For more information contact: Joan Nichols 651-29X-XXXX
Foreclosure - a word that strikes fear in the hearts of too many homeowners who are trying to ride out a series of foreclosure waves that are displacing ever-increasing numbers of family members, friends, and neighbors out of their homes and out of their communities. Foreclosure rates have become our financial tsunami, wreaking havoc on our communities and destabilizing our property values.
In Minnesota, one mortgage foreclosed for every 54 households from 2005 to 2007. The number of foreclosures increased so markedly in 2008 that one in every 31 households experienced a foreclosure from 2005-2008. As foreclosures continue to rise in the Twin Cities Metro area, we are experiencing a tightening rental market with higher rents and lower vacancy rates. The loss of rental units due to foreclosure and a tight rental market have resulted in a significant increase in homelessness.
Minnesota home owners and renters are struggling to survive the current housing crisis, particularly in areas with very high concentrations of foreclosures where entire neighborhoods have been destabilized. Clearly steps need to be taken to reduce the volume of foreclosures and to stabilize the housing market as much as possible in this very challenging economy.
There are a number of steps that could be taken to supplement, improve, or provide a partial funding match for federal housing legislation recently considered or passed – the Housing and Economic Recovery Act of 2008, the Emergency Economic Stabilization Act of 2008, and the economic stimulus bill. I want to share some recommendations on how the state and federal governments could work together to address our serious housing issues.
Housing Recommendations for State and Federal Consideration:
• Promote state moratoriums on foreclosures for up to one year. This would give families faced with foreclosure some “breathing room" and provide time for homeowners and lenders to work out loss-mitigation plans. Federal funds could be used to reward states in proportion to their boldness in providing such relief.
• Establish a large scale, mandatory mortgage refinancing mechanism. Keeping homes off the foreclosure rolls will help stabilize home prices and the housing market. Voluntary programs for lenders have proven completely inadequate. To make a real difference, lenders should be required to come to the table.
• Appropriate additional state funds for tenants caught up in foreclosures. Currently renters make up 40% of the households that are losing their homes to foreclosure. So, reward states with priority for federal funding when they establish renter-protection regulations for foreclosures such as requiring bona fide renters who are up to date on their rent be allowed to remain in the property.
• Make low income tax credits refundable to the developer. Due to the drop in value of federal Low Income Housing tax credits, affordable rental housing projects otherwise ready to go are unable to move forward in Minnesota. The Minnesota Housing Finance Agency believes that $3 million is needed in this state to offset the drop in value for projects proposed this year.
• Fund more Section 8 housing vouchers. Adding new federal Section 8 housing vouchers is essential to preventing housing instability and homelessness during the recession. Provide funding priorities to states who provide our own low-income rental housing vouchers.
• Prioritize or incentivize state housing development and rehabilitation projects that use “healthy housing” practices and principles and promote “green jobs” and “green job training”. Healthy housing standards and practices improve the health of residents. States like Minnesota that already require new housing constructed using state funds to adhere to nationally recognized healthy housing and “green communities” criteria should get preferential federal funding consideration.
I’ve also worked with Senator Mee Moua to organize a bi-partisan bi-cameral housing caucus whose biggest goal is to mae affordable housing a much higher priority for the 2009 Legisture. So far about 40 colleagues have joined us – Democrats, Republicans, Senators and Representatives. I urge all Minnesotans to contact their own legislators to ask them to join this effort. Your voice can help make our voices stronger!
Next month I plan to take my Housing Committee on a foreclosure tour to see first-hand the damage foreclosure has wreaked on families and neighborhoods in our communities. I will update you on the details when we get closer to the tour date. Please feel free to call or write with any ideas or issues. I can be reached by phone at 651-296-0294, by mail at 471 State Office Building, 100 Martin Luther King Blvd., St. Paul, MN 55155 or by e-mail at email@example.com.
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