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Foreclosure counseling expands

ST. PAUL -- Minnesotans facing home foreclosure may attend workshops with lenders to work out their financial problems.

However, Gov. Tim Pawlenty won't go as far as others and mandate such meetings.

Foreclosure counseling workshops already are available, but Pawlenty on Monday announced an expansion as the state works with the private Minnesota Home Ownership Center.

Workshops are scheduled in the Twin Cities area, and Pawlenty announced they will be added in Duluth, St. Cloud and Rochester. None are scheduled in the western half of the state, although state Housing Commissioner Tim Marx said they would be if the need develops.

"The American dream is threatened by this foreclosure and mortgage crisis," Pawlenty said.

Lawmakers are considering several incremental anti-foreclosure bills after thousands of Minnesotans began finding themselves unable to repay their mortgages. In many cases, those facing problems did not earn enough money to repay their loans.

The governor said he supports most of the anti-foreclosure bills, but not one that would delay foreclosures for a year.

The bill by Rep. Jim Davnie of Minneapolis and Sen. Ellen Anderson of St. Paul, both Democrats, would lead to more expensive credit for other Minnesotans, the Republican governor said.

"The credit market already is so tight, I don't think that it can get any tighter due to one law in Minnesota," Davnie countered.

Davnie said the governor's staff walked out of a meeting on the issue late last week, saying they had nothing to discuss. The governor called the Davnie-Anderson bill a mandate to both sides in a foreclosure, but Davnie said the bill remains voluntary, like the workshops Pawlenty promotes.

Pawlenty said forcing people into negotiations is not effective.

"Angry people who do not want to show up are not as effective as those who want to be there," he said, arguing for a voluntary program instead of establishing a mandate to negotiate.

Davnie said he is glad the governor is paying attention to the problem, but Pawlenty's Monday announcement is just "a nuance" change from what the state already does.

Pawlenty said the state cannot order mortgage lenders to negotiate with homeowners, in part because some mortgages are sold to numerous entities and many are located outside Minnesota.

However, the governor said, his agencies will try to convince lenders to negotiate with people who may face foreclosure. That would be best for both sides, he said.

"Counselors are making good progress," he said.

Executive Director Julie Gugin of the Minnesota Home Ownership Center said her organization deals with more than 12,000 foreclosures a year in workshops like Pawlenty promoted, and about half successfully resolve the problem. Commerce Commissioner Glen Wilson said it is important for people to begin mortgage counseling early. The earlier they seek help, the greater the chance a foreclosure will be avoided, he added.

Don Davis
Don Davis has been the Forum Communications Minnesota Capitol Bureau chief since 2001, covering state government and politics for two dozen newspapers in the state. Don also blogs at Capital Chatter on Areavoices.