Pawlenty, lawmakers take action on foreclosures

Foreclosed
Gov. Pawlenty announced $4.8 million in additonal funding that he said could help prevent more than 7,000 foreclosures.
MPR Photo/Brandt Williams

Pawlenty said he wants to do everything possible to help the growing number of homeowners who are facing foreclosure.

He said a $4.3 million federal grant to the Minnesota Housing Finance Agency will help expand a statewide network of foreclosure counselors who can reach out to Minnesotans who are at risk of losing their homes.

"This money will allow us to essentially double the number of counselors that are going to be available in Minnesota for this effort," he said. "Thirty-seven additional foreclosure counselors will be added to the current effort statewide, for a total of 76 counselors. We believe these additional counselors will help prevent in excess of 7,000 foreclosures during this upcoming year."

Pawlenty announced back in November that the state would hire additional foreclosure prevention counselors. At that time. the Minnesota Housing Finance Agency dedicated $1 million to the effort, while private and local agencies kicked in $800,000.

Pawlenty said counseling can often help to avoid or rework foreclosures. Julie Gugin of the Minnesota Home Ownership Center agrees. Gugin said her organization tells homeowners that help is available if they act on mortgage problems early.

"In many, many situations, we are extremely successful in keeping people in their homes, helping them avoid foreclosure," she said. "And if foreclosure ultimately is inevitable, helping them prepare for stable housing for their family into the future."

A year ago, state lawmakers cracked down on many of the predatory lending practices blamed for creating the mortgage foreclosure crisis. This year the Legislature is trying to continue the effort through dozens of different bills.

One measure allows tenants in rental properties to take over utility payments if the property owner is facing foreclosure and not paying the bills. Another would require landlords to notify renters when they're losing their property.

Rep. Jim Davnie, DFL-Minneapolis, said lawmakers are resolving many smaller problems related to the mortgage crisis.

"I think these bills are concrete, real world specific responses to different aspects to the foreclosure crisis," he said. "We're really peeling back the onion."

"I think these bills are concrete, real world specific responses to different aspects to the foreclosure crisis."

Neither the House nor Senate has taken final action on a more controversial bill that would defer mortgage foreclosures for a year.

The measure would allow homeowners with subprime loans to avoid the loss of their property while making partial monthly payments. Davnie said the bill is a bold and balanced approach.

"This is a crisis for families across the state," he said. "We can, if we act decisively, prevent avoidable foreclosures in Minnesota for 15,000 families, and that's our goal."

Gov. Pawlenty described Davnie's deferment proposal as well intended, but said he's leaning toward a veto if it lands on his desk. Pawlenty said deferring foreclosures could have an unintended effect on credit and interest rates for all homeowners in the state.

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