Rates remain stubbornly high in rural counties that have been hit harder by unemployment.
Foreclosures in Minnesota fell 17 percent last year to the lowest level since 2007, according to a report released Tuesday.
But the Minnesota Homeownership Center, which published the results, said it's not all good news.
The report underscores the troubles some parts of the state still face. While foreclosure rates dropped in many areas, there are counties that saw no improvement -- or where repossessions actually increased.
"Overall we are trending in the right direction," said Ed Nelson, a spokesman for the center. "But we are certainly not out of the woods yet."
In Minnesota, there were 21,298 sheriff's sales, according to the report. That's an average of 1.18 percent of all property owners across the state, but the rate ranged from 0.04 percent in Kittson County to 2.3 percent in Isanti County.
In Hennepin and Ramsey counties, foreclosures have declined from the previous year, and the rate is now on par with the foreclosure rate for the metro area, which averaged 1.43 percent. However, in more sparsely populated counties that lack a resilient, diverse economy, repossessions have spiked.
When the foreclosure crisis started in 2006, the problem was concentrated in urban neighborhoods where fraudulent mortgages were among the first to go into foreclosure. But communities suffering today are those where people are either unemployed or underemployed, Nelson said.
Julie Gugin, executive director of the Minnesota Homeownership Center, noted that while home seizures are falling, the rate is still three to four times higher than when the crisis began. Also, more than 54,500 property owners received a pre-foreclosure notice last year, a sign homeowners are still struggling to make their mortgage payments.
Along with the Minnesota Homeownership Center, the report is published by the Greater Minnesota Housing Fund, Minnesota Housing and the Family Housing Fund. HousingLink conducted the research.
Because the results are based on county sheriff's sales, the report is considered one of the most reliable indicators of how Minnesotans are faring in the foreclosure crisis. Comparable county data isn't available for other states, but national for-profit groups that track public records for the state show that the repossession rate in Minnesota is below the national average. RealtyTrac said one in every 624 U.S. households received a foreclosure filing of some form in January compared with one in every 778 households in Minnesota.
Nelson said communities will be grappling with this issue for several years to come, depending on how quickly the economy heals. Unemployment is the number one cause of foreclosures, he said. But he's optimistic that the rate of decline will increase as lenders, nonprofits and organizations like Fannie Mae and Freddie Mac adopt new programs to help homeowners avoid foreclosure.
"We need to see lenders step up to the plate," he said. "And do a better job of working with homeowners to keep them in their homes."
Jim Buchta • 612-673-7376