanish language newspapers.


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 25 agencies throughout Minnesota. The report sum-marizes household and loan characteristics, service usage, and outcomes for homeowners receiving foreclosure counseling during 2012.

This report includes data collected by foreclosure counselors at the 25 agencies in the Homeowner-ship Advisors Network (see below) providing foreclosure counseling services through the Minnesota Homeownership Center’s network. 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 as-sessment 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.

Program data was tracked using a central online reporting tool called CounselorMax™. The data for this report is based on client data from 2012 unless otherwise noted. The data was downloaded from Coun-selorMax and analyzed using SPSS and GIS software.

The following agencies provided client data for this report:

2Report Overview & Methodology

• 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

• 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

• Neighborhood Development Alliance (NeDA)

• Mahube-Otwa Community Action Partnership1

• 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

• Tri-Valley Opportunity Council

• Twin Cities Habitat for Humanity

• Washington County Housing and Redevelopment Authority

• West Central Community Action Program

• Wright County Community Action Program

1 New agency as of October 2012


The Minnesota Homeownership Advisor’s Network of foreclosure counseling agencies continued to serve a remarkable number of households. In 2012, the Center’s network provided foreclosure coun-seling services to 5,947 homeowners. While the Center’s network continues to manage a high volume of clients, the numbers served in 2012 represent a decrease of 41% over 2011 service. While numbers have dropped they still remain above the average prior to the crisis that began in 2008. Initial data from 2013 indicates it is likely that the foreclosure crisis will continue at or near 2012 levels for the near future. Other potential reasons for the reduction include improved direct lender participation in loss mitigation and consumer decisions to forego foreclosure prevention services in light of the valua-tion of their properties. With the lingering economic crisis and resulting unemployment losses, many families with prime loans are having difficulty making their mortgage payments. Homeowners will continue to struggle and the need for foreclosure counseling services will remain strong.

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

TOTAL 69,790

Figure 5: Households Served by Quarter, 2008-2012

21432674

3202

3790

4759

40523682

3375 34323199 2989

2538 27282450

2806

21941816

1449 1406 1276

0

1000

2000

3000

4000

5000

08' 1 08' 2 08' 3 08' 4 09' 1 09' 2 09' 3 09' 4 10' 1 10' 2 10' 3 10' 4 11' 1 11' 2 11' 3 11' 4 12' 1 12' 2 12' 3 12' 4

3Counseling Service Statistics


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

WashingtonRamsey

Minnesota Homeownership Center: Foreclosure Counseling 2012 Households Served by County

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

Number of Households Served

Households Served by Region

RegionHouseholds

Served

Metro (7-County) 3,592

Northwest 156

Northeast 460

Central 839

West Central 205

Southwest 166

Southeast 499

Outside MN 30

Total 5,947

2 25

9

8

9

49

9

2

21

1 6

4

20

2246

6 357

42

10918

24

62

41

243025

185810

6

38 14

31

9979

97

602

1152 338793

382169

156

20 13232

8

92

3

1 16

2 1

24

7

7

5

1133

105

14

1511

8

6

40

12

13

16 4047

29

35 31 13 13

1811711

10

32618

3


Analysis of Loan Type

The vast majority of the homeowners served by foreclosure counseling have fixed rate prime mortgages. This marks the continuation of a pattern that began four 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 2012, only 5% had subprime mortgages. Eighty-seven (87%) percent of the homeowners served by the Minnesota Homeownership Center’s counseling network had fixed rate prime mortgages. The remaining 7% had adjustable rate prime mortgages.

Figure 6: Prime & Subprime by Loan Type, 2008-2012

0%

20%

40%

60%

80%

100%

2008 2009 2010 2011 2012

Fixed Prime Fixed Subprime

ARM Prime Arm Subprime

Figure 7: Prime & Subprime Loans

2011 2012

Prime (>=8%) 94% 94%

Subprime (8+%) 6% 5%

Missing -- 1%

4Findings: Loans, Affordability & Counseling Outcomes


Loan StatusAbout half (46%) of the homeowners sought help from a foreclosure advisor while they were less than 90 days late on their mortgage; 22% 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 foreclosure than those who wait until a sheriff’s sale is pending. One troubling continuing trend in the 2012 data is the high share of homeowners (42%) who accessed foreclosure counseling after falling behind by over 120 days on their mortgage payments. It is possible that it is due to increasing number of homeown-ers who are trying to work out loan modifications directly with their lender. Advisors in the Minnesota Homeownership Center’s network are seeing more homeowners enter counseling after first trying to work 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, 2008-2011

Loan Status 2011 2012

Current 21% 22%

30-60 Days Late 15% 15%

61-90 Days Late 10% 9%

91-120 Days Late 11% 12%

120+ Days Late 43% 42%

Figure 9: Loan Status at Intake

0%

25%

50%

75%

100%

2008 2009 2010 2011 2012

120+ Days Late

91-120 Days late

61-90 Days late

30-60 Days late

Current


Reason for DefaultThe data continues to show that loss of income is the primary reason for default among homeowners seeking foreclosure counseling assistance. In 2012, fifty-five percent of the homeowners served re-ported that they had either a loss or reduction of their household income. 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. Loss of income refers to homeowners who have become unemployed and have temporarily lost all sources of income. Counselors report that many clients are seeking assistance as they have become unemployed or have seen a loss in hours.

Figure 10: Reason for Default

Reason Percent

2011 2012

Reduction in Income 36% 33%

Loss of Income 24% 22%

Poor Budget Management Skills 10% 11%

Medical Issues 11% 10%

Divorce/Seperation 7% 9%

Increase in Expense 4% 7%

Increase in Loan Payment 2% 2%

Death of Family Member 2% 2%

Business Venture Failed 1% .5%

Other 2% 3%


Analysis of loan affordability The majority of homeowners counseled had mortgage payments that were unaffordable at the time they sought counseling. Fifty-four (54 %) of the homeowners had a monthly mortgage payment that was more than 30% of their household income. Payments that are at or below 30% of income are typi-cally considered affordable.

In 2012, the median monthly mortgage payment among the homeowners receiving counseling ser-vices was $1166, which is $34 less than the previous year. Over one-third of the homeowners served had a monthly payment of $1000 or less. Nearly 30% of the homeowners had first-lien loan payments that exceeded $1500; this represents no change over 2011.

Figure 11: Percentage of Homeowners Income Paid to Mortgage Payment

36% 54%0%

50%

100%

Less than 30% spent on

mortgage

More than 30% spent on

mortgage


Counseling Outcome SummaryOver the past five years, the Minnesota Homeownership Centers’ network has helped over 26,000 home-owners avoid foreclosure. During this time, the Center’s network prevented foreclosures for 57% of the homeowners who received counseling. The industry average for foreclosure prevention is 36%. It often takes many months to identify the outcome of foreclosure counseling. As of early 2013, outcome data was available for 62% (3,701) of the homeowners who first sought counseling in 2012. Thirty-eight percent (2,246) of cases opened during 2012 are still receiving counseling.

Figure 14: Number of Foreclosure Outcomes on Closed Cases

Outcomes 2011 2012

Foreclosures Prevented 3,707(60%)

1,720(47%)

Foreclosure Occurred 1,508(25%)

719(19%)

Outcome Unknown 901(15%)

1,262(34%)

TOTAL 6,116 3,701

Figure 15: Summary of Foreclosure Outcomes on Closed Cases 2008-2012

0

5000

10000

15000

20000

25000

30000

Foreclosure Prevented

Foreclosure Occurred

Outcome Unknown

2012

2011

2010

2009

2008

26,431

11,0029,180


Foreclosures preventedIn 2012, forty-seven percent (47%) of the homeowners receiving counseling services were able to avoid foreclosure. Among those who averted foreclosure, 90% were able to stay in their home and 10% were unable to stay in their home. Based on available outcome data, there were 1,720 foreclosures prevented among those who first sought counseling in 2012.

Figure 12: Number of Foreclosures Prevented, by Remedy 2011-2012

Foreclosures Prevented 2011 2012

Brought Mortgage Current 1,393 601

Initiated Forbearance Agreement 596 249

Mortgage Modified 996 487

Bankrupcy 189 88

Mortgage Refinanced 77 88

Received Second Mortgage 3 2

Partial Claim 13 6

Entered Debt Management Plan 40 27

Pre-Foreclosure Sale (Short sale) 244 96

Sold Property 131 65

Executed Deed-in-Lieu 25 11

TOTAL 3,707(60%)

1,720(47%)

Figure 13: Percent of Foreclosures Prevented by Remedy, 2008-2012

0%

25%

50%

2008 2009 2010 2011 2012

Brought Mortgage Current

Mortgage Modified

Forbearance Agreement

Short sale

Bankruptcy

Sold Property

Mortgage Refinanced

Remained in Home

Unable to Remain

in Home


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

WashingtonRamsey

MN Foreclosure Statistics

RegionHouseholds

ServedForeclosures

Prevented

Metro (7-County) 3,592 1,199

Northwest 156 53

Northeast 460 76

Central 839 228

West Central 205 55

Southwest 166 26

Southeast 499 73

Outside MN 30 10

Total 5947 1,720

Number of Foreclosures Prevented

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

Minnesota Homeownership Center: Foreclosure Counseling 2012 Foreclosures Prevented by County

1 12

5

2

0

18

0

0

2

0 1

1

11

118

2 10

3

19

212

4

13

7

427

2180

1

11 4

8

2616

18

354

350 125189

12831

22

4 743

2

10

1

0 3

0 1

11

2

1

0

14

21

2

41

3

2

8

2

2

2 910

3

1 5 3 2

391

1

543

0


Households

Household Type Marital Status

Married with children

Single adult

Married without children

Female-headed single-parent household

Two or more unrelated adults

Male-headed single-parent household

Other

Married51%Single

29%

Divorced16%

Widow4%

1.7%

3.3%

4.4%

12.5%

14.3%

29.0%

34.7%

0% 50%

Other

Male-headed …

Two or more …

Female-headed …

Married …

Single adult

Married with …

0% 50%

Age

Median Age = 47

Credit Score

Median Credit Score = 577

Education

Highest Education Achieved

Referral Sources

Top 3 Ways they heard about us:

49%

4%

31%

4%7%

0%

100%

1

Unknown

Graduate

Bachelors

Associates

HS Grad

1

2

3

Agency Outreach (32%)

Lender/Mortgage Co (19%)

Friend/Word of Mouth (17%)

5Client Demographic Information


4%

24%

40%

20%

8%

3%

0% 50%

<10K

10K-25K

25K-50K

50K-75K

75K-100K

100K+

76%

8%

8%

3% 3% 1%White

Black

Hispanic

Multiple Race

Asian

Unknown

Percent of Area Median Income (AMI)

40%

13%

18%

12%

16%

0%

100%

1

100%+

81-100%

61-80%

51-60%

0-50%

Annual Household Income

Income

Median Annual Income= $37,296

Race

[70% are 0-80% or low income.]


Appendix

Foreclosure Prevention Counseling: The Minnesota ModelThe Minnesota Homeownership Center brings 17 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 responds to consumer demand in the most ef-ficient and effective way possible. Over the past five years, the Minnesota Homeownership Cen-ter’s network of counselors has gone from serv-ing an average of 4,500 distressed homeowners a year prior to 2007 to nearly 16,000 in 2009 and over 10,000 in 2011.


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.

Documents

2012 - HOCMN