Foreclosure moratorium extended to February 28 2021

The following news release was posted on the Federal Housing Finance Agency site.  It is important to note that this does NOT apply to every mortgage everywhere.  Many mortgages are owned by Fannie Mae or Freddie Mac, but not all of them. Still, this moratorium and possibility for forbearance will help many people.  See at the bottom of this post for instructions on how to look up your mortgage.

"1/19/2021

​Washington, D.C. – Today, the Federal Housing Finance Agency (FHFA) announced that Fannie Mae and Freddie Mac (the Enterprises) will extend the moratoriums on single-family foreclosures and real estate owned (REO) evictions until February 28, 2021.  The foreclosure moratorium applies to Enterprise-backed, single-family mortgages only. The REO eviction moratorium applies to properties that have been acquired by an Enterprise through foreclosure or deed-in-lieu of foreclosure transactions. The current moratoriums were set to expire on January 31, 2021.

“To keep our communities safe, and families in their homes during the COVID-19 pandemic, FHFA is extending Fannie Mae and Freddie Mac's foreclosure and eviction moratorium," said Director Mark Calabria. 

Currently, FHFA projects additional expenses of $1.4 to $2 billion will be borne by the Enterprises due to the existing COVID-19 foreclosure moratorium and its extension. FHFA continues to monitor the effect of the foreclosure and eviction moratorium on borrowers, the Enterprises and their counterparties, and the mortgage market and extend or sunset its policies based on the data and health risk.

The Enterprises continue to offer comprehensive loss mitigation programs for borrowers with eligible hardships. These programs, which were established pre-pandemic and have helped more than 4.5 million families stay in their home, will remain available even when COVID-19 forbearance flexibilities end.

Under the comprehensive loss mitigation programs, qualified borrowers with a financial hardship that affects their ability to pay their mortgage may be eligible for temporary forbearance of up to 12 months, whether their hardship was caused by COVID-19 or not. Qualified borrowers can also obtain loan modifications to assist their ability to resume regular monthly payments once their hardship is resolved."

According to www.https://www.makinghomeaffordable.gov 

"To find out if Fannie Mae or Freddie Mac owns your loan, use their respective loan lookup tools or contact your mortgage company to ask who owns your loan. 

FANNIE MAE, 1-800-2FANNIE (8am to 8pm EST), KnowYourOptions.com/loanlookup 

If you mortgage is owned by Fannie Mae, visit Know Your Options to learn more about foreclosure assistance options.

FREDDIE MAC, 1-800-FREDDIE (8am to 8pm EST), FreddieMac.com/mymortgage 

If you mortgage is owned by Freddie Mac, visit My Home to learn more about foreclosure assistance options.

Credit Card Authorized User Issues

Many of my clients are married and have credit cards that at least look like they are joint cards.  It can be confusing to figure out which of the two of them is obligated on a credit card.

If you have a credit card with someone else, the second person can be either a "joint account ownerr" or an "authorized user".  

An "authorized user" is a someone who is allowed to make purchases using your credit card.  Usually that someone has their own card with their name on it.  However, they are not legally responsible to pay the account, because they are not the account owner (although if they sign the credit card slip or terminal at the merchant I suppose it is possible the merchant could pursue them.  I think that is unlikely.)

If you, as the authorized user, don't have a credit history, or if you want to improve your score, being an authorized user on someone else's card might improve your own credit score if you are current and if the card issuer reports to the credit reporting agencies (as most do).  This is because the card issuer will report your usage to the credit reporting agency in your name as well as in the name of the account ownerr.  

However, as the account owner, adding an authorized user exposes you to the frolics and mistakes of the authorized user.  If they go out and have a party on your card, or if you trust them to make the payments on the card and they "forget", your credit score can be dragged down.  Worse, you are legally responsible for the permitted use of your card, so the card issuer can sue you.

If you are the authorized user, and if it is the account owner who is messing up, you can ask to have your name removed from the card.

Minnesota law provides that if you are joint account owners with your spouse "Either spouse may close a credit card account or other unsecured consumer line of credit on which both spouses are contractually liable, by giving written notice to the creditor." Minn. Stat. 519.05, subd. (b).

If you are in financial trouble, feel free to contact me at 320-252-4473.

What is the "means test"?

There are two types of bankruptcy usually used by individuals -- Chapter 7 and Chapter 13.  Either can help you deal with your finances.  Chapter 13 is a payment plan type bankruptcy, that lets you pay your bills, or a portion of your bills, over three to five years.  Chapter 7, on the other hand, wipes out your dischargeable debt without a payment plan, and usually takes about four months. 

However, in 2005 Congress, after a massive lobbying campaign, enacted something called the "means test".   In the means test we add up all your income for the six months (not including the month of filing) before your case is filed.  We then divide by six, and the result is your "current monthly income". 

If your "current monthly income" is less than the median income in Minnesota for a household of the same size as yours, you "pass" the means test.  

If on the other hand your "current monthly income" is more than the median income in Minnesota for a household of the same size as yours, we go on to substract specific monthly expenses, such as mortgage payments, car payments, tax withholding, and living expenses.  Some of these expenses are what you actually spend; some of these expenses are limited to amounts specified by the Internal Revenue Service.  If there is a surplus after completing the means test there is a presumption that your case is a substantial abuse and the US Trustee may ask the court to force you into a chapter 13.

The median income is adjusted periodically according to Census Bureau information.  For example, in December, 2020 (when this post is written), the median income is as follows:

     Household of one -- $61,811

     Household of two -- $81,478.00

     Household of three -- $100,430.00

     Household of four -- $118,646.00

     For each household member over four, add $9,000.00.

As always, if you have questions, feel free to call me at 320-252-4473 to set up a meeting by Zoom, telephone or in person.  

Priorities in estate planning

Do you have a will or an estate plan? For about half of Americans, the answer is “No”. The website The Motley Fool says that estate planning is an opportunity to provide for loved ones and protect your own interests in the face of life’s uncertainties.

Many people think only the rich need to do any estate planning. But, if you have a family (most especially if you have a blended family – children with someone not your current spouse) you should consider having an estate plan. For instance, if you have children from a prior marriage, if you die without a will you may “disinherit” them. When done properly, an estate plan can help you resolve issues ranging between designating a guardian for children to passing on a family-owned small business and hopefully avoiding or reducing any intra-family conflicts.

Even if you already have a will, family changes like marriage, divorce, births and deaths happen. These life events can render an estate plan obsolete.

Also, estate planning does not mean only what happens after your death. You may want to include a Health Care Directive (often called a living will) and a durable power of attorney. The Health Care Directive is in case you cannot communicate your health care wishes; the durable power of attorney in case you are no longer able to make your own business decisions.

You may have individuals who rely on you, such as minor children or incapacitated adult family members. An estate plan can help provide that their care and maintenance continues even if you are unable to provide it yourself. You can name a guardian for your children in your will and someone to take care of your minor child’s money.

If you want to talk more about estate planning issues, call me at 320-252-4473 to talk about it.

Basic Estate Planning Documents

If you are a Minnesota resident, there are three estate planning documents you should consider:

First, a will. A Will leaves your property to whoever you want when you die. If you don’t have a Will, Minnesota law will decide who gets your property; and it might not go to who you want if you die without a Will. A Will can also simplify the process of probate after your death, appointing a personal representative, which is what Minnesota calls an executor, and make sure that the personal representative does not have to post a bond. A Will may be especially important if you have children from more than one marriage, or if you have children from a prior message, as the law of intestacy (dying without a Will) can have results you would not expect, such leaving the home you share with your spouse partly to your spouse and partly to children from a prior marriage. If you have children who are under eighteen, you can include a contingent trust in your Will to have the money administered with more flexibility than leaving it directly to your minor children.

The second document is a Health Care Directive. A Health Care Directive lets someone else make medical decisions for you if you are unable to make those medical decisions yourself. Most people name their spouse as their health care agent and then name one of their children as an alternate. It is important that the health care agent know that the directive exists and where to find it. There is a very simple form located at: https://honoringchoices.org/health-care-directives/english-directives

The third document is a Durable Power of Attorney. (It is called "Durable" because it remains effective if you become mentally incompetent.) A Durable Power of Attorney permits someone to handle your affairs if you can’t. Many people think that they don’t need a Power of Attorney because their spouse is named as co-owner of bank accounts and is on the deed to the house. But a spouse cannot sign contracts, deeds, tax returns and other documents for you just because they are named as a co-owner on an account. Most people name their spouse on the power of attorney, and name one of their children as an alternate. It is very important, however, to know that a Durable Power of Attorney is literally a blank check, so you need to have the utmost confidence in the person you name. Every year there is a news story about a child who stole a lot of money from their parent. You can name two persons who are required to act jointly.

I can help you with all of these, if you wish. Feel free to visit with me, either in person or remotely.  Call my office at  320-252-4473

If you vote by mail ....

You would have to not own a television to not know that a Presidential election is a few days away.  Personally, I know how I am going to vote, and am already tired of political commercials.  Minnesota is apparently a battleground state, so I suppose we can expect the deluge of ads to continue until November 2.  If you want to talk politics, call me and we can discuss.  But I am trying to keep this post non-political. And when voting, remember that there are a lot of contests on the ballot in addition to the election of a President. My sample ballot has elections for: 21 Judges, school board, mayor, city council, soil and water district, state representative, state senator, US representative, US senator, and the President.

I know that many people will be voting by mail/absentee.

If you choose to vote by mail, you may want to verify that your ballot was received.

The Minnesota Secretary of State office has a "check your ballot" page.  Here is the link:

https://mnvotes.sos.state.mn.us/AbsenteeBallotStatus.aspx

Still time to get $1200 stimulus payment

 I received teh following email from the National Consumer Law Center:

Help needed to reach 12 million non-tax-filers facing September 30 and October 15 deadlines to claim their stimulus payment!

Dear friends and allies, The Coronavirus Aid, Relief, and Economic Security (CARES) Act provided economic impact payments to individuals up to $1,200 to help dampen the impact of the economic fallout of COVID-19. Most people have already received their payments via direct deposit, check, or prepaid debit cards.  But 12 million people who desperately need and are eligible for the stimulus payments could miss out unless they take action by October 15 – and we need your help to reach them.  This group of people, who do not typically file tax returns, includes very low-income families with children, people who have been disconnected from work opportunities for a long period, and many low-income adults not raising children in their home. A simple IRS form they may not know about now stands between them and their much-needed stimulus funds. Please help spread the word by alerting people to fill out the IRS’s “Non-Filers” Form.  Additionally, the IRS is extending to September 30, 2020 the deadline for recipients of Social Security, federal disability benefits, and other benefits – who have already received their individual payment – to apply for an additional $500 for each qualifying child.

Take action to spread the word about the September 30 and October 15, 2020 deadlines for non-filers to complete the IRS form to receive their Economic Impact Payment.

The Center on Budget and Policy Priorities (CBPP) has just issued a new analysis on the estimated 12 million people who are eligible for Economic Impact Payments (EIP) but who must file an online form with the IRS by October 15 to claim the funds this year or must file a 2020 tax return next year to receive it in 2021. The paper provides demographic information, state by state numbers, and suggestions for steps that states, as well as community and legal service providers, can take to help the most vulnerable individuals claim the substantial economic stimulus payment.  Action Item Spread the word in your program and communities. CBPP has developed resources to support EIP outreach work including flyers, press release templates, FAQs, and additional outreach tools.  Please also spread the word that people who received an EIP prepaid card should activate it or replace it to receive their money. More information Center for Budget and Policy Priorities: Aggressive State Outreach Can Help Reach the 12 Million Non-Filers Eligible for Stimulus Payment IRS takes new steps to ensure people with children receive $500 Economic Impact Payments Center for Budget and Policy Priorities: Stimulus Payments Outreach Resources NCLC: IRS Sending Letters About Unactivated Stimulus Prepaid Cards NCLC: The EIP Stimulus Payment Prepaid Card: Not a Scam; How to Avoid Fees (sample card and mailer) NCLC's COVID-19 website (continually updated) has extensive information on responses to the crisis, including state-by-state information on orders that have been issued. We hope you are staying healthy and thank you for joining us to ensure those most in need of Economic Impact Payments receive them.