Minnesota: Fighting for a Moratorium on Home Foreclosures
Editors note: Since this article was written, Minnesota Governor Pawlenty has announced there will be no special secession of the legislature this year and, in an unprecedented move, he states he will use the line item veto and his power to unallot to carry out massive budget cuts.
St. Paul, MN - Coinciding with the release of news that there were 342,000 foreclosure actions across the U.S. in the month of April, leaders of the Minnesota Coalition for a People’s Bailout testified before a House of Representatives committee at the Minnesota state capitol here, May 11 and May 14.
The hearing was on HF2233, which puts a one to two-year moratorium on foreclosures and which allows tenants of foreclosed properties to keep their existing leases. The hearing was ‘information only,’ because powerful Democrats in the Minnesota House and Senate – such as Representative Joe Mullery and Senator Jim Metzen, tied to banking interests – refused to give the bill a full hearing and also refused to release the bill to other committees.
A positive result of the May 14 hearing was the formation of a housing crisis ‘working group’ meeting scheduled for May 15. The Minnesota legislative session is supposed to end on May 18, but most observers expect a special session because of the budget crisis. The Minnesota Coalition for a People’s Bailout is hoping to get the bill passed during the special session.
On May 11, Leslie Parks testified on behalf of her mother, Tecora Parks, who faces a sheriff’s sale on May 29. After city-ordered repairs, the elder Ms. Parks told the broker that she wanted a loan exactly like she had before, which was a fixed-rate mortgage. She assumed that is what the broker was working out for her. But the broker set her up with an adjustable rate mortgage – an ARM – since he got more of a commission if he sold an ARM. Ms. Parks didn’t even know she had an ARM, since mortgage papers are very confusing and the broker didn’t let her know he was going against her wishes. Before this refinancing, Ms. Parks had perfect credit. She would have qualified for a conventional loan. But the broker sold her an ARM without her knowing. Now, Tecora Parks’s credit is ruined.
Stefanie Yorek. a member of AFSCME 3800, clerical workers at the University of Minnesota, testified: “Home values make up more than 75% of the assets for most of our union sisters and brothers. The collapse of housing values will continue to be a long term crisis for our members. Right now 22% of Americans owe more on their homes than their home is worth. Some projections are that by year end 70% of homeowners will be underwater. This translates to economic disaster for working people, for our members.
While the banks are being bailed out to the tune of $700 billion in taxpayer dollars, nothing is being done at any level to help working families stay in their homes and save their assets for the future. Our members have invested in their homes in the hopes of paying for their children to attend college, or have a nest egg at retirement.” She also named several local and statewide labor organizations that have signed on to the moratorium.
Mike Kidd, a lifelong resident of north Minneapolis, electrified the representatives as he explained his situation. Four and half years ago, Kidd, an owner of a small trucking company, made a $40,000 down payment on a $189,000 home, with a 30-year, fixed rate, low-interest mortgage. His home is now ‘worth’ about $87,000. This leaves him $100,000 ‘underwater.’ With the economic downturn, Kidd’s trucking business is suffering and he needs time to re-negotiate his mortgage. “I am hopeful that there will be some other things that will offered for homeowners in my situation, but it’s a very frustrating position to be in, especially at this point in my life [Kidd is 49]. The surrounding area, it looks like a war zone in some respect. You look at every block and there’s like three, four, five foreclosed properties.”
Peter Brown a volunteer with the Minnesota Tenants Union and the Minnesota Chapter of the National Lawyers Guild, submitted a statement which read, “The city council of Minneapolis, on April 28, 2009, the voted unanimously to make HF 2233 a priority…Rather than engage in the expensive and elusive chase trying to remedy the damage done by foreclosures/evictions/vacancies, we need to head upstream of the problem using the common-sense direct measures provided by HF 2233 to head off the foreclosure/vacancies syndrome in the first place.”
Tom Lenius, who helps compile foreclosure data for the Coalition and presented a map which showed some of the sheriff’s sales in Minneapolis in the first three and half months of 2009, stated: “The scale of the foreclosure crisis is staggering. Here in Minneapolis alone we have experienced well over 500 foreclosure sales so far in 2009, and we think the pace of foreclosures is set to increase. The only way to get enough time to implement a sound solution that protects people's rights is to impose a moratorium on foreclosures and evictions.”
Despite the good news about the upcoming ‘working group,’ Coalition members were wary. Minnesota Coalition for a People’s Bailout member Linden Gawboy stated, “The legislators kept bringing up how we had be ‘surgical’ in how we deal with this crisis. In fact something much more radical is called for We need a blanket moratorium so every family can get the relief they need.”