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1 The Legacy of Homeownership Prepare Purchase Preserve.

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1 1 The Legacy of Homeownership Prepare Purchase Preserve

2 2 1. Understand the hidden costs that impact Homeownership 2. What are your legal rights as a Homeowner 3. What resources are available to assist you HomeownershipHomeownership Prepare Prepare Purchase Preserve

3 What are your legal rights as a Homeowner Prepare - Purchase Preserve

4 As a first-time homebuyer, you may be unaware that there are other expenses you need to budget for on top of the asking price. Knowing about these potential hidden expenses can help you financially prepare for your big purchase.

5 Buying a house is one of the most important legal transactions you'll ever undertake. It's exciting, and you can keep the stress level to a minimum if you take time to learn about your legal rights and how the home buying process works in Detroit. Know Your Rights

6 To create equal housing opportunities for all persons living in America by administering laws that prohibit discrimination in housing on the basis of race, color, religion, sex, national origin, disability, and familial status. The Office of Fair Housing and Equal Opportunity administers federal laws and establishes national policies that make sure all Americans have equal access to the housing of their choice. Fair Housing Act

7 You have the RIGHT to shop for the best loan for you and compare the charges of different mortgage brokers and lenders. You have the RIGHT to be informed about the total cost of your loan including the interest rate, points and other fees. You have the RIGHT to ask for a Good Faith Estimate of all loan and settlement charges before you agree to the loan and pay any fees. You have the RIGHT to know what fees are not refundable if you decide to cancel the loan agreement. You have the RIGHT to ask your mortgage professional to explain exactly what the mortgage broker will do for you. Know Your Rights

8 You have the RIGHT to know how much the mortgage professional is getting paid by you and the lender for your loan. You have the RIGHT to ask questions about charges and loan terms that you do not understand. You have the RIGHT to a credit decision that is not based on your race, color, religion, national origin, sex, marital status, age, or whether any income is from public assistance. You have the RIGHT to know the reason if your loan was turned down. You have the RIGHT to ask for the HUD settlement costs booklet "Buying Your Home." Know Your Rights

9 RESPA is about closing costs and settlement procedures. RESPA requires that consumers receive disclosures at various times in the transaction and outlaws kickbacks that increase the cost of settlement services. RESPA is a HUD consumer protection statute designed to help homebuyers be better shoppers in the home buying process, and is enforced by HUD. RESPA - Real Estate Settlement Procedures Act

10 ATTEND A FREE HOMEBUYER EDUCATION WORKSHOP AND LEARN THE MECHANICS OF BUYING A HOME! ANY HUD APPROVED HOUSING COUNSELING AGENCY WILL OFFER WORKSHOPS OR HOUSING COUNSELING AGENCIES. SEE FOR HUD APPROVED AGENCIES IN YOUR AREA!WWW.HUD.GOV

11 “ YOUR Credit-Ability is YOUR Credi- bility” Prepare - Purchase Preserve

12 IMPACTING CREDIT & RESTORING CREDIT

13 Foreclosure affects your credit score by 250 points. That is, if you have a credit score of 680, it will drop down to 430. So, it's better to avoid a foreclosure and request the lender for a loss mitigation plan so that you're able to keep the home or if at all you can't keep the home, then at least see that your credit doesn't get a big hit. How Can Foreclosure Impact My Credit?

14 Impact on Credit A foreclosure stays on your credit report for 7 years. Once you start rebuilding your credit, it gets better with time, though it'll take almost 2-4 years to get a mortgage after foreclosure, that too at comparatively better rates of interest Unfortunately, a low credit score virtually guarantees that you will pay higher interest rates on home and auto loans, credit cards or other forms of credit.

15 Impact on Credit How much more will you pay? Experts say that a person with a low credit score, say, below 600, will likely receive mortgage interests rates that are nearly 3% higher than someone with a score above 700. low credit score In a worst case, you may be denied credit altogether.

16 Start making payments on time 2. Don't Borrow Money You Don't Need 3. Check Your Report For Errors 4. Call Your Creditors 5. Pay Off Your Balances 6. Start Using Cash 7. Create A Budget 7 Steps to Building Your Credit

17 1 st Start making payments on time Noting payment history constitutes 35 percent of your total credit score. If you don’t have money for a minimum payment by the due date, but will the following week, pay it next week. Don’t just double up your payment the next month, which a lot of people do. That makes you 30 days late and that will drop your credit score.

18 2 ND Don't Borrow Money You Don't Need The average American consumer carries between five and 10 credit cards in his wallet. That makes it easy to get in over your head. It also makes lenders nervous. Don’t charge to the limit on one card. If you have multiple cards it is better to charge less on both cards with room to spare. Get into the habit of paying off your cards in full.

19 3 RD Check Your Report For Errors You are entitled to a free copy of your credit report every 12 months from each of the leading consumer reporting agencies – Equifax, Experian and, TransUnion.EquifaxExperian and, TransUnion. If you find any errors, correct them immediately. If there are things that have been paid but still show up as a collection account, or you find an old judgment or lien you thought was paid, pay off what you owe, get those off your record.

20 4 TH Call Your Creditors Insist on speaking with a manager and tell them you’re having financial problems.“ Often, the manager will work with you to establish a lower monthly payment plan, freeze the interest owed, or forgive some of your debt altogether. They would rather get 75 cents on the dollar than have you go to bankruptcy court.

21 5 TH Pay Off Your Balances If you have multiple cards, send in as much as you can to the one with the highest interest rate, while continuing to make minimum payments to your other cards. Once the highest rate card is paid off, start chipping away at the one with the next highest rate—and so on. Bringing your credit card balances to zero renders you instantly more creditworthy.

22 6th Start Using Cash Stop using credit until you’ve got your financial house in order. By handing over cold hard cash for every purchase it’s easier to keep track of how much you’re spending on a daily basis. If you struggle with self-control, try putting your credit cards in a container of water and storing them in the freezer. "If you’re tempted to use them you have to wait until it melts and hopefully by that time the impulse is gone.

23 Finally Create A Budget Write down your expenses It’s good advice for anyone, but for those who are falling behind on their bills, the value of having a budget cannot be overstated. If you know what it costs you to live, it’s easier to cut back here and there. There are plenty of ways to find more money in your budget to pay off debt and clean up your credit. Stop paying more on your cell phone for text service. Drop cable TV. Take lunch to work and print coupons for your favorite products off the Internet.

24 Your Credit Report includes… 1.Name, DOB, and Social Security Number 2.Your Addresses 3.Your Employers 4.Your Debts 5.Your Payment History 6.Public Records 7.Inquiries 8.Collections and Charge-Offs

25 CREDIT REPORTS AND CREDIT BUREAUS  Equifax  Experian  Trans Union

26 View Your Credit Report Credit Score Calculation Chart

27 View Your Credit Report Requesting a copy of your own credit report for your personal review is strongly encouraged and does not negatively impact your credit history. Start REBUILDING Your Credit Today!

28 Resources Available for Homeowners Prepare - Purchase Preserve

29 President Obama's new mortgage relief plan, launched March 4th, 2009 aims to help up to 9 million borrowers qualify for more affordable mortgages and stay in their homes. The program will: – Work with lenders to modify the loan terms for up to 4 million homeowners. – Refinance up to 5 million homeowners into more affordable fixed-rate loans.

30 The Making Home Affordable Program is part of the Obama Administration’s broad, comprehensive strategy to get the economy and the housing market back on track. Making Home Affordable

31 The key components of the Making Home Affordable Program are: Refinancing for borrowers previously unable to take advantage of lower interest rates or a more stable mortgage product because of falling home values. $75 billion in incentives to provide loan modifications, and other foreclosure alternatives, bringing monthly payments to levels which borrowers can afford today and in the future. Making Home Affordable

32 What are the Home Affordable Refinance Program (HARP) and Home Affordable Modification Program (HAMP)? HARP and HAMP are the two principal components of MHA that use refinancing and loan modifications, respectively, to reduce monthly mortgage payments to affordable levels or move borrowers to more stable mortgage products. Making Home Affordable

33 Are all loan types eligible for the Home Affordable Refinance and Home Affordable Modification Programs? What about FHA/VA/USDA loans? The HARP option is currently available only for loans owned or guaranteed by Fannie Mae and Freddie Mac. Most conventional mortgages, however, including those owned by lenders or in securities, are eligible for HAMP. Any loan type may be considered for a FHA Hope for Homeowners (H4H) refinance. Treasury requires servicers to consider H4H at the same time they are evaluating a borrower for HAMP.

34 What should a counselor do if a servicer says an investor is not participating in the Making Home Affordable Program? To confirm the accuracy of the statement, a counselor should first determine if the loan is owned or guaranteed by one of the GSEs. If it is, the servicer is required to consider all borrowers who meet the minimum eligibility criteria for a refinance under HARP or a modification under HAMP based on the borrower’s circumstances. Making Home Affordable

35 Making Home Affordable

36 How does the counselor determine if a borrower’s loan is owned or guaranteed by Fannie Mae or Freddie Mac? A borrower on his or her own behalf, or a counselor with a borrower’s permission, may determine whether the borrower’s loan is owned or securitized by Fannie Mae or Freddie Mac by using the loan look up tools available at or on the agencies’ websites or by calling the agencies as follows: Making Home Affordable

37 How does the counselor determine if a borrower’s loan is owned or guaranteed by Fannie Mae or Freddie Mac? For Freddie Mac FREDDIE (8am to 8pm EST Mon.-Fri.) For Fannie Mae FANNIE (8am to 8pm EST Mon.-Fri.). Making Home Affordable

38 38 Helping Hardest Hit Homeowners On June 23rd, President Obama selected Michigan as one of 5 states chosen to participate in a new program designed to prevent foreclosures. The Helping Hardest Hit Homeowners Program consists of three options, which will assist homeowners to avoid foreclosure. NOTE: These programs will be administered through your mortgage loan servicer beginning July 12th, To find out more about the Helping Hardest Hit Homeowners Program visit the Michigan State Housing Development Authorities Hardest Hit Fund Website

39 39 Helping Hardest Hit Homeowners The U.S. Department of Treasury approved the Michigan State Housing Development Authority’s (MSHDA) plan to distribute a total of $498.6 million in federal funds that should help more than 49,000 Michigan households avoid foreclosure. MSHDA was the first of the nation’s HFAs to implement its plan to help Michigan's hardest hit homeowners by providing:

40 40 Mortgage payment assistance for homeowners currently receiving unemployment compensation, Rescue funds for homeowners who have fallen behind in their mortgage payments due to no fault of their own and who have overcome this obstacle, and

41 41 Federal matching funds for principal reductions for homeowners who can no longer afford their mortgage payments as a result of reduced income ,00.html ,00.html

42 42 Unemployment Crisis Three areas in Michigan posted jobless rates higher than 15%, including Detroit. The city wrecked by the collapse of the auto industry continued to lead the nation's areas of 1 million people or more with the highest unemployment rate in November at 15.4%. s/economymetro_unemployment/

43 43 Unemployment Mortgage Subsidy Program: When unemployed, it can become especially difficult to keep up with monthly mortgage payments. The Unemployment Mortgage Subsidy Program is meant to provide homeowners currently receiving unemployment benefits funding to ensure that mortgage payments are made to avoid foreclosures

44 44 Unemployment Mortgage Subsidy Program: The program will help homeowners stay current with their mortgages by funding 50% (up to $750) of their monthly mortgage payments. Homeowners will continue to be responsible for the remaining 50% of their payments. The subsidy is available for up to 12 consecutive months, or until the homeowner has returned to work, whichever is less

45 45 Loan Rescue Program: Many homeowners may experience a temporary financial hardship such as unemployment, divorce, or illness. When these situations cause a homeowner to miss mortgage payments, it is often difficult to get back on the right track

46 46 Loan Rescue Program: The new Loan Rescue Program was created to provide funding to homeowners who have recovered from a one time crisis, but remain on the brink of foreclosure. The program will provide up to $5,000 to homeowners who can now afford to cover their current monthly payments, but need help to catch up on past due payments or delinquent taxes

47 47 Principal Curtailment Program The Principal Curtailment Program provides up to $10,000 to the under- employed with severe negative equity in their homes. Under this program, the mortgage servicer must agree to match the funding given by the state to reduce the principal balance; thereby creating more affordable housing payments for the homeowner

48 A home mortgage is a secured debt. Secured debt is held against an asset, if the debt is not paid, the asset can be taken. If you do not adhere to your mortgage agreement, the lender can take your house. If you are having trouble, or think you may be facing future payments that you cannot afford, do everything in your power to make up the missed or late payments. Prioritize your mortgage payments. What to do if you are late on your Mortgage

49 If you do fall behind and are unable to catch up then you probably cannot afford the mortgage you currently have and must act quickly. Contact your lender or loan servicer immediately. Do not ignore their letters or calls. Let them know that you are having difficulty and are willing to do whatever is necessary to stay current on payments and keep your house. What to do if you are late on your Mortgage

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51 Loan is in default (late) if the monthly payment is not made in 30 days. Lender may send a notice of delinquency and start calling you. Late fees begin to accrue. During this time, if you can make a partial payment – make it. You may be able to make arrangements for payment with your lender - however, many lenders will not do so until 90 days of delinquency. Begin communication with your lender. First Month Missed Payment

52 You may receive phone calls and/or letters from collections department. Lenders may accept one payment but will put pressure on borrower for both payments. After the second month ends, partial payments are generally not accepted. You may be able to make arrangements for payment with your lender - however, many lenders will not do so until 90 days of delinquency. Late fees continue to accrue. Begin communication with your lender. Second Month Missed Payment

53 Lender may send a "Demand Letter" or "Notice to Accelerate." The homeowner generally has 30 days to bring the mortgage current. The homeowner may still be able to make arrangements with the lender. This could be the first opportunity for the homeowner to do so if the lender required 90 days delinquency. This is the last chance to catch up and go back to mortgage payment schedule. If the mortgage is not made current, foreclosure proceedings are started, including public notification at the local courthouse, in the local paper and posted at your house. Third Month Missed Payment

54 Lender will contact attorneys to schedule a Sheriff's Sale. The sale date will be scheduled four to six weeks after the attorneys receive the file. Under Michigan law, advertisement for the Sheriff’s Sale must be made for four successive weeks in a newspaper local to the property. Notice must be posted on the property within 15 days of the first publication. When the sale date is scheduled, you will receive a notice by mail AND a notice will be taped to your door. Fourth Month Missed Payment

55 You DO NOT HAVE TO MOVE at this time. The home is normally auctioned for the amount of the loan plus missed payments, accrued interest, late fees and attorney fees. To get property back after the Sheriff Sale, you must pay the total amount due within the redemption period (usually 6 months). The purchaser at the Sheriff's Sale is almost always the original lender. Fourth Month Missed Payment

56 You DO NOT HAVE TO MOVE until the redemption period is complete - usually six months. If you know you will have to move, use this time to save and look for a new place to live. If you leave the home prior to the end of the redemption period, you must contact your lender. You are still legally responsible for the property and can be held responsible for property issues. If you vacate the home and contact the lender, they can accelerate or shorten the redemption period to complete the foreclosure process for you. During Redemption Period After the Sheriff’s sale is complete

57 At end of the Redemption Period, you will get an Eviction Notice and a Legal Notice of an Eviction Action in court. You can go to court to fight the Eviction. After the Eviction Date, the sheriff can move your belongings to the curb. After the Redemption Period - Eviction

58 Judicial Foreclosure Available: Yes Non-Judicial Foreclosure Available: Yes Timeline: Typically 180 days Sale Publication: 30 days Redemption Period: 30 – 365 days Sale/NTS Sheriff Foreclosure information courtesy of RealtyTrac Housing Information courtesy US Census Bureau Which law provision governs Foreclosure in Detroit?

59 Judicial and Non-Judicial Foreclosures in Detroit The primary method of foreclosure in Michigan involves what is known as a “Non-Judicial” Foreclosure. This method does not involve the courts. This type of foreclosure process is also called “Foreclosure by Advertisement” because it requires public notices to be posted on the property and in the newspaper.

60 Judicial and Non-Judicial Foreclosures in Detroit In accordance with the new Michigan state law (effective July 5, 2009) requiring Pre-Foreclosure negotiations between servicers and homeowners, if a mortgage servicer is not willing to work with a homeowner, the owner has the right to demand a Judicial Foreclosure through the courts.

61 Repayment plan: The lender may be willing to agree to a repayment plan and split the late payment(s) up and tack them on to future monthly payments. Short refinancing: The lender may forgive some of your debt and refinance the rest into a new loan that you can afford. Loan modification: The lender may adjust the terms of the loan to make it affordable. They may lengthen the amortization schedule or lower the interest rate or include the past due amount into the loan and re-amortize the new balance so that you can pay the additional debt back over time. Avoiding Foreclosure Options

62 Short sale: The lender lets the borrower sell the house for less than the outstanding loan amount, takes the proceeds and forgives the remaining debt. Deed in lieu of foreclosure: You surrender the home to the bank and they sell it. Hard money loan: These loans have high rates and fees but may buy you enough time to sell the home and avoid foreclosure. Bankruptcy: Filing for bankruptcy will temporarily halt the foreclosure process and may force the mortgage lender to accept a more borrower-friendly repayment plan but a bankruptcy should only be considered as an absolute last resort. Doing so will remain on your credit report for ten years.

63 The U.S. Department of Housing and Urban Development (HUD) released its top 10 tips for homeowners who are facing foreclosure. These guidelines will assist homeowners who are struggling to pay their mortgage and could be threatened with foreclosure. HUD wants to encourage homeowners to take action and use every resource available so that they can get control of their finances and stay in their home.” HUD’s 10 tips for avoiding Foreclosure

64 If you are unable to make your mortgage payment: 1.Don’t ignore the problem. – The further behind you become, the harder it will be to reinstate your loan and the more likely that you will lose your house. 2.Contact your lender as soon as you realize that you have a problem. – Lenders do not want your house. They have options to help borrowers through difficult financial times. HUD’s 10 tips for avoiding Foreclosure

65 Open and respond to all mail from your lender. – The first notices you receive will offer good information about foreclosure prevention options that can help you weather financial problems. Later mail may include important notice of pending legal action. Your failure to open the mail will not be an excuse in foreclosure court. 4.Know your mortgage rights. – Find your loan documents and read them so you know what your lender may do if you can’t make your payments. Learn about the foreclosure laws and timeframes in your state (as every state is different) by contacting the State Government Housing Office.

66 Understand foreclosure prevention options. – Valuable information about foreclosure prevention (also called loss mitigation) options can be found on the internet at 6.Contact a non-profit housing counselor. – The U.S. Department of Housing and Urban Development funds free or very low cost housing counseling nationwide. – Housing counselors can help you understand the law and your options, organize your finances and represent you in negotiations with your lender if you need this assistance.

67 Prioritize your spending. – After healthcare, keeping your house should be your first priority. Review your finances and see where you can cut spending in order to make your mortgage payment. Look for optional expenses-cable TV, memberships, entertainment that you can eliminate. Delay payments on credit cards and other “unsecured” debt until you have paid your mortgage. 8.Use your assets. – Do you have assets-a second car, jewelry, a whole life insurance policy-that you can sell for cash to help reinstate your loan? Can anyone in your household get an extra job to bring in additional income? Even if these efforts don’t significantly increase your available cash or your income, they demonstrate to your lender that you are willing to make sacrifices to keep your home.

68 Avoid foreclosure prevention companies. – Many for-profit companies will contact you promising to negotiate a loan work out with your lender. While these may be legitimate businesses, they will charge you a hefty fee (often two or three month’s mortgage payment) for information and services your lender or a HUD approved housing counselor will provide for free if you contact them. – You don’t need to pay fees for foreclosure prevention help-use that money to pay the mortgage instead. 10.Don’t lose your house to foreclosure recovery scams! – If any firm claims they can stop your foreclosure immediately if you sign a document appointing them to act on your behalf, you may well be signing over the title to your property and becoming a renter in your own home! – Never sign a legal document without reading and understanding all the terms and getting professional advice from an attorney, a HUD approved housing counselor or trusted real estate professional.

69 69 Legal Assistance (eligibility requirement may exist): Acclaim Legal Services (248) Legal Aid and Defender Association (313) (information) (313) (intake) (313) (Wayne County) Legal Hotline for Michigan Seniors (60+) (800) Michigan Legal Services (313) (313) (Wayne County) Michigan State Bar Association’s Lawyer Referral Service (800) Neighborhood Legal Services of Michigan (313) United Community Housing Coalition (313) (Detroit only)

70 70 Resources Office of the Attorney General (517) Website: ACORN (Association of Community Organizations for Reform Now) Website: American Bar Association Website: Find Legal Help: Website:

71 71 Consumer Alert—Mortgage Foreclosure Scams Website: Detroit HOPE (Home Ownership Preservation Enterprise) Phone: (888) 995-HOPE Website: Freddie Mac Website: Fannie Mae Phone: (800) Website: Foreclosure "Rescue" Scams Website: Hold Onto Your Home Website: HUD (Housing and Urban Development). Website: Resources

72 72 Michigan State Housing Development Authority Website: Website: and/or Mortgage Bankers Association: Home Loan Learning Center Phone: (800) National Foundation for Credit Counseling Website: Statewide Foreclosure Prevention Task Force Phone: (734) Website: United Community Housing Coalition Phone: (313) U-Snap Bac Phone: (313) Website: Resources

73 73 Information and statistics in this presentation were obtained from the following: 1.www.makinghomeaffordable.gov 2.Detroit office of Foreclosure Prevention and Response 3.www.ForeclosureDetroit.org 4.www.Hud.gov 5.www.DetroitNews.com 6.www.MichBar.com 7.www.Michigan.gov

74 What Legacy are You Leaving? The dictionary describes legacy as something handed down from an ancestor or predecessor or from the past; or something acquired without compensation. “LEGACY is synonymous with birthright, inheritance, heritage and tradition.

75 What Legacy are You Leaving? Leaders have the ability to create and pass down a legacy. Will I leave behind a legacy where I made a positive impact on those around me? Did I leave a legacy where others saw that I invested my time, talent, and finances into things that were of eternal nature that were important to God? Did I take the time to plant seeds into the lives of others?

76 What Legacy are You Leaving? Was I generous in sharing all that I knew and had been given? Did I learn to talk less and listen more and to use the time that I was given wisely? Did I leave a legacy where my years on earth made the world a better place? Will my great-great grandkids know my name because of the life that I lived and because of the inheritance that I have left for them?

77 77 IN CLOSING: “You must be passionate, you must dedicate yourself, and you must be relentless in the pursuit of your goals. If you do, you will be successful!“ -Steve Garvey

78 78 The D&E Group 4532 Jonesboro Road 2nd Floor Forest Park, GA

79 79


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