In the first half of this year, foreclosures in Minnesota were down nearly 50 percent from the same period three years ago.
More than 1,100 homes each month were lost to foreclosure during that span, a big drop from the number during the height of the housing collapse.
In the first half of 2010, lenders were auctioning off more than 2,100 homes each month, according to a Minnesota Homeownership Center report.
Statewide, there were 6,795 foreclosures in the first two quarters of 2013, a drop of 29 percent from the same period in 2012. The Twin Cities metro area saw a decline of 33 percent. Fewer Minnesota homeowners are struggling with mortgage payments than at any time since 2006.
Although the situation is improving, foreclosures are still running about three times above their average rate, and plenty of homeowners are still struggling. But provisions of a new state law that took effect this month allow them to stop foreclosure if the process is not being properly conducted.
Lenders and housing advocates agree foreclosures are generally handled better than they were several years ago when mortgage delinquencies exploded and banks were overwhelmed. But there are still problems.
Sometimes a homeowner behind on a mortgage isn't offered available loan restructuring options. Sometimes they're lost in the shuffle, trying to restructure a loan with one person at a bank only to have another person at the same bank pressing ahead with a foreclosure. The new Minnesota law gives new power to borrowers caught up in those situations.
"It filled an important gap that was really missing and we hope that it will really make a difference in peoples' lives," said Ron Elwood, supervising attorney at the Legal Services Advocacy Project.
Elwood, who helped write the law, said homeowners in Minnesota who are facing foreclosure now have a legal right to challenge the action. The only other state to offer borrowers such protections is California. He said the new law is an example of legislation catching up with common sense.
"This is a fail-safe, essentially, to make sure that nobody is going to lose their home unnecessarily and stop foreclosures that are avoidable and that's everybody's goal: the banks, consumers advocates, the government - everybody," he said.
Lenders are much-better positioned to handle foreclosures than they were a few years ago, in part, because foreclosures have become so common, said Tess Rice, general counsel for the Minnesota Bankers Association, which also helped write the law.
She said problems that led to the consumer protection effort are no longer as prevalent as they once were.
So far, neither the bankers' association nor housing advocates know of any Minnesotan who has used the new provision to stop a foreclosure on a claim that it was wrongly proceeding.
"It's not going to be a big deal for the servicers because they are already doing this to comply with federal law, most of it," Rice said. While all sides agree the foreclosure process is running much more smoothly than it did a few years ago, mistakes still abound, said Dan Williams, who oversees foreclosure counseling in Minnesota for the Lutheran Social Service.
Williams said in most cases, lenders right wrongs when groups like his point them out. But when lenders are uncooperative, the new law provides a powerful incentive.
"If worse came to worse and a lender wouldn't do the things that they should ... it allows a person to take private action, secure an attorney and if, you know, the attorney wins the case it allows the fees for the court procedures and the attorney's fee required to be paid by the servicer," he said.
Williams said he is concerned about the possibility of scam artists trying to profit from the new law. He and other advocates encourage people who foresee difficulties paying their mortgage to immediately contact reputable counseling services.