At the end of last session, a bill sponsored by Rep. Joe Mullery (DFL-Mpls) cracking down on predatory lending was signed into law. It provides restrictions on “special mortgages,” prohibits various fees and provides borrowers with a private cause of action against mortgage lenders who violate certain laws.
The law was ahead of the country in many respects, according to a University of Minnesota report. Mullery believed that more needed to be done, and during the summer, he convened a group to look into laying out plans to aggressively deal with issues related to people facing foreclosure.
This group included DFL and Republican legislators, representatives from Legal Aid, Hennepin and Anoka counties, the City of St. Paul, HousingLink, Minnesota Bankers Association, Office of the Attorney General and the housing advocacy group Minnesota ACORN.
From this, five working groups emerged: the Renter Working Group; the Remedies Working Group; the Foreclosure Data Group; the Foreclosure Prevention Working Group; and the Vacancies Working Group.
Through this process, Mullery wanted to draft a series of bills that could be passed and survive a veto from the governor. At this point, it seems to be working out.
By April 1, at least 18 bills were drafted, and to date, seven bills dealing with mortgage foreclosure issues had passed the House with overwhelming support. At least two additional bills, including the Minnesota Subprime Foreclosure Deferment Act, are waiting to be heard on the House floor.
“People are hurting, neighborhoods are declining, our economy is wavering and the credit market is collapsing under the weight of this foreclosure crisis. These bills expand the options and resources available to homeowners to help Minnesotans avoid foreclosure,” Mullery said.
The main concerns
Of the issues raised, early intervention surfaced as the top concern. “The biggest way to help most people is to get them counseling,” Mullery said. If some type of support is not provided in that first 60 to 90 days, the situation often cannot be saved, he said.
HF3475/SF2912*, sponsored by Mullery and Sen. Linda Scheid (DFL-Brooklyn Park), would require lenders to notify foreclosure protection agencies when a borrower has been issued a default notice. The bill also provides the borrower with a “preforeclosure notice” alerting them to why they are getting a notice and what services are available. Passed 51-1 by the Senate March 5, the bill now awaits action by the full House.
Renters are sometimes caught in the middle of the foreclosure process, specifically when the property they are renting goes into foreclosure and no one tells them. Out of the discussions of the Renters Working Group came two bills.
HF3517/SF2910*, sponsored by Rep. Jim Davnie (DFL-Mpls) and Sen. Linda Higgins (DFL-Mpls), expunges an eviction from a tenant’s record if the tenant vacates the premises before commencement of eviction, or was not given proper notice. It was passed 129-0 by the House April 1 and 49-0 by the Senate March 5.
Meanwhile, HF3428/SF2909*, sponsored by Rep. Bob Gunther (R-Fairmont) and Sen. Rick Olseen (DFL-Harris), would allow for a tenant to pay a utility bill to keep service on when a landlord fails to pay a bill. It was passed 129-0 by the House April 1 and 63-0 by the Senate March 6.
Both bills await the governor’s signature.
The real numbers
The Foreclosure Data Group discovered that it’s difficult to find accurate data on properties in foreclosures. The group recommended two courses of action.
First, additional data should be provided on sales notices, including the complete address of the property, the name of the lender, whether or not the property is privately owned or owned by an investor, and whether or not the property is registered with the Mortgage Electronic Registration Systems.
The group further recommended that a study take place to develop a statewide foreclosure data collection and reporting system.
These two recommendations make up HF3516*/SF2914, sponsored by Davnie and Sen. Ann Rest (DFL-New Hope). Passed 129-0 by the House April 1, it now awaits action by the full Senate.
Addressing civil rights
North Minneapolis has been devastated by the foreclosure crisis. Mullery, who represents this area, knows that in some instances, people were given subprime loans that should not have received them. But there were also others who were clearly taken advantage of.
According to Mullery, 60 percent of the blacks who were in the subprime loans were eligible for prime rate loans, which could have saved them thousands of dollars. This type of discrimination, Mullery said, is inexcusable.
HF3478/SF2915* would raise the cap for punitive damages under the Minnesota Human Rights Act for fair housing from $8,500 to $25,000. Sponsored by Rep. Neil W. Peterson (R-Bloomington) and Sen. Mee Moua (DFL-St. Paul), the bill would allow authorities to prosecute mortgage fraud by charging them with other offenses and higher prison terms. The bill passed the Senate 57-4 March 31 and awaits action by the full House.