Hennepin County has set up a team to monitor the expected foreclosure onslaught when homeowners become unemployed or ill when a pandemic occurs more than two years ago.
Surprisingly, the waves of foreclosure never crossed Hennepin County or the Twin Cities. In Ramsey County, 72 foreclosures last year were the lowest since 2003.
Housing officials cite the moratorium of federal foreclosures and rising house prices as a result of the shortage of displaced people. In some cases, the booming housing market kept the value of real estate high, allowing owners to lag behind payments and sell profitably.
Now that the moratorium is over and interest rates are rising, economists have expressed new concerns about a recession that could spark a new foreclosure.
“It would be interesting to see if there is an upward trend,” said Luis Rosario, Ramsey County Councilor. “I think there is”
Hennepin County figures for the first six months of 2022 show an increase in mortgage foreclosures. So far, the county has recorded 154 foreclosures, compared to 173 in 2021 overall.
Ryan Allen, a professor of urban planning at the University of Minnesota and a member of the Hennepin County foreclosure team, said: ..
Almost 50% of this year’s foreclosures are in the core cities of Hennepin County, Minneapolis, Brooklyn Center and Bloomington. Few cities in the county have no real estate closures, such as Mound, Dayton, and Maple Grove.
Minnesota offers lenders two ways to get their home back. The state is one of the few countries to offer judicial foreclosures, and lenders can file proceedings in court seeking an order permitting the sale of foreclosures. The owner can defend the proceedings, but if the lender wins, the judge orders the sale of the house.
Another process is the more general non-judicial foreclosure, which is usually faster and cheaper than proceeding in court. Lenders must keep informed homeowners of the foreclosure procedure and inform them about mortgage counseling options. Under federal law, lenders cannot initiate foreclosure until the owner misses four payments.
Both parties can continue to consider possible mortgage payment plans to prevent foreclosure. The foreclosure notice must be published in the newspaper for 6 weeks, during which time the lender must again send information about the process outage to the owner. The county sheriff’s office handles the sale of the property.
According to CoreLogic, which uses public records to track national housing data, national foreclosure rates are the lowest in 20 years.
Data show that between March 2021 and March 2022, the number of homeowners whose mortgage payments were delayed by 30 to 90 days decreased. The share of mortgages at some stage of foreclosure also declined in the meantime.
Hennepin County used the federal COVID-19 Relief Fund to provide mortgage counseling to residents, said Mark Chapin, head of county residents and real estate services. Like Ramsey County, Hennepin also allowed owners to delay property tax payments.
Neither county used federal pandemic bailout funds to help pay mortgages, but both allocated money to help people pay rent. The state has received over $ 100 million in federal funding for its HomeHelpMN program to help lessors and homeowners pay, but it’s unclear how it has affected the prevention of foreclosures and evictions of peasants.
When the pandemic began, Allen said it was impossible to get an accurate picture of the foreclosure rate, as many programs were being deployed or considered by the federal, state, and local governments.
“But during the pandemic, things were actually more stable,” he said. “It wasn’t like the recession of 2008,” when economically vulnerable homeowners suffered a significant increase as part of floating rate mortgages.
According to Rosario, Ramsey County recorded 3,023 foreclosures in 2008, and house prices plummeted. He said there was a cluster of foreclosures throughout the block and it took more than a decade to restore the value that was wiped out during the financial crisis.
Foreclosure affects families and communities, said Allen, a professor of city planning. For households, it can ruin credit ratings, cause loss of impartiality, and cause dislocation problems for children forced to transfer to another school.
Foreclosures can also reduce the value of surrounding homes and inform potential homebuyers that their neighbors may be unhealthy, according to Allen.
“The impact of foreclosure is not trivial,” he said.