The committee heard testimony from the public about the devastating effects foreclosures have on communities. The vote was the first taken by the committee this session, noting the urgent and statewide nature of the crisis.
Duluth City Councilor Dan Hartman testified that the foreclosure crisis is a statewide problem in need of a statewide solution.
“I think the common perception is that foreclosures are a ‘Twin Cities problem,’” Hartman said. “I’m here to tell you that the foreclosure crisis has reached every corner of the state, including Duluth. In Duluth, we’re working to help families facing foreclosure, but there’s only so much we can do. That’s why we need a common sense, statewide solution like the one being considered by you today.”
Sarah Larson, a small business owner and Army veteran from Waverly, has faced many economic challenges over the past few years and has worked hard to stay in her home. “Each time we call HSBC we get a different person on the line,” Larson said. “And each person we talk to tells us something us.”
Since 2006, more than 150,000 Minnesota homeowners have lost their homes to foreclosure. In 2012, there were three times more foreclosures in Minnesota than in 2005, continuing to have a disastrous effect on Minnesota communities.
The Minnesota Homeowners’ Bill of Rights, authored by Rep. Mike Freiberg, DFL-Golden Valley; Rep. Raymond Dehn, DFL-Minneapolis; and Rep. Karen Clark, DFL-Minneapolis; would protect homeowners during the foreclosure process by:
• Implementing a foreclosure mediation program. There is growing recognition of the effectiveness of foreclosure mediation programs in preventing unnecessary foreclosures by bringing lenders and homeowners together for a face-to-face conversation about the homeowner’s situation and available options. There are now jurisdictions in 25 states that use foreclosure mediation. Around the country, more than 70 percent of mediated cases reach a settlement – usually one that means a family stays in their home. Those for whom paying a mortgage is not a sustainable option also benefit by negotiating a “graceful exit” in how and when they move out.
• Banning dual tracking. The law would prohibit mortgage companies from pursuing foreclosure while a homeowner is seeking a loan modification, a process known as “dual tracking,” that has resulted in numerous foreclosures of homeowners who were actively working to stay in their homes. Modification departments at banks like Wells Fargo and Bank of America, for instance, often instructed homeowners to stop making payments in order for them to get assigned to the loan modification program. However, when the homeowners followed these directions, the banks often foreclosed on them anyway.
• Requiring a single point of contact. The law would require that mortgage companies assign struggling homeowners a “single point of contact – an individual who knows about the homeowner’s loan, has access to decision makers, and will handle the flow of documentation between the homeowner and the mortgage company. The law would also require mortgage companies to explicitly approve or deny a modification, verify foreclosure documents, and provide such documentation to homeowners upon request.
• Allowing homeowners to sue their bank following a dual tracking loss. Homeowners would have the right to seek damages, including attorney’s fees, if they incur a loss as a result of dual tracking. This private right of action has been extremely valuable for homeowners in other states. A judge in Louisiana, for instance, awarded a homeowner $3.1 million in damages because of “reprehensible actions” from Wells Fargo, which serviced the loan.
The legislation next goes to the House Civil Law Committee.
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The committee heard testimony from the public about the devastating effects foreclosures have on communities. The vote was the first taken by the committee this session, noting the urgent and statewide nature of the crisis.
Duluth City Councilor Dan Hartman testified that the foreclosure crisis is a statewide problem in need of a statewide solution.
“I think the common perception is that foreclosures are a ‘Twin Cities problem,’” Hartman said. “I’m here to tell you that the foreclosure crisis has reached every corner of the state, including Duluth. In Duluth, we’re working to help families facing foreclosure, but there’s only so much we can do. That’s why we need a common sense, statewide solution like the one being considered by you today.”
Sarah Larson, a small business owner and Army veteran from Waverly, has faced many economic challenges over the past few years and has worked hard to stay in her home. “Each time we call HSBC we get a different person on the line,” Larson said. “And each person we talk to tells us something us.”
Since 2006, more than 150,000 Minnesota homeowners have lost their homes to foreclosure. In 2012, there were three times more foreclosures in Minnesota than in 2005, continuing to have a disastrous effect on Minnesota communities.
The Minnesota Homeowners’ Bill of Rights, authored by Rep. Mike Freiberg, DFL-Golden Valley; Rep. Raymond Dehn, DFL-Minneapolis; and Rep. Karen Clark, DFL-Minneapolis; would protect homeowners during the foreclosure process by:
• Implementing a foreclosure mediation program. There is growing recognition of the effectiveness of foreclosure mediation programs in preventing unnecessary foreclosures by bringing lenders and homeowners together for a face-to-face conversation about the homeowner’s situation and available options. There are now jurisdictions in 25 states that use foreclosure mediation. Around the country, more than 70 percent of mediated cases reach a settlement – usually one that means a family stays in their home. Those for whom paying a mortgage is not a sustainable option also benefit by negotiating a “graceful exit” in how and when they move out.
• Banning dual tracking. The law would prohibit mortgage companies from pursuing foreclosure while a homeowner is seeking a loan modification, a process known as “dual tracking,” that has resulted in numerous foreclosures of homeowners who were actively working to stay in their homes. Modification departments at banks like Wells Fargo and Bank of America, for instance, often instructed homeowners to stop making payments in order for them to get assigned to the loan modification program. However, when the homeowners followed these directions, the banks often foreclosed on them anyway.
• Requiring a single point of contact. The law would require that mortgage companies assign struggling homeowners a “single point of contact – an individual who knows about the homeowner’s loan, has access to decision makers, and will handle the flow of documentation between the homeowner and the mortgage company. The law would also require mortgage companies to explicitly approve or deny a modification, verify foreclosure documents, and provide such documentation to homeowners upon request.
• Allowing homeowners to sue their bank following a dual tracking loss. Homeowners would have the right to seek damages, including attorney’s fees, if they incur a loss as a result of dual tracking. This private right of action has been extremely valuable for homeowners in other states. A judge in Louisiana, for instance, awarded a homeowner $3.1 million in damages because of “reprehensible actions” from Wells Fargo, which serviced the loan.
The legislation next goes to the House Civil Law Committee.