Minnesota Moving To Regulate Forecolsures
March 6, 2008
If the Fed doesn’t bailout mortgage borrowers, the states might just step in.
Minnesota’s legislature is moving forward on three separate bills that would step up government involvement in pending foreclosures.
Already, White House and central bank officials are tilting with Congress over potential federal "relief” legislation which might intervene in mortgage contracts.
Yet political pressure is building at the state level, too, to forestall a wave potentially millions of foreclosures in the coming months.
The Minnesota bills, while not bailouts yet, would:
Require lenders to contact a state-approved foreclosure counselor when default notices go out, and tell the borrower about that contact
Erase foreclosure eviction notices from renters’ records, so that a default by a landlord won't affect the renter’s ability to rent another home
Shorten foreclosure sales to five weeks from six months, so that abandoned properties reoccupied quicker.
"We need to do this," state Sen. Linda Higgins from Minneapolis told Minnesota Public Radio. "This is really reaching a crisis level."
[Editor’s Note: What the Mainstream Media is NOT Telling You About The Economy.]
Other proposals in the works take more blunt action, including a one-year moratorium on some foreclosures.
Minnesota state Sen. Linda Scheid, said the actions would help both banks and borrowers. Part of the problem is foot-dragging as borrowers ignore the default notices and bank phone calls out of panic.
"These people are in denial," Scheid said.
It’s not hard to understand what’s driving the politicians to act. Vacant properties are on the rise, up to 800 in Minneapolis from 300 last year.
Empty houses drag down property values and lead to crime. High prices for scrap metal lead thieves to break into homes, to steal appliances — even wiring.
State Rep. Joe Mullery said too many borrowers were pushed into adjustable mortgages when they could have taken fixed-rate loans, including, he says, up to 60 percent of blacks with subprime loans.
"It's a disgrace," he told reporters.
Editor's Notes: