“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 firstname.lastname@example.org email@example.com 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 Please M t your phones! Pl Mute h ! 611# to self mute un mute 600# to un-mute 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 firstname.lastname@example.org 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. g y 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 email@example.com 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 firstname.lastname@example.org @ p g Visit website: http://daneforeclosurehelp.org/ Access The Archived Version of this Program To access an archived version of today’s program, go to: https://www.livemeeting.com/cc/wislineweb/view Enter Your Name Recording ID: Legalissues‐100617 Recording Key: (Leave Blank) Recording Key: (Leave Blank) Click View Recording Click the ICON for either Microsoft Office Live Meeting High Fidelity Presentation OR Microsoft Office Live g y Meeting Replay This archive will remain for 365 days on the web don’t Please don t forget Close out of browser Close out of browser p Disconnect phone call Thank You!
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