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<br />
<br />Based on these concerns, Sen. Ann
<br />Rest (DFL-New Hope) and Rep.Jim
<br />Davnie (DFL-Minneapolis) introduced
<br />SF 2914 and HF 3516, which require
<br />more comprehensive data on notices of
<br />pendency, including the street address,
<br />name of the lender, and whether the
<br />property is owner-occupied, renter-
<br />occupied, or commercial. The bills also
<br />create a group to study the develop-
<br />ment of a statewide foreclosure collec-
<br />tion and reponing s,ystem.
<br />
<br />Preventing foreclosures
<br />Outreach and intervention services can
<br />be effective tools for homeowners.
<br />However, they are only successful if
<br />homeowners are connected with them
<br />early on. Based on recommendations
<br />of the foreclosure prevention working
<br />group, Sen. Linda Scheid (DFL-Brook-
<br />lyn Park) and Rep. Mullery introduced
<br />SF 2912 and HF 3475 to make the
<br />foreclosure process easier for home-
<br />owners to understand. The bills make
<br />foreclosure prevention counseling
<br />notices available to homeowners, and
<br />change the process for redemption
<br />and sheriff's sales.
<br />Sen. Ellen Anderson (DFL-St. Paul)
<br />and Rep. Oavnie are proposing a one-
<br />year subprime mortgage deferment.
<br />Titled the "Minnesota Subprime
<br />Foreclosure Deferment Act of 2008,"
<br />SF 3396 and HF 3612 would allow
<br />borrowers who obtained either a sub-
<br />prime loan or a loan with a negative
<br />amortization betwe'enJanuary 1,2001,
<br />and August 1,2007, to defer the fore-
<br />closure for up to one year. "A number
<br />of proposals have been introduced to
<br />give homeowners new tools to prevent
<br />foreclosure," Anderson said in a press
<br />release. uThe deferment option sim-
<br />ply allows them additional time to put
<br />those tools to good use."
<br />Under this proposal, borrowers
<br />would still have to make monthly pay-
<br />ments, but they'd pay the less of either
<br />65 percent of their current montWy
<br />payment or the minimum monthly
<br />payment they had when they first got
<br />the loan. The League supports the con-
<br />cept of a one-year deferment on sub-
<br />prime mortgage foreclosures. This
<br />would allow homeowners more time
<br />to work out an agreement with lend-
<br />ers, while staying in their homes and
<br />remaining active in their communities.
<br />
<br />APRIL 2008
<br />
<br />Cities take action, too
<br />Cities have also taken action to help
<br />homeowners stay in their homes and
<br />ward off problems associated with
<br />foreclosures.
<br />For example, Brooklyn Park, which
<br />has the second-highest number of fore-
<br />closed homes in Hennepin County, has
<br />created a comprehensive strategy to pre-
<br />vent foreclosures as well as to specifi-
<br />cally address issues that arise during the
<br />foreclosure process. The city's strategy
<br />focuses on prevention, identifying vacant
<br />and foreclosed properties, and rehabili-
<br />tating properties. With these initiatives,
<br />Brooklyn Park hopes to reduce the
<br />number of foreclosures and, when they
<br />do happen, to preserve the homes so
<br />they can quickly be sold to new owners.
<br />Similarly, Oakdale officials have an
<br />action plan to address the problem.
<br />The city has had almost a 100 percent
<br />increase in the number of foreclosed
<br />properties from 2006 to 2007. Its efforts
<br />will concentrate on education and pre-
<br />vention, home rehabilitation, and moni-
<br />toring foreclosed homes. City staff will
<br />collect data regarding foreclosures and
<br />share it with Oakdale police, fire, and
<br />code enforcement staff to coordinate
<br />their efforts.
<br />Through efforts like this, cities can
<br />help combat this problem while pre-
<br />serving the viability and safety of their
<br />communities.
<br />
<br />Federal government initiatives
<br />At the federal level, President Bush
<br />announced the HOPE NOW Alliance,
<br />which sets up industry-wide stand-
<br />ards to provide systematic relief by
<br />either refmancing loans or freezing
<br />interest rates. Borrowers can visit
<br />www.hopenow.com or call (800)
<br />995-4673 for information.
<br />Through the creation of the HOPE
<br />NOW Alliance, six of the major lenders
<br />who hold 50 percent of mortgages in
<br />the United States have agreed to par-
<br />ticipate in Project Lifeline. This calls for
<br />lenders to voluntarily provide a 30-day
<br />pause on foreclosures for homeowners
<br />who are at least 90 days behind on pay-
<br />ments. The goal is to give borrowers a
<br />chance to work out new terms with
<br />their lenders. Recent reports on these
<br />two initiatives have been mixed. Critics
<br />say the programs have not reached as
<br />many people as intended.
<br />
<br />MINNESOTA CITIES
<br />
<br />The crisis isn't over yet
<br />It's likely that the full ramifications of
<br />the subprime market and subsequent
<br />foreclosures have not fully played out.
<br />Thousands of subprime mortgages
<br />are scheduled to reset in the next 18
<br />months. Many cities are already seeing
<br />the effects foreclosure are having on
<br />their neighborhoods and addressing
<br />them accordingly. The League encour-
<br />ages cities that are not already facing
<br />problems related to foreclosed and
<br />vacant properties to proactively address
<br />foreclosures by working with lenders
<br />and homeownership counselors, and
<br />rehabilitating deteriorated homes. ...
<br />
<br />Hue Nguyen is intergovernmental relations
<br />representative for the League of Minnesota
<br />Cities. Phone: (651) 281-1260. E-mail:
<br />hnguyen@lmc.org.
<br />
<br />STAGGERING
<br />FORECLOSURE STATS
<br />
<br />According to the Mortgage Bankers
<br />Association, mortgage delinquencies
<br />and foreclosures are the highest since
<br />the group began coUecting dala in 1979.
<br />RealryTrac, which tracb foreclosures
<br />nationwide, reponed that foreclosures
<br />affected 1.3 million properties in 2007.
<br />It is estimated that 1 percent of all U.S.
<br />households nationwide were in some
<br />stage of foreclosure during 2007.
<br />
<br />The situation in Minnesota is not any
<br />bener. HousingLink, a Twin Cities-based
<br />organization that specializes in the
<br />collection and discribution of affordable
<br />housing information, reported 6,466
<br />sheriff sales in Minnesota in 2005.
<br />Sheriff saIes in 2007 are estimated at
<br />20,573--a 218 percent increase. If
<br />current trends continue. foreclosures in
<br />2008 could reach as many as 30,000.
<br />
<br />In 2007, according to the MinnesOta
<br />Housing Finance Agency, the seven-
<br />counry metro area suffered from 13,000
<br />foreclosures, and 8,000 of them occurred
<br />in Hennepin and Ramsey Counties.
<br />The foreclosures seem to be concen-
<br />trated in certain zip codes. In the 10 zip
<br />codes with the most foreclosures, there
<br />are 6.900 owner-occupied homes with
<br />subprime loans, and 24 percent of those
<br />loans are delinquent or in foreclosure.
<br />
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