The shift from Minneapolis to suburban districts comes just as the federal government has increased assistance to cities struggling with foreclosures.
Home foreclosure activity in suburban Hennepin County continues to heat up, even as it cools off in Minneapolis.
Foreclosure data for the first half of 2008 show that the number of sheriff's sales jumped 59 percent in suburban Hennepin, compared with the same period last year.
But the number of sales is up only 20 percent so far this year in Minneapolis, and there are indications they are leveling off on the North Side, which has been the epicenter of the state's foreclosure crisis.
Although the tilt toward the suburbs dates to late 2007, the evidence suggests it's gathering steam.
Minneapolis accounted for 58 percent of the county's foreclosures in the first half of 2006, but that dropped to 41 percent for the same period this year.
The changing patterns come just as the federal government has increased aid to cities struggling with homes vacated after foreclosure.
"We have an important new partner," said Tom Streitz, who heads city housing development effort. He said the federal money will allow cities to buy more properties, rehab them and get them on the market faster. That will help stabilize neighborhoods, he said.
Some are more pessimistic.
"I doubt very much if the federal legislation is going to fix what's broken in north Minneapolis," said Roberta Englund, staff director for two neighborhood groups. "It is a clutch of problems, some related to foreclosure and some related to poverty and crime and some related to the ability to sustain existing owners."
Jeff Strand, who heads the county's response to the foreclosure wave said he's seen anecdotal evidence of the shift to the suburbs. A foreclosure workshop at Hosmer Community Library in south Minneapolis drew only 10 people. But one at the Brooklyn Center library drew more than 30 people, and those in Richfield and Crystal drew about 20 families each.
"There's so many vacant properties in Minneapolis that it's going to have to level off," said Cheryl Peterson, who managed foreclosure prevention programs for Habitat for Humanity.
The Folwell neighborhood, which tracks foreclosures north of Olson Memorial Hwy., has found that North Side foreclosures dropped from 720 for the first six months of 2007 to 683 this year.
Prentiss Cox, a University of Minnesota instructor who has prosecuted and studied mortgage fraud, said there was more fraud-based foreclosure in Minneapolis than in the suburbs. "I think that the worst of that first wave has worked its way through he system or we're about at the peak," he said.
In contrast, Cox said, the next wave of foreclosures that could be triggered, by mortgages resetting payment levels, could be more suburban-oriented. It's likely to affect people with credit good enough to qualify for mortgages just a step below prime. Cox said this wave will be more difficult to predict.
Steve Brandt • 612-673-4438