Learning Center » minnesota

Attorney General of Minnesota Wants Mediation in Foreclosure Compulsory

Julie Parker — Mon, 24 Nov 2008 12:36:32 +0000

Lori Swanson, the Attorney General of Minnesota wants mediation in foreclosure matters compulsory. She called for the state to make it mandatory for the banks to open talks with house owners before foreclosing on them. Swanson added that her department has been successful to some extent with voluntary mediation in some cases She was applauded by many who said that their houses and homes had been saved only because of the intervention of her office.

Swanson went on to say that the difficulty is with the complexities of modern mortgages. This is making sorting out matters bothersome. Her suggestion is that the state should transfer some of that responsibility to the lenders. She said, “If you’re going to take the home away from people and use the foreclosure process, you gotta show up at the mediation and negotiate in good faith. And that you, the lender, are going to have to figure out what that means. If you truly don’t own it, you’re going to have to get authority from someone, whether it’s the secondary investors or somebody calling the shots.”
Of those who had benefited was Lisa Hemberger a hairstylist residing at Cottage Grove. She said that voluntary mediation had helped her to avoid foreclosure and continue to stay in her home. Life had become difficult for her when her husband lost his job. Without help from the office of the Attorney General she had been unable, on her own, to contact the lender and fell behind in her mortgage dues. Each time she called the lender a different person would respond who did not know anything. They would transfer the call from one to another in an endless meaningless chain. For an ordinary person it is well nigh impossible to break through this impasse.
Swanson said that Minnesota is in urgent need of initiating a negotiating process following the outlines of Farmer-Lender Mediation Act that had assisted about 14,000 farmers during a crisis that broke twenty years ago. She bemoaned that today nearly three times more that number are facing similar money problems with the situation set to worsen in the following year.
Alarmed at the foreclosure related financial crisis the Bush administration as well as local and state governments have been taking many measures since the last year but so far it has not been able to make a dent in the rush of foreclosed houses entering the market and destabilizing the economy.

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Unprecedented Increase In Foreclosures Throw Challenge To South Metro Counties

Julie Parker — Mon, 07 Jul 2008 15:28:47 +0000

An unprecedented increase in foreclosures in southwest metro counties is posing a challenge to south metro counties. Officials and communities are in a tizzy – what to do and what not to do. A warning has come through to local government bodies that the foreclosure crisis is worsening. This translates into slim budgets to an extreme point.

In Dakota County the warning is that the increased figure of court sales this year is going to be the same as the total number of actual sales of the previous year. In Scott County the prediction is that foreclosures are going to double from the previous year. It will take a couple of years to stabilize.

Mary Monteith of Carver County Community Development Agency referred to it as a “daunting task.” There is a feeling of confusing amongst her colleagues. Jon Ulrich, Scott County Commissioner told her that the number of foreclosures rolling in is too much for their capability to respond. “We’re taking a sip out of a fire hydrant of water,” he said. What makes matters worse is that time is against both lenders and borrowers.

The officials were one in their view that the most important thing is to let the borrowers realize that help is available. The earlier they seek it is the better for them. The government can then take initiatives to assemble financial help packages to steer borrowers through the temporary foreclosure bottleneck. Montieth reiterated that it should not be taken to mean that money is being doled out at random. Public money will not be played around with until officials are convinced that the borrower has the will and the power to overcome the immediate hurdle. It must be shown on paper and ink that they can manage the mortgage.

Scott and Dakota had been ranked among the most affluent counties. In 2001 there were less than 200 court auctions of foreclosed units in Dakota. In 2007 there were less than 1,600 sheriff’s sale – the highest numbers coming from West and South St Paul and Farmington.

It is the house owners associations that are at the receiving end of the foreclosure crisis. Dues relating to unpaid utility bills and trimming of lawns are going unpaid. The most dangerous thing is the falling real estate with prices plummeting to unprecedented levels. The market is trying to reach its point of balance. Meanwhile thousands more are rushing into the foreclosure net.

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Foreclosures Challenging Congress

Julie Parker — Wed, 21 May 2008 12:18:37 +0000

Foreclosures are challenging Congress and as yet seem to be enjoying the last laugh. Democrat Rep. Tim Walz speaks about his own personal experience. The house next to his has been in foreclosure for more than a year and pulled down the value of his own unit by 20%. The story of Walz is being repeated all over Minnesota with the bursting of the housing bubble. Both Democrats and Republicans are harangued with complaints from community leaders about the rot spreading from foreclosed vacant houses. Leaders of both parties are huddled together sitting at the same table desperate to find solutions to tackle the common enemy.

The House and Senate have passed bills and more are in the offing. There are doubts if the Democratic led Congress will be able to come to terms with Bush administration and the President’s veto threat.

The House bill consists of three parts aimed at avoiding foreclosures with the hope of bringing back the mortgage market to its rails. It allotted greater powers to the Federal Housing Agency to be able to insure refinanced mortgages. On their part the lenders would have to reduce the amount of loan in tune with the prevailing market prices. Secondly the bill allows $11 billion as tax credits to buyers and mortgage holders who refrain form itemizing their respective tax deductions. This also includes the granting of $7,500 to new buyers. It allots to the state $10 billion for floating mortgage revenue bonds to help in the refinancing of sub-prime mortgages. Thirdly the bill made changes in the Freddie Mac and Fannie Mae mortgage companies that are federally sponsored.

Democrats together with a large Republican approval supported the bill but the numbers were not strong enough to override the veto threat. The critics said that it was a bail out for buyers by putting the market at jeopardy. Republican Rep. John Kline criticized the bill for doing ‘little to address the current foreclosure problems’. The market should be allowed to find its level. However he did not oppose other forms of assistance. Walz stressed on voluntary moves between lenders and borrowers. He did not want the blame game to sling mud at each other. His contention was that since the forest is already on fire something should be immediately done before arguing about who started it. The problem should be tackled keeping in view the interests of the borrowers, the mortgage industry as well as the market.

Foreclosure Scam Stories

Julie Parker — Mon, 05 May 2008 13:18:28 +0000

More and more house owners who were and are victims of foreclosures are coming out with foreclosure scam stories. Many companies came forward with rosy promises of helping to prevent foreclosures but ultimately nothing happens except that the victims find themselves poorer.

The story of Chantae Grandsberry of Brooklyn Center is one of many. She was hunting around for someone to help her save the house that was her home. Her searches took her to an Oklahoma firm and at that time she believed that she had knocked at the right address. The firm was freely quoting from the Bible on its website and introduced themselves as foreclosure prevention specialists who believed in Christian values. Grandsberry and her husband were taken in by these holy platitudes. At that time Chantae was expecting a child and believed that those who cited the Lord could not sin. But in a short time she lost her house last October when the company – American Foreclosure Specialists, failed to keep their promises. They had taken $1,200 in advance although this was in violation of Minnesota law, commented the Attorney General of Minnesota, Lori Swanson.

In the beginning of the month Swanson filed law suits against American Foreclosure Specialists and three other firms – all being based outside the state. They had violated the law by collecting fees even before providing services they had promised to do so. Here the matter did not end. Because of their tall talk, the house owners lost time and more funds trying to salvage the foreclosure hit wreckage. Thus these scammers made a bad situation even worse. Swanson filed the suits in the District Court of Hennepin County. She is also trying to prevent these scammers from operating in Minnesota. This is part of the general programme the Attorney General has taken up to sieve out the fraudsters and cheaters.

The cases were registered against American Foreclosure Specialists, National Foreclosure Relief of Nevada, Lewis Loss Mitigation of Alabama (also operating as Stop Foreclosure and Lewis and Associates Consulting), D.R. Financial Services of California (also working as D.R. Financial and Superior Home Loans), Mortgage Default Assistance of Florida and Home Assure of Florida.

Despite official measures being taken against the scammers, it is essential that the people become aware of the rising number of cheats and tricksters. In fact their numbers are rising with the number of foreclosures. The foreclosure notice traumatizes the victim who cannot think clearly.

Hennepin Sues Foreclosure Scamming Firm

Julie Parker — Wed, 23 Apr 2008 12:57:37 +0000

The Attorney General of Hennepin stated that some consulting firms have been duping foreclosure victims with promises of help. Six firms located outside the state have been charged by Hennepin County District Court. Injunction is being sought to prevent them from continuing with their business in Minnesota while the court proceedings are in progress. In the suits it is stated that these firms violated the laws of the state by raking in handsome fees for services they promised to deliver. But in reality they did nothing of the sort. As a result of this this foreclosed suffered intensely. More money and time was lost that ultimately led to the very thing they were trying to avoid – eviction.

Attorney General Lori Swanson commented that these firms ‘made a bad situation even worse.’ The companies were blatant enough to host websites advertising their claims. They also used direct mail services to make contacts with the house owners and sweet talked their way into the traumatized hearts of their prey. In each particular case these firms asked for consultation fees ranging from $1,000 to $,2,400. However they slowly made more demands matching further promises from clients who were already neck deep in debts facing and foreclosures.

These scammers approach at the point when the victim is first hit with the news of foreclosure when fear and despair traumatize sanity. Lonnie Sievert lost her house in Brooklyn Park to foreclosure. Her situation was made worse with these cheats. The trio against whom law suits were filed were National Foreclosure Relief of Nevada operating in California, Lewis Loss Mitigation of Alabama (using many names like American Foreclosure Specialists amongst others), also in California and Home Assure of Florida.

Each individual has a story to tell, Terry Lake is one. She has filed for bankruptcy in an effort to save her house. She gave something around $2,400 to one of the trio for this advice of filing bankruptcy. Another person, Lake, had more or less the same story to tell. Intuition had warned him that the promises were false and yet he got taken in by smart sales talk. To add sacrilege to injury the website of the American Foreclosure Specialists underlined the fact that the firm was run by Christians quoting lines from the Bible. One of the victims who chose this particular firm for its religious tone was Chantae Grandsberry of Brooklyn Centre.

Avoiding Foreclosures

Julie Parker — Thu, 03 Apr 2008 14:16:31 +0000

A federal grant has been made of $4.3 billion to help 7,000 foreclosure victims in Minnesota. It is the second largest sanctioned in the country related to the present crisis. It will help the state to hire more housing counselors to steer the borrowers through the maze of lender bureaucracy. Governor Tim Pawlenty commented that the state wants to go all out to prevent foreclosures. However he warned that it does not involve the foreclosure deferment bill that is raising much controversy while navigating through the House and Senate. This bill will make Minnesota the first state to announce a hold on some of the foreclosures while permitting borrowers to make reduced payments for a year. Pawlenty added that he would veto the bill when it would come to him. The step would have grave consequences that had not been anticipated. It will push up credit costs for the residents of Minnesota.

Apart from the federal grant the Marquetter Financial Companies will give the state more aid worth $5000,000 to help those who will benefit from a bridge loan and avoid foreclosure.
Minnesota has been particularly hard it. It is expected that there will be 37,000 foreclosures in 2008. Legislators at state and federal level are scrambling for solution as the entire socio-economic structure of the country is adversely affected. On Tuesday the Minnesota House passed a number of foreclosure related bills that would step up financial assistance and give protection to tenants and mobile house owners.

Packages aimed at foreclosure assistance are moving through the Congress as well as the Senate. This will sanction funds to local governments to enable them to buy foreclosed units, increase the scope of mortgage assistance and permit bankruptcy judges to modify the terms of the house loans. But it is not all smooth sailing. Senator Ellen Anderson (Democrat) said that the deferment bill is required to buy time allowing the Congress to find out more comprehensive measures to solving the foreclosure crisis, looming large over US. She commented that while the 37 extra counselors are most welcome nevertheless it is vital that the house owners are given more time to breathe form the foreclosure embrace that is choking them. The number of counselors will be doubled but the problem will remain with out of the state lenders. With the mortgages being bundled into packets it is now difficult to locate the lenders stationed around the globe.

Worshop In Minneapolis To Check Foreclosures Before It Is Too Late

Julie Parker — Thu, 27 Mar 2008 12:52:21 +0000

During the last two years the situation has been sinking from bad to worse and foreclosures have enveloped Minneapolis. More and more people are losing the houses that have been their homes. The increase has been by 60% during the first two months of 2008 as compared to the same period in the previous year.

To stem the tide the Minnesota Home Ownership Center is hosting the workshops free of charge so that the people can learn about the ins and outs of foreclosures and how to battle it. Over one hundred families participated in the first workshop held in the basement of St. Paul’s church on Tuesday night.

Each one had a story to tells. Anthony Sofie had lost his construction job and consequently could not meet his mortgage commitments. What is worse – the rates are set to go up again. He wants to know what can be done to keep fires of his hearth burning in his home. Ed Nelson representing Minnesota Home Ownership Center said that Sofie had approached them at the right time – the slightest delay would have been fatal. The sooner they come the better the options. So far more than half of those who sought help have benefited. Nelson opines that the foreclosure situation is not without hope.

At the workshop it is explained in detail what missing a payment amounts to. After the first lapse the lender sends a notice. By the fourth month the lawyers come into the picture. The court or Sheriff’s auction takes place by the seventh month. Sofie came to know that the rate of interest would remain unchanged. This might enable him to continue to stay in the house that is his home. He is optimistic that within 5 years he will improve his position. But had he not sought help he would have lost his house and home.

The foreclosure is a legal process that lenders nowadays want to avoid because it takes up time, money and energy. With the phenomenal rise in foreclosures the lenders have eaten more than they can swallow. They want to get rid of these white elephants. As such they are eager for modifications, loan forgiveness or giving permission for short sale. Nobody benefits from foreclosures – lenders, borrowers, administration or communities. As such the climate is just right for viable solutions.

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Sub-Prime As Well As Other Factors Behind Foreclosure Crisis

Julie Parker — Wed, 19 Mar 2008 12:08:24 +0000

All of Minnesota is affected by foreclosures in a very bad way but the situation outside the Twin Cities is different. The picture here is mixed. Iron Range communities in north eastern Minnesota is bursting with economic activity and this has resulted in a robust housing market. The risky loans have not played a dominant role here. It is mainly because, unlike the Twin Cities, the housing prices in the last few years had not been artificially inflated. The other causes behind foreclosure have been unemployment, rising costs, medical bills and break up of families.
The sub-prime loans however played around in the Twin Cities and its suburbs. In 2005 the distribution of these loans had peaked with 47,122 persons availing of this loan. The housing boom started off in 2000 and in that year sub-prime loan takers had been only 8,347.

The law makers are coming forward with various measures to mitigate the crisis. It includes delaying foreclosures and allowing for more accessibility of data. The state housing agency has also been sanctioned funds from the federal kitty to hire more counselors across the state to tackle the growing menace. The effort has been paying dividends, as per reports from a recent survey. The legal fraternity is acquiring a better understanding of loopholes in the law that might check foreclosures.

In 2007 there were 2007 foreclosures right across Minnesota touching 20,573. It meant a 84% increase over the previous year when the number was 11,207. In the seven county Twin Cities there were 7,039 foreclosures in 2006. In 2007 the number nearly doubled to 12,885. In other parts of Minnesota the foreclosure number was 4,168 in 2006. In 2007 it jumped 84% to 7,688.
The study analyzes that the foreclosure number in greater Minnesota is double than that what the analysts had previously predicted. Thus the foreclosure rate is now growing more speedily in some greater Minnesota counties than in the Twin Cities. The so called ‘collar counties’ have been worst hit outside the Twin Cities – including Isanti, Chisago, Sherburne and McLeod counties.

The project director of Greater Minnesota Housing Fund, Stephanie Vergin opined that most of the foreclosure blight was on those collar-counties that had seen frenetic housing activity in the recent past. People moved out in the suburbs to avail for more affordable houses. But fuel prices and other factors mired the situation leading to foreclosures.

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Lawmakers Rush To Take Offensive Against Foreclosures

Julie Parker — Thu, 06 Mar 2008 12:37:29 +0000

Bills are being rushed through to help both borrowers and renters continue to stay in the houses that are their homes. In Minnesota the lawmakers dubbed the foreclosure situation as historic. They initiated a package of 10 bills to help the foreclosure victims. More than a dozen foreclosure related bills are in the Legislature.

In the Twin Cities (seven counties) foreclosures doubled in 2007 as compared to 2006. In January Hennepin and Ramsey Counties set records in foreclosure listings. The reason was unmanageable sub-prime mortgages, unemployment, credit crunch and the like. Although core city suburbs like Bluff, Frogtown and North Minneapolis have been hit the epidemic is also spilling over onto the suburbs hitting farm towns.

A close parallel is being drawn to the Great Depression and most of the experts feel that this situation will drag on up to 2009. Others say that foreclosures will continue for many years. Allen Fishbein, the director of housing and credit policy for the Consumer Federation of America said there is concern about the sweeping effects of foreclosure penetrating all levels of the market. Foreclosures have also badly affected the lenders and they have responded positively to the appeal of President Bush to modify loans.

In 2007 Minnesota passed the strongest anti-predatory laws in the country. The new bills aim to take stiff measures like preventing cutting of essential supply like water, gas and heating so long as the renters continue to be current. Another bill makes it compulsory for lenders to link borrowers with foreclosure counselors to sort out matters. A coloured pre-foreclosure notice will have to be mailed to the borrower giving information about counseling. Yet another bill requires the setting up of an electronic system by the state to monitor foreclosure movements. It is a pity that till date an archaic method still continues to hold sway.

A flat moratorium on foreclosures have not been considered as this is something unrealistic and unconstitutional. Quasi moratorium proposals are being considered. The Minnesota Sub-prime Foreclosure Deferment Act of 2008 would for the time being defer foreclosure proceedings for a year under certain conditions – the main one being that the borrower must be occupying the house in dispute.

The package of bills is the outcome of the working together of 38 organizations representing the government, lenders and communities at all levels. One of the salient points is that attention is being given to the plight of the renters.

Via

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Subprime Mortgage Crisis: Future Uncertain

Julie Parker — Mon, 04 Jun 2007 18:50:21 +0000

Bankers are watching and waiting with uncertainty the snowballing effect of the sub-prime tsunami crisis.

Even though April provided a breather by a dip of 1% in foreclosure listing, it was still up by 62% compared to last year. Even then it will be far above the average of last year. Statistics pouring in show a worsening of the situation. No one knows the actual number of active sub-prime mortgages, its source of origin or refinancing procedures in Northeast Minnesota and Northwest Wisconsin.

Risky loans had triggered off this crisis. Some of the biggest sub-prime lenders like Ameriquest and New Century Financial are toppling down.

Some regions of the country have remained untouched by this virus – Wyoming, Vermont, North and South Dakota, Mississippi, Delaware and Washington D.C. Topping the list are 10 cities of which six are in California. These six ranks first among the group of notorious 10. Las Vegas comes first. Others claiming this dubious distinction are Nevada, Colorado, Connecticut, Florida, Arizona, Illinois, Michigan, Ohio and Georgia. As a result of this fall out Michigan, Minneapolis and Ohio are reeling under massive layoffs.

Big national financial services are practically non-existent in some important regions. Yet sub-prime activity has been typical with apprehended results. Real estate businesses having taken a U turn, lenders are tightening loan conditions thus putting marginal borrowers in a soup. Their rates of mortgage interest are rising while the value of their property continues to plummet.

The situation is so alarming that Lutheran Social Services have come forward to provide pre-bankruptcy counseling in Minnesota and Douglas County. The sub-prime lending has hit not only the borrowers but also local banks and communities. A ‘teaser’ rate tempts the borrower to fall into the net. Later the net closes in on the catch with disastrous consequences to all but the lender-agent nexus. Sub-prime lending essentially steals business from smaller entities.

Authorities have come forward and tightening the belt of the law – a grim reminder that playing around with lending will attract felony charges coupled with compensation and damages. However it applies only to current frauds and does not extend backwards. Thus primarily the focus is on prevention.

Wisconsin is the only state that has no limits on interest rates. Pay-day lending has been rampant which many regard as an unhealthy drain on the economy. The heat is on to find a solution and save the people.

Via