Foreclosure Help Plans In Minnesota

April 23rd, 2008

Governor Pawplenty has initiated a plan to help foreclosure victims in Minnesota but more strong action is the call of the hour. Thousands in Minnesota are cowering under the threat of foreclosures. Rising to the situation Pawplenty is planning to extend support given by the state to prevent foreclosures.

Recently Pawplenty announced that he would increase the number of counseling conferences, provide additional funds fore extra meetings between the two parties in foreclosure matters and also introduce a running hot line. The governor is further strongly urging the lenders to seal compacts. The plans unfortunately depend on the participation of the lender – something which they may or may not do. The pivot of the issue is modification of loans. Previous such efforts have failed to take off – a disheartening record.

In 2007 counseling had benefited 4.500 house owners facing foreclosures. On the negative side more than 20,500 residents lost their properties to foreclosure. It was an 84% rise since 2005. The sub-prime and other non-conventional loans are largely help responsible for this debacle. The apprehension is that another 37,000 borrowers may run into default problems in the current year.

The help programmes are not having a positive impact mainly because a majority of the lenders continue to be adamant and unbending. In such a situation it is up to the law to think of ways and means to make persuasion more effective and forceful.

Jim Davnie (DFL – Minneapolis) initiated a bill that would postpone foreclosures for a year. This would give the besieged borrowers a breathing time to recuperate. This may not be the answer but at least something over and above voluntary programmes enabling people to stay for a longer time in houses that are their homes. It would of help in cases where short term loan modifications. For all this counseling is essential. Mandatory mediation is a must. A third party could find out if the lenders are sincere in their platitudes.

However there is no alternative to legal clout against predatory unscrupulous lenders and agents. Minneapolis successfully sued T.J. Waconia for fraud recently. As many as 141 houses were taken back from the firm and placed under the supervision of a receiver. The city hopes to refurbish the units and sell them to qualifying buyers.

However the ground reality is that many borrowers are to blame for eating more than they can digest.

Via