Archive for the ‘ Loans ’ Category

Top 21 Mortgage Terms

In the mortgage world there are a lot of terms that may be confusing. Because of this, we put together a “Top 21 Mortgage Terms” video that lists many common terms and their definitions. If there is a mortgage term that you don’t see and you have questions about – don’t hesitate to reach out to us, we are always happy to help and we are only a text, phone call or email away!

Visit our Mortgage Center on our website, or give us a call at 800-549-0194.

Top 10 Reasons to WooHoo! With Citizens

Citizens is the home of WooHoo! Banking® and ultimate service. We have the best products and services to fit your banking needs! Watch our latest video and you’ll see why you’ll want to WooHoo! with us too!

For more information visit us at:

Your Resolution, Your Home

new house

Is purchasing a new home on your list of resolutions and goals for 2018?  We found this helpful article that has some great tips on how you can reach that goal! Full article

And as always, our team of Citizens Mortgage lenders is only a phone call away if you have any housing questions you need answered – 800-549-0194. More information can also be found on our website at:


Citizens Bank Minnesota donates $15,000 and is committing up to $65,000 in total for Madelia Fire Disaster Relief

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Madelia has suffered a tremendous loss and Citizens Bank Minnesota is committed to supporting our fellow neighbors, businesses and friends and to help this small community rebuild after a fire that took place on Wednesday, February 3, 2016. Mark Denn, La Salle Branch Manager, and Fire Chief for Madelia Fire Department states,  “As an employee of Citizens and a volunteer fire fighter and Chief for Madelia Fire Department, I am amazed at how the surrounding fire departments and communities have come together to support Madelia. Words cannot express the gratitude and appreciation for all the help to rebuild Madelia’s main street!”

Citizens will donate $10,000 to the 10 area Fire Departments involved in the incident. A donation of $5,000 will be given to “Madelia Strong, Inc.”, which was formed locally to administer financial relief to those affected by the fire. Lastly, Citizens will establish up to $50,000 in interest free loan funds, to be administered out of their La Salle Branch, to be used for both personal and business purposes to those applicants that demonstrate job displacement or loss resulting from the fire.

Those interested in learning more about the loan program please contact our La Salle Branch at (507) 642-3121. Let’s get Madelia back on its feet!

Citizens Bank Minnesota is pleased to announce the following promotions:

986857 Citizens 075Julia Baumgartner, Senior Vice President

Baumgartner joined Citizens in 1991 as a Vice President and Commercial Loan Officer. She graduated Summa Cum Laude from Kansas State University with a B.S. degree in Finance as well as a B.A. in Spanish. She is also a graduate of the Commercial Lending School at the University of Oklahoma and the Graduate School of Banking at the University of Wisconsin.

986857 Citizens 033Tim Hoscheit, Senior Vice President

Hoscheit joined Citizens in 1986 as an Agricultural Loan Officer and was promoted to Vice President in 1991. He is a graduate of Western Wisconsin Technical College with an Associate Degree in Finance. He is also a graduate of the Graduate School of Banking at the University of Colorado.

Baumgartner and Hoscheit will be assuming senior management roles in the bank previously performed by Bill Brennan, who will be retiring in the spring.

What Is Really Happening With Fannie & Freddie!


If you’re a mortgage borrower your great goal in life is to get a lower rate. While 2012 saw the lowest mortgage rates in 65 years, 2013 and early 2014 have not been far off the mark.

In a plot worthy of a James Bond villain, there has been a decided effort in Washington to make the mortgage market less competitive, to assure that the lending system as we know it is  completely gutted and thus to artificially raise mortgage rates.


By replacing Fannie Mae and Freddie Mac with new firms created by the private sector — but backed with government guarantees. Without Fannie and Freddie costs to borrowers would rise, creating less housing demand but raising huge profits for replacement companies.

A year or two ago the end of Fannie and Freddie seemed like a done deal, but in a sudden reversal, it looks like the two giant mortgage buyers will remain in business for the foreseeable future.

Here’s what’s happening — and why:

Fannie Mae and Freddie Mac
Fannie and Freddie buy conforming loans from local lenders. These loans are bundled together and re-sold to investors worldwide. Such securities are then insured and guaranteed by Fannie and Freddie in exchange for guarantee fees (g-fees) — fees worth tens of billions of dollars annually.

So who should get the fees?

Until 2008, it was Fannie Mae and Freddie Mac who got the money, as well as their shareholders. However, with the nationalization of the two giant secondary lenders the picture is no longer so clear. For instance, in 2012 Congress increased the g-fees charged by Fannie Mae and Freddie Mac, not to improve their bottom line or lower mortgage rates, but to fund a temporary payroll tax reduction. In effect, Fannie and Freddie became cash cows to be milked by Congress.

The big battle is whether Fannie and Freddie should exist at all. There are several plans floating around Washington to replace the two big GSE with private firms, big companies created on Wall Street.

Not usually mentioned is that such plans to “privatize” the secondary market are unnecessary. There are already private firms that buy mortgages and then sell securities to investors. For instance, according to conservative financial writer James K Glassman, private companies controlled 67 percent of the secondary market in 2006 but only 14 percent in 2012.

Why did private-sector companies lose so much market share? It was these companies that securitized toxic and subprime mortgages, the loans most likely to fail and the financing at the heart of the mortgage meltdown.

What makes the DC “private sector” proposals different from the private companies long been active in the secondary market is that the new firms would be backed with federal guarantees, just like Fannie and Freddie. Taxpayers would implicitly be on the hook for any losses while all profits would go to investors. In other words, the new private companies would be exactly the same as Fannie and Freddie before the mortgage meltdown. Only the names on the dividend checks would change.

The government’s position in this matter for the past few years could not be more clear: The Federal Housing  Finance Agency — the bureaucracy that now runs Fannie and Freddie — actually produced a report which lays out the whole plan.

How do we know? Just look at the title: “FHFA’s Initiative to Reduce the Enterprises’ Dominant Position in the Housing Finance System by Raising Gradually Their Guarantee Fees.”

The idea is not to create private companies that through better products or lower costs would gain market share, but instead to purposely hobble Fannie and Freddie with higher costs so they can no longer compete effectively.

The plan to undermine Fannie and Freddie has been in high gear but is now facing resistance. Arguably, it may even be dead.

Net Worth Sweep
What happened to stop one of the biggest lobbying efforts in Washington?

Three things:

First, Fannie and Freddie are hugely profitable — and the profits are now collected by the government and used to hold down the deficit. Fannie has so far paid $114 billion to the federal government while Freddie has chipped in $71.3 billion. The two companies will easily repay the $188 billion advanced by the Treasury.

Payments to the federal government from Fannie and Freddie are not considered “income,” instead in the magical thinking of government finance they are defined as “negative outlays” that “reduce” spending and thus the deficit.

“Much of the drop in spending” for December 2013, said the Congressional Budget Office, “occurred because payments from the government-sponsored enterprises Fannie Mae and Freddie Mac to the Treasury were $34 billion more than they were last year.”

Second, unlike Citigroup, General Motors, Chrysler or AIG, federal claims against Fannie and Freddie will not end with the repayment of advances plus interest. In one of the most unusual financial strategies ever seen, last summer the government unilaterally declared that it was entitled to a “net worth sweep” from the two companies, meaning that it would take all profits and income from Fannie and Freddie.

If the government takes all income it means no cash is available to pay dividends to other shareholders or rebuild capital reserves. The government now faces multiple suits as a result of the “net worth sweep” policy because of claims that it’s violating the “taking” clause of the Fifth Amendment by not offering “just” compensation to shareholders.

No one knows how the courts will  rule on such claims, but prospects for the federal government are fairly grim. In the 1996 Winstar case, shareholders of illegally-seized savings-and-loan associations won $30 billion in compensation for the loss of their property. The claims from Fannie and Freddie shareholders could be substantially larger.

Third, given the flood of money generated by Fannie and Freddie, maybe their premeditated and artificial collapse is not such a good policy. Not only would the government lose dividend payments, it would also have new liabilities with their private-sector  replacements.

In addition — and not to be overlooked — with an end to Fannie and Freddie borrowers would face higher financing costs. Mark Zandi, the chief economist at Moody’s Analytics, told the Associated Press that privatization of the secondary market would increase the cost of a typical $200,000 mortgage by $75 to $135 a month — that’s $900 to $1,620 per year — with no additional benefit to borrowers.

You can see the impact of recent federal policies by looking at conventional and jumbo mortgage rates. In an historic reversal, jumbo loans are now cheaper than conventional mortgages because g-fees have pushed up the cost of conventional loans. This happens because jumbo financing is not purchased by Fannie Mae and Freddie Mac, thus such loans do not include g-fees.

The re-thinking of government policies was dramatically shown when still-another increase in the g-fee was announced in December and stopped in January. Interestingly, the increase was the last major act of outgoing FHFA Director Ed DeMarco — and the first for incoming Director Mel Watt.

Article taken from, written by Peter Miller, Contributor

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June Is American Housing Month

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6 Tips for Saving for Your Down Payment

Before you can make the transition from renting your home to owning your home, you will need to have a substantial down payment, typically 5 to 20 percent of the home’s value. The American Bankers Association suggests the following tips to help save for it:

​Develop a budget & timeline. 

Start by determining how much you’ll need for a down payment. Create a budget and calculate how much you can realistically save each month – that will help you gauge when you’ll be ready to transition from renter to homeowner.

Establish a separate savings account. 

Set up a separate savings account exclusively for your down payment and make your monthly contributions automatic. By keeping this money separate, you’ll be less likely to tap into it when you’re tight on cash.

Shop around to reduce major monthly expenses.

It’s a good idea to check rates for your car insurance, renter’s insurance, health insurance, cable, Internet or cell phone plan. There may be deals or promotions available that allow you to save hundreds of dollars by adjusting your contracts.

Monitor your spending.

With online banking, keeping an eye on your spending is easier than ever. Track where most of your discretionary income is going. Identify areas where you could cut back (e.g. nice meals out, vacations, etc.) and instead put that money into savings.

Look into state and local home-buying programs. 

Many states, counties and local governments operate programs for first-time homebuyers. Some programs offer housing discounts, while others provide down payment loans or grants.

Celebrate savings milestones.

Saving enough for a down payment can be daunting. To avoid getting discouraged, break it up into smaller goals and reward yourself when you reach each one. If you need to save $30,000 total, consider treating yourself to a nice meal every $5,000 saved. This will help you stay motivated throughout the process.

Article taken from American Bankers Association, June 2014

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