Mortgage Relief Plan Gains Support from Minnesota Nonprofit Housing Agencies

Minnesota nonprofit housing agencies are welcoming the recent announcement of a $75 billion mortgage relief plan, which they see as a step in the right direction to address the foreclosure crisis. The plan aims to help homeowners still current on their payments but at risk for default by reducing their monthly payments through refinancing or loan modifications. Local real estate agents and foreclosure experts praise the plan for providing incentives for homeowners and service providers, unlike previous voluntary loan-modification programs that failed to stem the tide of foreclosures.

Key Takeaways:

• The $75 billion mortgage relief plan focuses on helping homeowners still current on their payments but at risk for default by reducing their monthly payments either through refinancing the mortgages or modifying their loans.
• The plan's incentives for homeowners and service providers aim to avoid the problems of previous voluntary loan-modification programs, which made no dent in the flood of foreclosures that began in 2007.
• Cherie Shoquist, foreclosure project coordinator for the city of Minneapolis, said the plan "is just what we at the city have been waiting for" because it will target people who can make their payments for now and keep them in their neighborhoods.
• Chris Galler, head of the Minnesota Association of Realtors, expressed caution about the plan's effectiveness, stating that it will help some people but may not be enough to address the root causes of the foreclosure crisis.
• The number of foreclosed properties is still flooding the market, dragging down home values across the country, and the plan's tax credit up to $8,000 for first-time home buyers is seen as one piece of the puzzle to encourage buyers to enter the market.
• Bob Schnell, a partner at the Faegre & Benson law firm, emphasized the shared responsibility among government, lenders, investors, and homeowners to address the foreclosure problem.

Statistics:

• In Minnesota, estiamted 28,000 foreclosures took place in 2008, more than four times the 2005 levels.
• Last year, about 18,000 of the state's foreclosures were in the Twin Cities.
• The number of foreclosures is dragging down home values across the country and could lead to even more home foreclosures.

Sources:

• Minnesota Home Ownership Center: www.hocmn.org, 651-659-9336.
• HUD: A list of HUD-approved counseling agencies in Minnesota is available at www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm.
• Lutheran Social Services in Minneapolis: 612-879-5266.
• Habitat for Humanity: 612-331-4090 or go to www.tchabitat.org.
• ACORN: 651-642-9639 or go to www.acornhousing.org for help finding a counselor.