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					“LEGAL ASPECTS OF FORECLOSURE AND 
  A RESPONSE BY THE DANE COUNTY
  A RESPONSE BY
       HOUSING TASK FORCE. ”
        Brought to you by the Access to 
       Affordable Housing Team & Dane 
        County Foreclosure Prevention 
                  Taskforce"




               June 17, 2010
                   y
Your Moderator Today…

                  Andy Lewis 
                  Andy Lewis
                  Community Development Specialist
                  Center for Community and Economic Development
                  University of Wisconsin Extension
                  Contact Information:
                  610 Langdon Street, Room 328
                  Madison, Wisconsin 53703 
                  andy.lewis@uwex.edu 
                  andy.lewis@uwex.edu
                  T 608.263‐1432
                  F 608.263‐4999

           Co-Chairs      Access                       Team
Andy Lewis Co Chairs the “Access to Affordable Housing Team” with Kathleen
Metzenbauer
     Housekeeping Details

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Need Technical Support?
    In Madison, Wisconsin – 608-262-3399
    Outside of Madison – 800-442-4614
      g        y
Joining Us Today…

                   Daniel A. O Callaghan 
                   Daniel A O'Callaghan
                   Michael Best and Friedrich LLP
                   Contact Information:
                   One South Pinckney Street
                   Suite 700
                   Madison, Wisconsin 53703 
                   daocallaghan@michaelbest.com
                   T 608.283.0117
                   T 608.283.0117
                   F 608.283.2275

Dan O’Callaghan is a member of the Land & Resources Practice Group, focusing
his    ti in the          f transactional real estate, real estate development,
hi practice i th areas of t        ti   l    l t t        l t t d      l     t
land use, and zoning law.
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Joining Us Today…

                     Ariel Kaufman
                     Ariel Kaufman
                     Program Coordinator
                     Community Partnerships/Office of the Chancellor 
                     University of Wisconsin‐Madison 
                     Contact Information:
                     Campus Community Partnerships [www.ccp.wisc.edu]
                     The Villager, 2300 South Park Street, Suite 1
                     Madison, WI 53713
                     Madison, WI 53713
                     alkaufm2@wisc.edu
                     T: (608) 260‐2674
                     F: 608) 260‐8133
Ariel Kaufman chairs the Park Street Partners and was an original convener of the Dane 
County Foreclosure Prevention Summits which developed into the Taskforce.  Ariel is 
currently on the steering committee co‐chaired by Dan O'Callaghan (Michael Best and 
Friedrich LLP) and Ellen Bernards (GreenPath Debt Solutions).
Friedrich LLP) and Ellen Bernards (GreenPath Debt Solutions)
Two Gaps:
1. LEGAL REPRESENTATION:
1 LEGAL REPRESENTATION:
 In Milwaukee, a study done by Legal Aid Society of
 In Milwaukee, a study done by Legal Aid Society of 
 Milwaukee, Chief Staff Attorney Catey Doyle, 
 demonstrated that 97% of homeowners in 
 Milwaukee go through the foreclosure process 
 unrepresented.
2. CONSUMER KNOWLEDGE:

Why do borrowers fail to contact their lender when
 they have trouble making payments?
 Don t
 Don't know lenders can provide options
     53%
 Too depressed/stressed
     26%
 Think they can get by on their own       12%
 Lenders mistreat them (write in)         10%

Source: NHS Chicago, Inc HOPI Meeting October 30, 2007, n=139 counselors representing 85 agencies nationally serving 25,000 consumers 
                                                         collectively in 2007
Are We There Yet?
Annual % Change in Foreclosure Cases
% Change in Foreclosure Cases
     Q1 2009 – Q1 2010
     Q1 2009 – Q1 2010
% Increase in Foreclosure Cases
      Q4 2009 – Q1 2010
      Q4 2009 Q1 2010
Current Data on Foreclosure Case Data for Your 
Counties Can be Found at: 
Counties Can be Found at:

http://www.uwex.edu/ces/cced/economies/communit
   yindicators/Indicators_Links.cfm#q1_2010

Or just go to the link on the home page:
http://www.uwex.edu/ces/cced
http://www uwex edu/ces/cced
    g g
Mortgage Loans

Traditional Variety
Traditional Variety
  Fixed Rate, fully‐amortizing

Adjustable Rate Mortgages (ARMs)
                 y    g
  first allowed by congress in 1982

“Exotic” Loan Products
  Interest only
  Stated income (or “no doc” / “low doc”) loans
  Negative amortization loans
  Option ARMs
    g g                p
Mortgage loans – risk spectrum

         LOWEST
                   Prime

                   Alt‐A

                   Subprime

         HIGHEST
        g g
The mortgage market

  The players
  Secondary market and the securitization of 
      t
  mortgages
  Subprime crisis
   h              ’
  The government’s response
  What’s ahead
        g g
The mortgage market

  Primary Mortgage Market
  Primary Mortgage Market

  S    d    M t      M k t
  Secondary Mortgage Market
        g g
The mortgage market

Long history of government involvement
Long history of government involvement
  1934 ‐ Federal Housing Administration (FHA)
  1938 ‐ Federal National Mortgage Association 
  1938 Federal National Mortgage Association
  (Fannie Mae)
  1968  Government National Mortgage Association 
  1968 ‐ Government National Mortgage Association
  (Ginnie Mae)
  1970  Federal Home Loan Mortgage Corporation 
  1970 ‐ Federal Home Loan Mortgage Corporation
  (Freddie Mac)
                g g               p y
        The mortgage market – the players

     g g     g
 Mortgage Originators
  Depository Institutions
    Commercial banks
                                      Secondary Market Conduits
  Thrifts (savings & loan)
          (     g         )                     Fannie Mae
Non-depository Institutions                     Freddie Mac
                                                                                 Investors
     Mortgage brokers                 Ginnie Mae (for FHA and VA loans)
     Mortgage lenders                                                             GSEs
                                           Private Investment Banks
                                                                               Pension funds
    Top Mortgage Originators (2008)
                                                                          Life insurance companies
   Rank      Company         Amount
    1     Wells Fargo       $230B                                            Commercial banks
    2     JP Morgan         $185B
    3     Bank of America   $181B
    4     Countrywide       $132B
    5     Citigroup         $104B
        g g                  p y
The mortgage mess – one more player

The Servicer
  Often the mortgage lender who originated the loan
  Acts according to a Pooling and Servicing Agreement (PSA) 
  with the owner/investor (if the loan has been sold or 
  securitized)
  Receives monthly mortgage payments on behalf of the 
  Receives monthly mortgage payments on behalf of the
  owner/investor
  Manages tax and insurance escrows
  Monitors delinquencies
  Manages the loss mitigation and foreclosure processes
  Makes payments to the investors
        g g
The mortgage market – meltdown

Mortgage meltdown
Mortgage meltdown
  Fueled by the availability of high LTV mortgage financing, 
  the housing market peaked in 2005–2006
  Interest rates started to rise and housing prices started to 
  drop moderately in 2006–2007 in many parts of the U.S.
  Refinancing became more difficult
  Refinancing became more difficult
  Defaults and foreclosure activity increased dramatically as 
      y                p
  easy initial terms expired
  Financial institutions collapsed under the weight of so many 
  bad loans
        g g
The mortgage market – meltdown 

The government s response
The government’s response
  Emergency Economic Stabilization Act authorizing 
  the Treasury to establish the $700 billion Troubled 
  the Treasury to establish the $700 billion Troubled
  Asset Relief Program (TARP) – October 3, 2008
     t a ocus        pe e t g          as to stab e
  Initial focus in implementing TARP was to stabilize 
  financial markets and increase lending activity
           y           y
  Treasury’s authority under the Act also extends to
    Preserve homeownership
    Protect home values
    Maximize foreclosure mitigation efforts
        g g
The mortgage market – meltdown

 What’s ahead
 Wh t’ h d
  Foreclosure rates across the country continue to 
  rise
  Unemployment rates remain high
  The scenario may get a little worse before it gets 
  The scenario may get a little worse before it gets
  better
Foreclosure
 A legal process initiated by a lender against a homeowner to 
 regain the collateral following a default on mortgage 
 regain the collateral following a default on mortgage
 payments.
 The process has several possible outcomes but, generally, the 
 homeowner loses the property – typically because it is sold to 
 homeowner loses the property typically because it is sold to
 repay the outstanding debt or repossessed by the lender.
 The process is usually governed by state law and varies widely 
 by state; processes generally falls into one of two categories
 by state; processes generally falls into one of two categories
    Judicial foreclosures, which proceed through courts, and
    Non‐judicial foreclosures, which do not involve court 
           di
    proceedings.
 Legal fees, foregone interest, property taxes, repayment of 
 former homeowners’ delinquent obligations, deferred 
 maintenance, damage to the property, and selling expenses 
 maintenance damage to the property and selling expenses
 can make foreclosure extremely costly to lenders.
Foreclosure
Alternatives to Foreclosure

       Transition/Non retention Options
     ‐ Transition/Non‐retention Options
             (borrower gives up the house)

              Retention Options
            ‐ Retention Options
              (borrower keeps the house)
Alternatives to Foreclosure
   Non‐retention
(borrower gives up the house)
(borrower gives up the house)

 Pre‐foreclosure Sale
 Short Sale
 Short Sale
 Deed‐In‐Lieu
 Walk away
 Bankruptcy
Alternatives to Foreclosure
   Non‐retention                     Retention
(borrower gives up the house)
(borrower gives up the house)   (borrower keeps the house)
                                (borrower keeps the house)

 Pre‐foreclosure Sale            Reinstatement
 Short Sale
 Short Sale                        p y
                                 Repayment Plan
 Deed‐In‐Lieu                    Loan Modification
 Walk away                       Refinance
 Bankruptcy                      Forbearance
                                 Bankruptcy
Overview of Dane County Response

Cross sector collaboration needed to address large 
Cross‐sector collaboration needed to address large
  public problem (Leadership for the Common Good, by Barbara 
  Crosby and John Bryson, 2005).  
Madison situation
  Local housing study (2007) prior to housing crisis
  Foreclosure interest and efforts 
  Problem less severe meant less resources 
Convened Summits
Summits Developed into the Taskforce
Housing Study by
South Madison Community Housing Team
South Madison Community Housing Team

   Participatory Action Research Study 
Robles, A., Wortsman, J., and Kaufman, A. (April 2007).  “Housing and Community 
   in South Madison: Local Residents’ Viewpoints and Experiences.”  Full Report 
   posted on Campus Community Partnerships website: 
   http://www.ccp.wisc.edu/docs/CBR/StoriestoActionFullReport.pdf
   http://www ccp wisc edu/docs/CBR/StoriestoActionFullReport pdf
   Study Area: 2 South Madison Neighborhoods
   Shared Leadership Research Team: South Madison Community 
   Team Members, South Madison Residents,  South Metropolitan Planning 
   Council, Office of the Chancellor and School of Human Ecology at 
   University of Wisconsin‐Madison, Center for Economic Development at 
   University of Wisconsin Milwaukee
   University of Wisconsin‐Milwaukee 
   Many Stories to Action Project Collaborations (e.g. with UW‐
   Extension Dane County’s Financial Education Center on Home Buying and 
   Foreclosure Education, Dane County Foreclosure Prevention Taskforce, etc.)
   Foreclosure Education Dane County Foreclosure Prevention Taskforce etc )
Participatory Action Research Process

 Resident researchers (recruitment, training)
 Process 
    Objectives: positive qualities of good neighborhood & housing situation, 
    key housing issues for tenants & homeowners
    Method: cluster sampling, 109 interviews (Burr Oaks, Bram’s Addition)
    Analysis & Writing: Report authored by Andrea Robles, Jodi Wortsman, 
    Ariel Kaufman
 Information sharing
 I f    ti    h i
   Presenting & Learning about resources
 Understanding the big picture 
   Using team report, other data
 Build broad collaborations  
   p             g
 Improve housing situations 
                                                                        30
   On the individual and community level (e.g. foreclosure, home buying)
Homeowners Interviewed Said: 
Paying Too Much on Housing Costs
Paying Too Much on Housing Costs



   57%
  SPEND                Those planning to live in home
 OVER 30%               62 % plan to stay over 6 years
   income 
      on 
 housing costs


         Owning
          home
       unaffordable!
                                                  31
Participatory Action Research 
uncovered housing pressures
uncovered housing pressures

On  Homeowners                On Renters
    • Struggle to own           Struggle to rent
     Repairs and utilities                      l
                                             Utilities
     Mortgages and taxes                  Rents prices
       Wages too low
          g                             Wages too low
                                  Difficult landlord relations
       Fear lose house
                                Rising rents 
   • Rising house prices 
                                Discrimination
     • Discrimination           Owning unaffordable
                               Costs of owning high, Bad credit, 
                                Wages too low, House prices too 
                                Wages too low House prices too
                                      high, Hard to find help
Foreclosure Prevention Summits

               Convened 3 Foreclosure Summits 
               Convened 3 Foreclosure Summits
Summits were a collaborative effort of South Madison residents, University of 
  Wisconsin‐Madison (Community Partnerships/Office of the Chancellor and 
   Law s School s Economic Justice Institute , South Metropolitan Planning 
   Law’s School’s Economic Justice Institute South Metropolitan Planning
        Council (SMPC) and participants from multiple organizations.  
1.   Inclusion ‐‐ broad stakeholder participation           
     (i.e. those working on, interested in, and/or affected by foreclosure)
2.   Defined problem from multiple perspectives
3.   Brainstormed solutions 
4.   Determined next step
Dane County Foreclosure Prevention Taskforce
        http://daneforeclosurehelp.org/
        http://daneforeclosurehelp org/
Who We Are
  Coalition of public agencies, non‐profit service providers and other 
  community partners working together to develop sustainable alternatives 
  to foreclosure in Dane County.
Our Mission
Our Mission
  To develop and implement a coordinated response to the current 
  foreclosure problem in Dane County.  
Structure
  Co‐chairs, Monthly Steering Committee meetings, Subcommittee Chairs
  Support staff for Taskforce
  3 main workgroups mirroring Milwaukee s model (Prevention, 
  3 main workgroups mirroring Milwaukee’s model (Prevention
  Intervention, Stabilization) plus workshop committee
  Semi‐annual full Taskforce meetings
Prevention

     Primary Mission. Get pertinent, up to date, local 
     information into the hands of the families who are facing the 
     possibility of foreclosure.

     St t
     Strategy. Sh i f       ti    i    i t d   di
               Share information via printed media 
1.    Educational articles on foreclosure topics (e.g. community 
      newspapers)
2.    Research existing materials to avoid duplication and 
      discovered foreclosure brochure. Subcommittee created 
      insert specific to Dane County resources, as a companion 
      piece. 
      Distribution: Financial Education Center, Dane County Housing 
      Authority, Dane County Extension office, and at various community 
      sites.
      sites
Workshop Committee
Prevention & Intervention w/additional partners
Prevention & Intervention w/additional partners

Objectives: 
   (1) increase homeowners’ awareness of options for mortgage help, 
   (2) help homeowners to determine their next steps,
   (3) prepare homeowners for their next steps by encouraging goal‐setting 
         db d
      and budgeting.
  ** Develop DCFPT's Tools to Manage Your Mortgage workshops, & 
                   other resource‐building efforts.
2010 Community Workshops:
2010 C        i W kh
  English‐language: East side (August 2009), North side (March), South side 
  (June 21& 28).
  Spanish language: Ellen Bernards partners with taskforce community
  Spanish‐language: Ellen Bernards partners with taskforce, community 
  organizations (LaSup, Latino Chamber of Commerce, Centro Hispano, 
  DATCP, and others).  South side (June 5, 2010).  
  Future
Intervention

   o a swe e p a e            s uc o s
 Pro se answer template & instructions
 Dane County Foreclosure Mediation Program (DCFMP)
 DCFMP Mediation Coordinator
 Direct Outreach to Homeowners in Foreclosure
 Answer Clinic
 Wisconsin foreclosure timeline
Wisconsin Foreclosure Timeline
Stabilization

 Goal: Map Dane County information to identify 
 Goal: Map Dane County information to identify
 neighborhoods/communities with concentration of 
 foreclosures.  
 Objective: Find an easily accessible, comprehensive 
 data source which lists residential properties  (single 
 family, condo and rental by street address) where 
 the foreclosure has been completed.  
City Funded New Position

Annie 
Beaman,       Foreclosure Prevention Specialist 
Dane 
County 
C
              (Dec. 2009 – Dec. 2010)
              (                      )
Housing       Provides Assistance to Homeowners
Authority, 
assists 
assists         Provided information & referrals to 125 
families &      homeowners in or near Madison 
supports        As UW law student, also able to assist 
Taskforce
                homeowners understand and navigate legal 
                h                d t d d          i t l l
                process of foreclosure. 
Contact

 For more information about the Dane County
 Foreclosure Prevention Taskforce please email
 info@daneforeclosurehelp.org
     @                     p g
 Visit website: http://daneforeclosurehelp.org/
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