Focus on foreclosures

In an era of banking and automotive industry federal bailouts, House Housing Finance and Policy and Public Health Finance Division members heard about ways that federal and state funds are being distributed to Minnesotans whose homes are at risk of foreclosure.

Tonja Orr, Minnesota Housing Finance Agency assistant commissioner, said the agency has seen a 35 percent increase in foreclosures between 2007 and 2008. That’s 28,000 more families displaced. Orr also said that homeowners and renters are waiting until they are delinquent 120 days or more before seeking help, and that more emphasis is being placed on getting people help before the sheriff comes knocking at the door.

There are several ways the agency is attempting to expedite needed counseling and financial assistance:

• educational housing fairs, conference calls for people who cannot apply in person or who wish to be discreet, flyers in city utility bills and multi-lingual counseling;

• $9 million is available for help with down payments; and

• $1 million is available for a combined rehabilitation and down payment loan program.

Rep. Dan Severson (R-Sauk Rapids) said the process, as a whole, may create a false sense of security. Communities were encouraged to provide subsidized housing and people were “pushed” into those homes, Severson said. With a downturn in the economy, their ability to make mortgage payments diminished.

“So you have the taxpayer paying on the front end to get people into subsidized housing. When it comes off the market, now you’re asking for more money to fix up the house so we can present it to new people who, in fact, may be questionable as to whether they can meet the challenge,” he said.

What the committee needs to address, according to Severson, is how to create a system that creates a long-term solution.

Committee Chairwoman Rep. Karen Clark (DFL-Mpls) advised members that a Housing Caucus, which includes bipartisan participants from both the House and the Senate, is expected to reconvene this session, although an initial meeting date has not yet been scheduled.