Minnesota foreclosures lowest since 2007

Foreclosures fell to their lowest level since 2007 across the state, but there are still some counties where the problem is getting worse.

According to a first-quarter report from HousingLink, there were 4,836 sheriff's sales from January through March, or 10 percent fewer than the same quarter last year.

Dan Hylton, HousingLink's research manager, said that while the trend is positive, he warned that the number of people who have lost their home is still nearly four times higher than the 1,618 quarterly average posted in 2005.

"It's about what I've expected," said Hylton. "But we know that there are still a lot out there."

Though the report bolsters evidence that the state's economy is improving, it's unclear whether the declines in some areas are a sign that homeowners are doing better financially, or whether lenders are simply delaying the inevitable. "It's still a mystery how many we'll see coming through the pipeline," Hylton said.

Throughout the state, the declines have been steady, falling on average 3.3 percent from quarter to quarter. They were strongest in the Twin Cities metro, which posted a 11.5 percent decline compared with a 7.4 percent decline in outstate counties.

The report is based on sheriff sale data collected directly from counties throughout the state, and it reveals dramatic differences in how counties are recovering from the foreclosure crisis. In general, the highest foreclosure rates have spread from urban communities where the crisis got its start as the result of mortgage fraud, into exurban areas where economic problems are mostly to blame. Those "collar communities" are particularly vulnerable because so many of them were places were developers could build hundreds of houses aimed at first-time buyers who couldn't afford higher prices in communities closer to their jobs within the metro area.

"These people are not only burdened by cost of housing, but by the fact that they have to have to pay high gas costs to commute to the Twin Cities, and that doesn't help things," Hylton said.

The report doesn't track the number of delinquencies that will eventually lead to foreclosures, but a CoreLogic report earlier this month suggests that mortgage delinquencies are down slightly in Minnesota.

Colleen Hernandez, who is chief executive of the Homeownership Preservation Foundation, a Twin Cities-based national foreclosure prevention center, said that declines in foreclosure rates aren't always a sign that homeowners are in better financial shape. She said that recent legal settlements that impose fines on lenders who improperly process foreclosures are causing some lenders to either delay the filing, or to go the short-sale route.