Report: Minn. foreclosures dropped 12% from 2008

A new report from the Minnesota Home Ownership Center says the state had 23,000 foreclosures last year, a drop of 12 percent from 2008 levels, when foreclosures reached their highest levels.

The report is based on sheriff's sales data collected from all 87 Minnesota counties. Sheriff's sales mark the point at which a homeowner loses ownership of a foreclosed property.

The Minnesota Home Ownership Center's spokesman Ed Nelson said the decrease is encouraging, but it's unclear if it will establish a downward trend.

"What we see with foreclosures in the state of Minnesota is that while the numbers are down slightly for 2009, we'll have foreclosure issues in Minnesota for a while," Nelson said.

Nelson and others say that while the actual sheriff's sales numbers were down in 2009, signs of trouble still proliferated. Mortgage delinquencies were on the rise, and pre-foreclosure notices in Minnesota climbed higher than actual foreclosures. Experts say that means there are still a lot of troubled mortgages out there; they're just taking a long time to work their way through the foreclosure process and show up in sheriff's sale data.

"... while the numbers are down slightly for 2009, we'll have foreclosure issues in Minnesota for a while."

A customer at a Wells Fargo "Home Preservation Workshop" on Wednesday reflects those trends. Lisa, who only wanted to use her first name, has so far avoided foreclosure, even though she and her husband both had nearly two years of unemployment. They paid the mortgage using retirement savings for a while, but Lisa was reluctant to deplete her retirement savings entirely, and turned to Wells Fargo for assistance.

"I've been working on this for a year," Lisa said.

Lisa's back at work now and Wells Fargo recently approved a mortgage payment plan for her family. The lender's workshop continues Thursday until till 7 p.m. at the St. Paul RiverCentre. It allows Wells Fargo clients experiencing mortgage difficulties to meet face-to-face with loan modification specialists. Walk-ins are welcome.

But several studies are showing that many modification programs are ineffective.

The U.S. Treasury Department said Wednesday that as of last month, the government's mortgage relief plan has helped about 12 percent of borrowers who signed up since President Barack Obama announced the program a year ago. As of last month, about 116,000 homeowners had completed the application process and had their loan payments reduced permanently. That compares with more than one million homeowners who started the process.

Minnesota Congresswoman Betty McCollum, who stopped in to observe the Wells Fargo event, said she and her colleagues are studying why the federal mortgage relief program isn't performing better.

"We're looking into that and trying to figure out why that happened," McCollum said. "When we first rolled the program out, there were problems with it. Chairman [Barney] Frank has been having hearings on it. The committee is looking at it very seriously. Was it the way it was being implemented? Was it the way we wrote the law?"

McCollum said the program grew out of a strong desire to help homeowners, but she admits that the novelty of the task may have led to legislators writing "an unworkable law." She said she's reviewing the matter currently.