Foreclosures have cost thousands upon thousands of Minnesotans their homes and now activists say it's time for lawmakers to push for stronger protections for homeowners.
Legislation, dubbed the "Homeowners' Bill of Rights," would require banks to provide consumers with a single point of contact when faced with a looming foreclosure and establish mediation procedures to help avoid foreclosures. It also would institute a state-level ban on the practice of dual-tracking foreclosures -- a practice, soon to be banned at the federal level, that allowed banks to move ahead with foreclosure proceedings even when they were negotiating with homeowners trying to avoid foreclosure.
Critics say the proposals are unnecessary, since the newly-formed Consumer Financial Protection Bureau is pushing for many of the same safeguards at the federal level. Minnesota banks and credit unions have warned lawmakers that the bill would give them less flexibility to help consumers facing foreclosure.
Minnesotans for a Fair Economy, a coalition of civic, labor and religious leaders released a report this week, estimating that foreclosures cost 141,239 Minnesotans their homes between 2008 and 2012, and driven home values down by some $20 billion. The group rallied at the Capitol Wednesday afternoon, holding photos of foreclosed homeowners and signs with their tally of foreclosures county by county -- 50,507 in Hennepin County, 15,697 in Anoka, 12,551 in Dakota County, 618 in Kandiyohi.
"I lost my home," said Kim Martini, who fell behind on the mortgage payments on her South St. Paul home when she lost her job due to illness. She used her entire savings to keep up with the mortgage payments, but when she tried to refinance, the bank refused, she said, because her home -- located in a neighborhood now filled with foreclosed houses -- was now worth $100,000 less than when she bought it.
"I'm a hard worker, I make smart decisions. I did not deserve to lose my home," said Martini, near tears. "We need a system to keep people in their homes, not a system that forces them out of their homes."
The bill's Senate sponsor, Sen. Patricia Torres Ray, DFL-Minneapolis, said foreclosures were a rarity in her district when she first ran for office seven years ago.
"Now, in every block, there is an empty home," she said. "In every neighborhood, there are hundreds of houses that are being foreclosed....It's affecting our neighbors, it's affecting our relatives, it's affecting our family and we need to do something about it."
State Rep. John Lesch, DFL-St. Paul, shared his own struggles with the bank that hit him up for a balloon payment on a $50,000 loan he'd taken out on his home in 2004. When the balloon payment came due in 2010, his home was underwater
"I'm a homeowner, I'm a legislator. You'd think I'd be a sophisticated guy dealing with the banks," Lesch told the crowd. "They reported me to the credit reporting bureaus, saying I was late on my mortgage payments. When I called them and asked them -- I had a $200 a month automatic payment -- 'Why would you report me late? You canceled my payment.' They said, 'Yes, we didn't need your $200 a month. We needed your $50,000. Therefore you're late.'"
Lesch said it took a year, and knocked 100 points off his credit score, to deal with the bank.
"I'm here to tell you, everyone has a problem with the banks," he said. "This law...will finally give homeowners some negotiating advantage....And everyone can have homes and no one can feel insecure in their homes in the state of Minnesota."