Joe and Pam Sutton have lived on this hobby ranch in rural Hubbard County for seven years. They built the home themselves. The couple fenced off 26 acres of pasture for their 10 horses.
"That's Parker the stallion making the noise," Joe says. "And this is one of our mares, Jordan... and they're our friends."
For a while, times were good for the Suttons. Joe had plenty of work as a self-employed construction contractor. But Joe says the housing market took a dive a few years ago. His construction business slowed to a crawl.
The couple put their house up for sale in 2004, but even at a drastically-reduced price, they couldn't find a buyer. Joe says things came to a head about a year ago.
“You get published in the newspaper. Everyone is going to know it anyway, and know you're not going through it alone.”Pam Sutton
"If the phone don't ring, I don't work; that's the bottom line," Sutton says. "There was no money coming in so we just all of the sudden were really struggling making payments."
The bank foreclosed on the house this summer; the Suttons have to be out in six months. Pam says their credit will be ruined for awhile and they'll probably have to rent until they get back on their feet. Pam says she and Joe were embarrassed about going through foreclosure.
"There's some humility involved in this and I just swallow my pride. It's going to happen. You get published in the newspaper. Everyone is going to know it anyway," Sutton says. "And know you're not going through it alone. Cause there's going to be a whole lot of people... So we're not going to be alone."
Experts say the Sutton's story is being repeated across the state at an alarming rate. The new study from the Greater Minnesota Housing Fund shows there were more than 11,000 foreclosures statewide last year, nearly double what was previously reported by a national study. Outside the seven-county metro area, foreclosures jumped from about 2,707 in 2005 to 4,168 in 2006. That number is projected to exceed 8,700 this year.
For all greater Minnesota counties, there was a 48 percent increase in the number of foreclosures between 2005 and 2006. If projections for this year hold true, there will be a 91 percent increase in foreclosures between 2006 and 2007, resulting in a total of more than 15,000 foreclosures over the past two years.
The study shows counties just outside the seven-county metro area are the hardest hit. Chisago and Isanti counties top the list with a projected three foreclosures for every 100 households. That's more than three times the average rate in the metro area.
Experts say subprime lending is to blame for much of the increase. Subprimes are higher interest loans offered to people with less than sterling credit. In Minnesota, subprime loans account for a quarter of all loans in small communities and closer to half of all loans in some counties.
Some lenders were giving mortgages to people that just couldn't afford it, according to Housing Fund President Warren Hanson.
"Thousands of families, thousands more families than we ever expected, are having their finances ruined, essentially, by foreclosure because they were tempted by cheap credit and sometimes tempted by predatory lenders who perhaps made the story sound a lot better than it could ever have been," Hanson says.
The foreclosure problem in Minnesota is most noticeable in low income urban areas. In north Minneapolis, boarded up, foreclosed homes invite vandalism and lower property values.
That doesn't appear to be happening yet in greater Minnesota according to Tim Flathers, with the Headwaters Regional Development Commission in Bemidji. Flathers says the number of foreclosures in some counties in the Headwaters region is projected to double or triple this year. But so far, foreclosed homes appear to be scattered over a wide area. Flathers worries that could change.
"The part that is of major concern is that we see a trend that is increasing fairly dramatically. And we don't really know right now what the future holds if you go out a year or two from now," Flathers says. "Are we just at the tip of the iceberg? I'm not sure... There could be a lot more people out there that are in a precarious situation right now."
Agencies that provide financial counseling for people going through foreclosure say their resources are being strained by a record number of requests. Julie Gugin, director of the non-profit Minnesota Home Ownership Center in St. Paul, says there's an urgent need for more counselors to deal with a record number of requests.
Gugin's advice for people having trouble with mortgage payments is to get help as soon as possible.
"It's a natural response to crisis or people not to necessarily want to talk about their situation. But the sooner they act, the sooner they seek services and counseling, the more options they have. So we really encourage people to seek that out," Gugin says.
Observers hope new state regulations that went into effect this month will help slow the foreclosure trend. The new rules increase mortgage lender accountability and prohibit people from borrowing more than a property is worth.