Housing money to rescue foreclosed homes
Minneapolis Mayor R. T. Rybak says groups of real estate investors are buying what he calls collections of foreclosed houses.
"And in those properties which were once owned by stable homeowners, they're replacing them with renters who may be very problematic and have proved to be problematic in our neighborhoods," Rybak said.
The state says it will help create an $11 million loan and grant program to try prevent the predatory buying. The foreclosed homes will be purchased by the Greater Metropolitan Housing Corporation. Homes will be repaired and sold. Money from the sale goes back into the loan fund.
Paul Halvorson, director of Third Way Network, a north Minneapolis non-profit which does the same thing on a small scale says the $11 million might preserve 100 homes in the city.
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"There were almost 3,000 foreclosures last year in Hennepin County and the number will more than double this year so it's still a drop in the bucket. But hopefully it will leverage private and philanthropic resources to multiply this effort and try create a larger collective response from this community," Halvorson said.
Minnesota Housing Finance Agency Commissioner Tim Marx says the state alone does not have the resources to respond to the foreclosure crisis.
"We know much more needs to be done and if we're going to address this issue it's going to take many, many hands from the national government the state government and the local government, the entire homeownership industry, lenders (and) realtors to really work together and drill down and address this issue," Marx said.
Lenders are being asked to extend mortgage repayment deadlines to homeowners in trouble, according to Marx.
Tom Fulton, the head of the Family Housing Fund, the state's largest non-profit housing financier says private sector lenders are being asked to help in other ways.
"First of all by helping people who need counseling get counseling, so they avoid foreclosure to begin with and secondly, to minimize the time a foreclosed house goes (empty) until it's resold," Fulton said.
It can take a year to clear away red tape on a foreclosed home allowing it to be sold to another buyer.
The business the foreclosure crisis creates for some is evident on Minneapolis boulevards. Signs are blossoming like dandelions urging homeowners facing foreclosure to call a toll free number.
Minneapolis City Council President Barbara Johnson guesses the signs are a scam and will just hook homeowners into another bad deal.
"Our suggestion is if you're facing foreclosure call Minneapolis 311 and we'll get you to a legitimate counselor who will help you through the process," she said.
The Minnesota Housing Finance Agency gave St. Paul last week $500,000 to help create a similar revolving loan program to buy foreclosed homes. State officials say the Ramsey County foreclosure rate more than doubled from just over 600 homes two years ago to more than 1,400 homes last year. There are double- and triple-digit-percent increases in the number of foreclosures in Dakota and Scott counties, according to state officials.
