Among the victims of the devastating economic crisis have been homeowners. Foreclosures surged nationwide in the latter half of the last decade — initially when the housing bubble burst and, more recently, as mass layoffs and depressed wages have forced workers out of their homes. Minnesota hasn’t been immune. Since 2005, more than 100,000 foreclosures have occurred in this state — both in urban and rural areas — affecting one of every 20 households. But unlike most states, Minnesota leads the nation with a collaborate effort designed to prevent foreclosures, or at least mitigate their effects on communities.
Members of the Minnesota Foreclosure Partners Council — a unique partnership between public and private agencies, communities and cities — has helped 25,000 Minnesota homeowners avoid foreclosure within the last year. And a whopping 66 percent of homeowners who sought help since 2007 have avoided foreclosure. Simply put, this state’s foreclosure prevention program is the envy of the nation.
According to Ed Nelson, spokesman for the Minnesota Home Ownership Center, the innovative program was already in place here before the recession hit in 2008. Nelson said that Minnesota is the only state that has made a coordinated effort to prevent foreclosures when possible and also recover homes after the fact — when foreclosures are inevitable.
And Minnesota’s innovative program is saving the state lots of money.
“Foreclosure prevention is by far the most cost effective way for Minnesota to face foreclosures,” explained Nelson. “Each household that gets counseled in Minnesota costs approximately $300-$400 in counseling dollars. … Foreclosure recovery costs banks, municipalities, cities, and the communities where those homes are located about $52,000 per property.”
Minnesota Housing Commissioner Mary Tingerthal said that the alliance studied the statistics early on and realized that a flood of homeowners were coming who would need assistance to stay in their homes.
And there’s more help coming from government. Last week, the state’s U.S. Senators Amy Klobuchar and Al Franken announced the allocation of another $3 million in foreclosure counseling funds for the Minnesota Housing Finance Agency.
“These programs will provide financial advice and counseling that can help Minnesota families facing foreclosure,” said Sen. Klobuchar. “As we continue to focus on economic growth and job creation, it is important that families have access to tools they can use to stay in their homes.”
“While some foreclosures are unavoidable, many of them can be prevented by the services of foreclosure counseling agencies all over Minnesota,” said Sen. Franken. “These funds will give thousands of homeowners across our state access to the information they need to avoid foreclosure and stay in the homes they’ve worked so hard for.”
Preventing 25,000 foreclosures affects many more than 25,000 households, explained Saint Paul Council member Melvin Carter, who lives in the Frogtown neighborhood which has been particularly hard hit by foreclosures. “For every foreclosure that’s prevented, we’re talking about not just that family that stays in their home, but we’re talking about the neighbors who, instead of having to shovel the snow next door, instead of having to pull the weeds and mow the lawn, they get to keep their neighbors. We’re talking about a whole community of impacts.”