The Foreclosure Crisis Isn’t Over Yet
September 21st, 2009 at 3:10 pm By Nora Ferrell
According to a September 21st Star Tribune article, the housing foreclosure rate in Minnesota is the highest in the Upper Midwest. Minnesota reported 3,688 foreclosures in August–a decline of 11 percent since July but 70 percent higher than a year ago. Wisconsin, Iowa, South Dakota and North Dakota all had lower foreclosure rates.
All signs point to a slow economic recovery in Minnesota and the nation. And as thousands of Minnesotans continue to deal with unemployment, lack of health insurance, and upside down mortgages, more foreclosures are sure to follow.
It’s not too late to look at an insightful prescription for housing recovery crafted by MN2020′s Economic Development Fellow Lee Egerstrom and retired St. Paul banker Larry Buegler. According to a report they released earlier this year, Minnesotans should consider starting a new program that would guarantee new homebuyers’ down payments for five years even if the market continues to decline. This type of “price floor” program would stop the housing market free fall and get local markets moving again, according to report authors.
Modeled after a program that helped to end the farm crisis in Minnesota and the country in 1987, The Minnesota Home Values Guarantee Program will benefit both lenders and consumers and stabilize prices. According to the report, federal efforts to make funds available for lenders and borrowers to rework troubled mortgages are not likely to succeed if property values continue to fall.
“We feel confident that a Guarantee program can turn the housing market around in Minnesota, but it doesn’t need to be limited to our state. This program can work across the country,” said Egerstrom. “When credit markets have dried up and federal dollars aren’t reaching homebuyers on the ground, it’s time to take a front porch approach to the problem.”
LikeTags: foreclosures, Housing, housing crisis, housing market, recession
