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Increase in foreclosures comes as a surprise

After a positive-trending 2009, the number of home foreclosures in Olmsted County was up a sharp 39 percent in 2010, according to a recent statewide report.

"I am surprised — it's kind of a shocking increase," said Warren Hanson, president and CEO of the Greater Minnesota Housing Fund , a co-sponsor of the report.

The report, " 2010 Foreclosures in Minnesota ," was prepared by HousingLink , an affordable housing advocacy organization, using county sheriff's sale data.

In Olmsted County, the data showed a record 456 foreclosures in 2010, up from 327 foreclosures in 2009. The 2009 total had been a 19 percent decrease from the year before.

Statewide, there were 25,673 foreclosures in 2010, an 11 percent increase.


Today, the annual totals for home foreclosures statewide and in Olmsted County are three to five times as great as the totals reported in the middle of the last decade.

Five years ago, the rise in foreclosures was attributed to predatory lending, poor credit decisions by buyers and lenders, marketplace fraud and instances of collusion between Realtors and other real estate professionals, Hanson said.

"The vast majority of that kind of property has moved through the system," he said.

Today's foreclosures, Hanson said, are attributable to the poor economy, putting them more in line with analyst's traditional "big three" causes for home loss — loss of job, loss of spouse or loss of health.

Job loss is the biggest reason, accounting for an estimated 60 percent of foreclosures in 2010, according to a report by the Minnesota Home Ownership Center .

A lesser number of the foreclosures are the result of strategic decisions by buyers whose homes are "under water," meaning they are worth less than the amount owed on them. Some of those buyers make a tactical financial choice to walk away from their mortgage and try again with another house later.

Some, but not many of those tactical foreclosures are seen by Judy Plank, who heads the Homeownership Program in Olmsted County's Community Housing Partnership .

"Most of the people who are calling me today have lost their jobs," she said. Others, she said, still have their jobs, but have had their hours reduced.


Plank's program offers foreclosure counseling, helping people pick up the pieces after losing a home, or advising delinquent mortgage-payers on the steps to take to avoid losing their homes.

Her office had 208 clients in 2010. That was a decrease from 2009, when it had 274 clients. Both years, though, are by far the high-water marks in recent years for activity in the counseling program, she said.

A method of foretelling pending foreclosures — delinquency notices from foreclosure attorneys and lenders — shows a likelihood of a continued rise.

Between October 2010 and January 2011, Plank's office received 401 such notices. That compares to 361 such notices during the same period a year earlier.

The problem is particularly bleak, she said, in the building trades, where some workers haven't had work in a year or more.

"I have a couple households that have maxed out unemployment," Plank said. "They don't have any income, and they really have to start looking — do they take a $7-an-hour job instead of that $15-an-hour job, and can they afford to live? There's a lot of hard decisions for people that lose employment."

The foreclosures report was co-published by the Minnesota Home Ownership Center, the Greater Minnesota Housing Fund, the Minnesota Housing Finance Agency and the Family Housing Fund .


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