ST. PAUL, MN – State Representative Melissa Hortman (DFL – Brooklyn Park) joined other legislators in unveiling legislation today that would provide support for responsible homeowners who continue to feel negative effects from the national home foreclosure crisis. The “Supporting Responsible Homeowners and Stabilizing Neighborhoods" Act would expand refinancing options for responsible homeowners, prevent needless foreclosures, and ensure greater transparency from lending institutions.
A recent report showed that Minnesota has the 17th highest foreclosure rate in the nation with over 21,000 foreclosures in Minnesota in 2011. These totals are down 17% from 2010, but are still three times higher than foreclosure rates in 2005.
“In 2012, economists predict an uptick in foreclosures,” said Rep. Hortman. “Too many Minnesota families are still at risk of losing their homes. More foreclosures are the last thing we need.”
Rep. Hortman is offering support for responsible homeowners through a range of provisions that don't cost the state any money. The legislation focuses on ways to expand options to homeowners in difficult financial situations while making it easier and more transparent for them as they work with banks.
The bills would not use any of the resources from the national settlement with the five large banks that are to be dedicated to homeowners. Minnesota Attorney General Lori Swanson has said she will direct these $43 million in funds directly to homeowners. DFL legislators agree this is the correct approach.
The “Supporting Responsible Homeowners and Stabilizing Neighborhood” Act includes the following provisions:
Supporting Responsible Homeowners
• Expand refinancing options for responsible homeowners who are current on their mortgages, but face barriers, such as being “underwater,” which prevents them from taking advantage of historically low interest rates.
• Prevent needless foreclosures by providing a 12-month stay of foreclosure proceedings for unemployed homeowners who have lived in their home for ten years.
• Increase transparency for homeowners applying for loan modifications by requiring banks to provide clear and straightforward eligibility criteria, and protect homeowners against unnecessary foreclosure, including right of appeal.
• Make “dual tracking” illegal so that banks are not allowed to foreclose on a house while a loan modification is pending.
Holding Banks Accountable
• Require banks to notify homeowners of each and every loan modification option available to them so that no one is needlessly foreclosed upon when another solution available.
• Prohibits lenders and brokers from charging fees for services not performed
Some elements of the legislation included in this package have been introduced, while others are currently being drafted.