Fighting foreclosures

Minnesota homeowners facing foreclosure could get a new tool to help save their houses.

Sponsored by Rep. Debra Hilstrom (DFL-Brooklyn Center), HF2613 would give homeowners the option to negotiate a mortgage modification with the help of a mediator.

Gov. Tim Pawlenty vetoed a similar measure last year; however, Hilstrom said the bill now has support from a broader array of interests, and added that she is committed to passing a bill the governor will sign.

Rep. Jim Davnie (DFL-Mpls) presented the bill on Hilstrom’s behalf at a Feb. 23 hearing of the House Commerce and Labor Committee. He conceded that mediation is not a guaranteed solution to the foreclosure crisis; however, he said it would at least provide a means for borrowers and lenders to communicate clearly with each other.

“There’s a recognition that, needless to say, it’s not a 100 percent successful process. But … this creates a forum where people can work together,” he said.

Under the bill’s provisions, a homeowner in danger of foreclosure would first have to consult with a mortgage counselor. If counseling fails to resolve their situation, the Office of the Attorney General could then appoint a mediator to facilitate good-faith negotiations between the homeowner and their lender.

The bill is modeled after the Farmer-Lender Mediation Act of 1986, which Hilstrom said saved thousands of Minnesota farms from being foreclosed.

Rep. Greg Davids (R-Preston) questioned the need for such a program, arguing that there are already a number of state and federal initiatives designed to accomplish the same thing.

Steve Johnson, Minnesota Bankers Association government relations director, also questioned the need for the bill. He said a 2008 law that promotes pre-foreclosure counseling for homeowners is already accomplishing much of what the bill is intended to do.

The committee approved the bill and referred it to the House Civil Justice Committee. A companion, SF2170, sponsored by Sen. Linda Scheid (DFL-Brooklyn Park), awaits action by the Senate Judiciary Committee.