The home foreclosure explosion that triggered the Great Recession caused damage that reached deep into Minnesota communities. So says a new report, "The Wall Street Wrecking Ball," released last week by a coalition of religious and grassroots social justice organizations backing foreclosure reform legislation at the Capitol this year.
In Hennepin County alone, the report says, the total decline in home values due to 50,507 foreclosures from 2008 to 2012 topped $8.75 billion. Worth noting is that the loss in valuation of homes in proximity to foreclosed properties exceeds that of the foreclosed homes themselves by nearly 2 to 1.
In addition, the costs to taxpayers and lost tax revenue associated with foreclosure during that four-year period cost local governments in Hennepin County nearly $525 million.
Those numbers for a single county help explain why last year's $26 billion settlement between the nation's five largest mortgage companies and 49 state attorneys general was decried as inadequate.
The report notes that foreclosure levels in 2013 remain three times higher than they were before 2008. That's why the coalition led by Minnesotans for A Fair Economy, Jewish Community Action and ISAIAH has renewed its push for state action to help homeowners avoid foreclosure when they fall behind on their mortgages. The bill's centerpiece: A requirement of face-to-face mediation between homeowners and lenders before foreclosures can proceed.
Legislators are bound to hear from the best lobbyists the banking industry can buy in opposition. They should also hear this: A mediation requirement before foreclosure has ample precedent in Minnesota. It was instrumental during the farm crisis of the mid-1980s in keeping hundreds of family farmers in operation. That 1986 measure had its roots in a two-year foreclosure moratorium pushed into law by Gov. Floyd B. Olson in 1933.
State responses to those crises reflected and reinforced Minnesotans' faith in each other and in democratic government. This year's Legislature can decide whether the same will be said one day of this state's response to the Great Recession.
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