The sub-prime mortgage crisis has affected the United States as a whole and Minnesota particularly. We’ve watched as more houses have become vacant, neighbors have moved away, and boards and broken windows blight our landscape. North Minneapolis has been hit especially hard. Across my street I noticed that a lawn wasn’t being mowed. Then a garage door suddenly disappeared. Throughout the coming weeks I noticed the gradual accumulation of garbage (old tires, debris, and concrete block) in the garage. The city bounced me around and claimed that nothing could be done about the problem until the city inspector got around to stopping by the place.
The majority of the foreclosures have happened due to the re-adjustment of non-fixed rate mortgages (ARM). After a period of time (usually 2-3 years) the low teaser interest rate adjusts to the current federal rate plus something. Practically this means that a mortgage payment that started out being affordable for the homebuyer can quickly rise above the ability of the family to afford. Finally the bank steps in and forecloses on the property.
We need to attack this problem from two sides:
1. What to do about the homes that have already foreclosed?
2. How to prevent further foreclosures in our neighborhood?
Homes that are sitting vacant cause several problems and the current laws are inadequate to cover the costs of dealing with the problem. The fees associated with home vacancy have increased (from $2000 to $6000) to help offset the additional maintenance required by these properties. But these fees are assessed to the property taxes – essentially passing the buck to the next buyer! When banks foreclose on a property it should be mandatory that a responsible entity be registered with the City/State so that fees assessed against the property can be definitely delivered. This will ensure that banks own up to their responsibility for the lending that has taken place in our neighborhood.
Many homes seized by Hennepin County have not been put up for auction. Specifically a large inventory of properties has been withheld from the market over the last two years. These properties are sitting idle, attracting crime, and depressing the values of our homes. Placing the inventory immediately on the market would allow first time homebuyers to populate the neighborhood and revitalize our property tax base. We must not prevent the market from sorting this problem out by holding back inventory!
Many properties that are being foreclosed are currently occupied with renters. Though the renters may have been making steady, timely payments to the landlord, a foreclosure can force them from the home. Special provision should be made for these situations. The minimum amount of time for occupation of the property ought to be increased and after foreclose is finalized the renting family should have first chance at the property before auction. Paying a bit less for the home will mean the family will have more money for maintenance and upkeep and have more money to spend in the neighborhood.
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