When the foreclosure rate declined by 12 percent last year, it looked like the housing crisis that has affected more than 88,000 homes since 2005, had turned around.
But housing experts in Minnesota predict some parts of the state could see a second wave of foreclosures this year.
One of the new hot spots may be in the Brainerd Lakes area, where the unemployment rate is nearly 19 percent -- the highest jobless rate of any large city in Minnesota.
Mike and Cathy Borgie have struggled to keep up with their bills. Mike is a chef and restaurant manager who's been out of work for a year. Cathy works at a local department store but recently had her hours cut to just one shift a week.
They both receive unemployment checks, but it's not enough. They're usually behind on their utility bills. More often than not, they're 30 days past due on their mortgage payment for their four-bedroom rambler on eight wooded acres just outside Brainerd.
"Every month that goes by it's tougher and tougher for us," Mike Borgie said. "We're so discouraged... Our whole life we worked, and here we are. What do you do? It's like there is no future. All you try to do is get through today."
What makes matters worse is that the Borgies are underwater on their home mortgage. That means they owe more on the home than it's worth.
The Borgies say they've done everything they can to avoid going into foreclosure. They've sold many of their possessions. They burned through about $40,000 in retirement savings and cashed in life insurance policies.
For Cathy Borgie, it feels like their dream home is slowly slipping through their fingers.
"Right now my dream home would be something I could afford to live in and not worry that as soon as the unemployment stops that we're living in our car, because we aren't going to have anything," she said.
Unless one of them finds a job, it's likely the Borgies will join the ranks of Minnesotans who've lost their homes to foreclosure. When their unemployment checks run out in July, Mike Borgie said, the best he can do is put his house up for sale.
But Borgie admits he has no real hope of getting enough from a sale to pull himself out of debt.
"If it just doesn't sell then I will just stop making the payments, until the sheriff comes and knocks on the door," he said. "To be honest with you, at this point it just doesn't matter to me. I just want to work. I want to get up in the morning and have a purpose."
Experts say there are a few reasons to worry about a second wave of foreclosures in Minnesota. There are a growing number of people like the Borgies who've fallen behind because of long term unemployment.
More Minnesota families could soon be in their predicament. They're among the borrowers who obtained so-called non-prime, adjustable rate mortgages at the peak of the housing market. With those rates due to reset, interest rates on some mortgages could go up, making the monthly payments unaffordable.
According to the Minnesota Housing Finance Agency, those types of mortgages are concentrated in the Brainerd lakes area and in the western and southern Twin Cities suburbs.
That has meant a flood of new properties up for sale, said Amy Gitchell, a mortgage broker in Nisswa, which covers the Brainerd lakes area. The latest sellers includes people trying to get rid of second homes on places like Gull Lake.
There's a certain portion that are in the foreclosure process, a certain portion that have been foreclosed on, and there's a number of them that are right on the brink, and they're dropping their price aggressively in order to get a sale," Gitchell said. "This is a really critical time for our local economy."
Predicting when and even if a next wave of foreclosures comes isn't an exact science, especially with those non-prime adjustable rate mortgages due to reset.
It all depends on what happens with the economy, said John Patterson, director of research at Minnesota Housing.
"People had predicted a lot of problems with these resets," Patterson said. "But with interest rates remaining low... it's not as much of a concern. But I think the question is how much longer will interest rates remain low?"
Some experts predict interest rates will begin climbing as the economy continues to recover from recession. That will make it even harder for people to get rid of homes they can no longer afford.
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