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With housing advocates predicting no end in sight for the foreclosure crisis, which could cost 20,000 Minnesotans their homes this year, Gov. Tim Pawlenty on Friday expanded financial counseling for tens of thousands of Minnesota homeowners who are behind on their mortgage payments.

Pawlenty said the state will spend another $1 million to double the number of counselors helping beleaguered homeowners.

Meanwhile, the state commerce commissioner said his office is pursuing about 20 cases of potential criminal behavior by lenders and others this year, a big increase from previous years.

A housing advocate said the new counseling dollars and existing state and private funding would provide help for about 26,000 households -- about one third of the households expected to be behind on their mortgages by the end of this year. Based on experience, an estimated 5,700 of those are likely to avoid foreclosure through the programs, according to Warren Hanson, president of the Greater Minnesota Housing Fund.

The power of counseling

The counselors can help people in debt avoid bad refinancing deals, put together a budget or negotiate new arrangements with lenders. Counselors also advise people who can't afford their homes to sell now and save equity to buy later.

One person who sought counseling is John Schmatz, 56, of Hutchinson, Minn. He fell behind on his monthly mortgage this year and said he had no luck trying to negotiate a deal with the lender.

"I talked to 20 different people from the mortgage company, and I was getting nowhere," Schmatz said.

He said a housing counselor from Lutheran Social Services interceded with the lender, negotiating a reduction in interest rates as part of a loan restructuring.

"In a matter of three weeks he had it all taken care of," Schmatz said. "I couldn't have done it without them."

Hanson said as many as 80,000 Minnesota homeowners will be behind on their mortgages by the end of this year, nearly double the figure of a year ago.

He said about 20,000 people will have lost their homes this year, compared with about 11,000 in 2006.

Crisis more severe elsewhere

Even so, Minnesota and its major cities have not been hit as hard as some other places. Among the top 100 metro areas in the nation, the Minneapolis-St. Paul area ranked 69th in foreclosures during the third quarter of this year with 3,699 filings -- one for every 349 households -- on 2,812 properties. That is up 13.2 percent from the second quarter of this year, according to a survey released this week by RealtyTrac, a national online database of foreclosed and bank-owned properties.

"Although cities in just three states -- California, Ohio and Florida -- accounted for more than two-thirds of the top 25 metro foreclosure rates, increasing foreclosure activity was not limited to just a few hot spots," said James J. Saccacio, chief executive officer of RealtyTrac. "In fact, 77 out of the top 100 metro areas reported more foreclosure filings in the third quarter than they had in the previous quarter."

Pawlenty said the new money will build on existing counseling efforts.

"We want to encourage people that ... they shouldn't let pride get in the way from asking for help," Pawlenty said.

Also Friday, Commerce Commissioner Glenn Wilson said his department has added three investigators to deal with an increasing number of complaints regarding potentially fraudulent loan deals.