Help to preserve home ownership

A bill that would increase the financial assistance cap for those participating in a program to prevent mortgage foreclosures was passed 127-2 by the House April 1.

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 to a $10,718 cap for Twin Cities metropolitan area homeowners and $9,478 in Greater Minnesota.

Tonja Orr, Minnesota Housing Finance Agency assistant commissioner, earlier told a House committee that 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.

“Given the run up in housing values over the last decade, that assistance is not sufficient in many, many cases,” Davnie 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, Orr added. The only way loans are released is if the homeowner can solidly make payments after use of program funds.

The bill now goes to the Senate where Sen. Linda Higgins (DFL-Mpls) is the sponsor.