Forum tries to sort through complicated housing, economic problems

Another economic stimulus?

Sen. Amy Klobuchar thinks that’s part of the answer to fixing the ailing economy — more help from the government and nonprofits targeted at the troubled housing industry.

But how?

The political challenge of working through the industry’s travails became apparent this morning at a forum convened by Minnesota’s Democratic senator. About 40 people crowded into a tiny meeting room for the event, held at the Hopkins office of the Community Action Partnership of Suburban Hennepin County.

The forum was called to discuss a first-time homebuyer’s credit that Klobuchar is sponsoring in the U.S. Senate and explore the ripple effects of the housing crisis on the economy and middle-class families. 

Housing crisis called ‘incredibly complicated’
“This is incredibly complicated,” said Rep. Jim Davnie, a Minneapolis DFLer who attended the forum of the housing crisis. Davnie was instrumental in getting state legislation passed last year to curb predatory mortgage lending practices.

But that legislation was aimed at future practices. Most of the forum speakers raised concerns about current problems, often experienced by homeowners and tenants adversely affected by the state’s surge in foreclosures.

Two of the panelists, Christina Scipioni and Jon Tran, plan to marry this fall. They said they were elated when they got an FHA-backed loan to buy a home, which they will close on at the end of the month. But at first, they couldn’t get a mortgage. Tran said he works three jobs, and Scipioni said she has two.

Another panelist — Karen Skepper, economic development manager for Anoka County — said boarded-up homes now dot the landscapes of every one of the county’s 19 cities and two townships. Last year, 1,671 sheriff’s sales were conducted for home foreclosures in the county, up from 843 in 2006.

Many counties face double-edged problem
That presents a double-edged challenge for the county, she said. First, growing numbers of its residents are losing their homes and seeing their credit ratings decline. Second, the boarded-up homes are eroding the quality of entire neighborhoods.

Skepper said Anoka County is trying to craft a program to improve the neighborhoods by helping buyers to purchase homes, working with federal grants and the nonprofit Two Rivers Land Trust.

“There are a lot of ways we got into this problem, and there will be a range of solutions that will help us solve this crisis,” said Julie Gugin, executive director of the Home Ownership Center of Minnesota.

One way is through more counseling services. The center, working with a counselors network, launched a series of workshops last month for home borrowers. The network now has 76 counselors, four times as many as it had at the start of 2007.

At Home Line, a tenant advocacy nonprofit, calls from renters concerned about foreclosures soared to 438 last year from 77 in 2006. This year, the calls are running at an annual rate of 800 to 900.

Tenants are the first to learn of the foreclosures, because the sheriff’s notices go first to the occupants, even though it’s the owners whose properties are caught up in the foreclosure process. Often, the renters react with alarm, fearing they’ll have to move out in a few weeks. Yet in most instances, the renters actually have six months or more to find a new home, said Mike Vraa, an attorney who works for Home Line.

Pam Perri Weaver, executive director for the Builders Association of Minnesota, said she worries that new federal legislation being considered will favor big business at the expense of small home-builders. “We don’t want to see small business being bypassed,” she said.

A Klobuchar aide said the flood of Minnesota foreclosures has now reached far beyond its most concentrated area, North Minneapolis, and is hitting parts of Anoka and Isanti counties particularly hard.

Both the U.S. Senate and House of Representatives are weighing legislation this week to help homeowners and others affected by housing market troubles. The push for more widespread federal aid has picked up steam since the Federal Reserve aided big Wall Street investment banks in the wake of the Fed-assisted sale of the Bear Stearns investment firm.

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