Help to preserve home ownership

A bill that would increase the financial assistance cap for those participating in program assistance and counseling to prevent mortgage foreclosures was approved Feb. 27 by the House Housing Policy and Finance and Public Health Finance Division. It now goes to the House Finance Committee.

Sponsored by Rep. Jim Davnie (DFL-Mpls), HF3346 would help families and individuals in financial crisis by increasing money available in the Foreclosure Prevention Assistance Program. Currently the cap is set at $5,500 per individual or family. The bill would raise that to “110 percent of the greater of state or applicable metropolitan statistical area median monthly owner cost of owner occupied housing … multiplied by six.” The change would amount for a $10,718 cap for Twin Cities metropolitan area homeowners and $9,478 in Greater Minnesota.

Tonja Orr, Minnesota Housing Finance Agency assistant commissioner, said foreclosure prevention counselors have said that monthly mortgage payments multiplied by six frequently exceed the $5,500 cap. Therefore, they’re not able to help people who may have had a temporary loss of income and can’t catch up from the crisis, she said.

The cap was last changed in 2001, and instead of coming back to the Legislature for another change, the adjusted standard would be built into the bill, she added. The only way loans are released is if the homeowner can solidly make payments after use of program funds.

Rep. Rob Eastlund (R-Isanti) said mortgage companies should help homeowners in crisis, and criteria for the department loan should also hinge on concessions made by lenders.

Orr said they do have counselors working throughout the state with lenders, but it’s often difficult to identify the main issuer and the person making the decision to renegotiate a loan.

A companion bill, SF3073, sponsored by Sen. Linda Higgins (DFL-Mpls), awaits action by the Senate Finance Committee.