House Democrats gathered Tuesday to unveil an ambitious wish list of foreclosure reforms that they’d like – but don’t really expect -- to see pass this session.
Just weeks away from the bill filing deadline for this session, the DFL is proposing sweeping protections for struggling homeowners and a crackdown on questionable lending practices. Even its supporters admit it’s probably not going to happen this year, but in a state where an estimated 21,000 people lost their home to foreclosure last year, they say it’s worth the effort to start a dialog.
“The clock is ticking,” said John Vinje, 58, who is facing a sheriff’s sale of his Bloomington home on April 9, in spite of his efforts to get the bank to help him work out a loan modification. He joined the DFL at their press conference. “This could save my home.”
The DFL proposals, which have not yet been introduced as bills, include a 12-month reprieve from foreclosure for unemployed homeowners or those who have been paying their mortgages for more than a decade; expansion of refinancing options for homeowners with “underwater” mortgages – those who paid more for their homes than they are currently worth; and a ban on banks “dual-tracking” a foreclosure, or beginning foreclosure proceedings while homeowners are still trying to refinance.
They would also require banks to inform homeowners of all the refinancing options available to them and require lenders to provide “clear and straightforward” criteria about eligibility for refinancing, as well as inform them about their right to appeal. The DFL aslo called on lenders and brokers to stop charging for services not provided.
“These bills will help responsible homeowners by halting needless foreclosures, make it easier for middle class Minnesotans to save money through refinancing, and will hold irresponsible bankers accountable for the kinds of practices that got us into this mess,” House Minority Leader Paul Thissen, DFL-Minneapolis, said in a statement about the foreclosure plans.
Minnesota has the 17th highest foreclosure rate in the nation and in some areas, like the north Minneapolis district represented by Rep. Joe Mullery, have rates much, much higher. That neighborhood has seen more than 9,500 foreclosures, but he said it’s a statewide tragedy.
“It’s happening all over the state now and it’s happening largely because of the loss of jobs,” he said.
Mullery, who has sponsored sweeping foreclosure reform bills in the past, isn’t optimistic about his odds for this year. Thissen said the caucus has not yet discussed its foreclosure proposals with the GOP majority or discussed the odds of getting a hearing scheduled before the end of the session, which will likely come sometime near Easter.
“Given the rate they’ve been hearing foreclosure bills, it’s probably not going to happen,” Mullery said.
Meanwhile, John Vinje is still trying to work out a refinancing deal before the sheriff’s sale. He and his wife bought their in 2008 for $148,000 and put $30,000 into renovations, he said. Today, the home’s assessed value is $102,000, with the value set to plunge to $78,000 next year.
Vinje, who works in security, has been told by the bank that he needs to come up with at least $6,000 to fend off the April sheriff’s sale. The couple, who fell behind on their payments and have been unable to catch up, can’t come up with that kind of lump sum.
“That’s what the housing bubble does to you,” Vinje said.