Fighting foreclosure problems

Areas of Minneapolis and St. Paul hit hard by foreclosures in recent years have seen a lot of formerly owner-occupied houses turned into rental properties. According to Rep. Joe Mullery (DFL-Mpls), the change has taken a toll on the neighborhoods.

“With the foreclosures, people are coming in, buying them real cheap and turning them into problem properties with tenants that aren’t committed to the area,” Mullery said.

As a result, areas like the Jordan neighborhood in north Minneapolis, which has seen its share of rental properties go from 21 percent to 49 percent, have seen an uptick in crime, stresses on the local school system and an increase in social problems.

To address the problem, Mullery sponsors HF157 that would allow cities to adopt ordinances providing for “owner-occupied” residential use. In other words, cities could prohibit buyers from scooping up foreclosed properties only to rent them out. The bill is designed to only apply to cities like Minneapolis and St. Paul that have been hit especially hard by the crisis.

“This would be another tool in our toolbox that would help cities with this issue,” said Gene Ranieri, intergovernmental relations director for the city of Minneapolis.

Rep. Ryan Winkler (DFL-Golden Valley) expressed concern that the bill would shut out the only potential buyers of foreclosed properties, arguing that tightened mortgage lending restrictions have reduced the ability of low-income Minnesotans to purchase homes of their own.

Mullery responded that it would be better to have the houses sit vacant until a responsible buyer could be found than to have them turned into problem properties. He said there are many programs available to help people purchase homes in low-income neighborhoods.

The House Local Government Division approved the bill March 23 and referred it to the House State and Local Government Operations Reform, Technology and Elections Committee. There is no Senate companion.