Preserving Homeownership in North Minneapolis:

Responding to the Impact of Foreclosures

Executive Summary -

Imagine what the public reaction would be if a tsunami destroyed over 2,000 homes in one area, leaving 2,000 families without shelter or assets.  North Minneapolis is now experiencing such a tidal wave of foreclosures, and while the houses may still be standing, the devastation families experience through foreclosure is on the scale of that experienced in a massive natural disaster.  Northside neighborhoods and residents are concerned about the negative impacts on individuals, families and communities.  Individuals and families lose their homes, their credit ratings and potentially face interruptions in work and education.  They are often forced to leave communities in which they had developed and invested social capital in the form of relationships and trust.  Neighborhoods also lose social capital and remaining residents face the loss of home values, potential increases in crime and loss of jobs.  Responding to this situation requires a comprehensive approach in order to address both the individual and community levels.  The response must include prevention of foreclosures as well as assistance to families and communities dealing with the aftermath of foreclosure.

Our research shows that many of the fraudulent practices which led to the current crisis are being addressed by legislation and law enforcement.  We do believe that additional legislation can help reduce widespread fraud from recurring when the recent inflated market conditions return.

We find no connection between murder and crime rates and the foreclosure crisis.  While foreclosure may lead to vacancies and provide opportunities for vandalism, crime has been dropping in North Minneapolis.  The high murder rates of previous years occurred when there was no foreclosure crisis.

We find that foreclosure not only forces individual households, both homeowners and tenants, out of their homes but also has the effect of reducing the overall level of home ownership in a neighborhood.  This research documents how foreclosures are accelerating the pace of conversion from owner-occupied to investor-owned properties in North Minneapolis.  While many foreclosed properties are already owned by investors, the percentage of these properties is increasing rapidly as mortgage companies repossess homes and are unable to quickly resell them to new homeowners.

Proposals to Reduce Mortgage Fraud

1) Pass legislation requiring that the public record include the names of the appraiser, the individual mortgage broker, the institution originating the mortgage and the title company involved in the transaction. This will increase the transparency of transactions.

Proposals to Reduce & Prevent Foreclosures in North Minneapolis

2) Increase public awareness of mortgage foreclosure prevention resources by involving NNA members and other local community organizations in conducting public education including door to door outreach and other grass-roots efforts. Support efforts to provide more resources for outreach by NNA organizations and others.
3) Expand resources available for foreclosure prevention counseling on the North Side, including training multi-lingual staff able to serve Hmong, Lao and other immigrant communities.
4) Ensure that Northside renters receive information about foreclosure and their rights to remain in their homes to help them avoid dislocation and homelessness. This will also prevent vacant buildings from becoming targets of vandalism and arson and locations of criminal activity.
5) Support efforts to coordinate housing services to North Minneapolis families and owners facing foreclosure including e.g. matching potential tenants with responsible landlords.
6) Encourage mortgage holders to adopt a voluntary three month moratorium on foreclosures on the North Side to allow more time for working out new mortgage terms with eligible homeowners.

Proposal to Preserve and Promote Home Ownership

7) NNA should convene a group to develop a comprehensive housing and redevelopment policy for North Minneapolis to address the challenges and opportunities posed by the foreclosure crisis. Discussion should include consideration of ways to promote community ownership and control of parcels and/or buildings, the benefits and disadvantages of increasing density, etc.
8) After developing this housing policy, NNA should work with Northside Home Fund Board and other partners to carry it out.

Adopting these policies will require coordination and action from the local to the state levels. We look forward to working with all stakeholders, public officials and office holders to create solutions that assist the thousands in need and preserve our North Minneapolis neighborhoods.