Facing Foreclosure? Late on House Payments?
If you are, the most important thing you can do is to get help now! There are resources available for you.
- Home Ownership Center of Minnesota
- Minnesota Housing Finance Agency
- Lutheran Social Services Debt Counseling Services
How the Foreclosure Crisis Began
In the late 1990s, the housing industry was booming, with increased demand and low interest rates. Because of these forces, many citizens rushed into misleading and confusing mortgages that allowed them to borrow outside of their ability.
These mortgages were mainly of two forms: Adjustable Rate Mortgages and 2/28 Adjustable Rate Mortgages.
Adjustable Rate Mortgage (ARM)
A mortgage consisting of a changeable interest rate throughout the term of the loan; the interest rate annually adjusts, eventually making the premium unmanageable for the homeowner.
Commonly known as a "subprime mortgage" this is a different form of an ARM, where the loan begins with a two-year "teaser" rate (which the homeowner can afford), then significantly readjusts out of the teaser rate into the full interest rate in the third year for the duration of the mortgage.
According to the Department of Housing and Urban Development (HUD), the majority of these loans were created between 2004 and 2006, and they have begun to readjust, leading to the foreclosure crisis in 2006, 2007, and projected in 2008.
The process is complicated, but here is a summary of the steps in a foreclosure process:
- 1st missed payment: Lender calls and sends letter.
- 2nd missed payment: Considered in "default."
- 3rd missed payment: Begin foreclosure process.
- 4th missed payment: Notice of foreclosure sent to homeowner, lender attorney involved.
- 5th missed payment: Sheriff sale date scheduled and published for 6 consecutive weeks.
- 6th and 7th missed payment: Sheriff sale occurs.
- Home owned by bank: Mortgage given 6-month redemption period.
- After 6 month redemption period: Home vacant and full responsibility of the bank.
Suspicious Activity in Forclosed-On Homes
We need the community's help. If you believe the home next to you has been foreclosed on, and you see suspicious activity, please notify the police by calling 911.