EDITORIAL: Missed a house payment?

During the past three years, 38,000 Minnesotans have lost their homes because they couldn’t afford their mortgage payments.

That trend isn’t likely to end anytime soon. This year, more than 80,000 Minnesotans are expected to miss at least one mortgage payment.

Like those who already have lost their homes, more Minnesotans are asking questions such as: “Is my home mortgage right for me? Is my home affordable over the long term?”

On Tuesday, March 10, two local nonprofits — Heartland Community Action Agency and Lutheran Social Service of Central Minnesota — along with the nonprofit Minnesota Home Ownership Center, will host a telephone seminar to help homeowners in our part of the state answer those questions.

If you have any fears about making your next mortgage payment, we urge you to call in.

Ed Nelson of the Minnesota Home Ownership Center visited our office last week to explain the importance of the free mortgage support and foreclosure counseling that will be offered during this seminar. For many, Mr. Nelson said, the seminar will be just the first step toward better understanding mortgage affordability. “We will walk the consumer through the foreclosure process in Minnesota,” he said.

Some who call in might have already fallen behind in their payments. Others might be on the verge. The key, Mr. Nelson advises, is to take action early if you fear you might not be able to make a payment. The earlier you respond, the more options you have.

“If the sheriff is outside and ready to auction off your house, your options are pretty limited,” he said.

The Minnesota Home Ownership Center coordinates free mortgage support and foreclosure counseling through a statewide network of 25 nonprofit organizations. That help has become all the more valuable in recent months. It’s especially valuable to communities like Hutchinson, where unemployment reached 9.6 percent during December — weeks before Hutchinson Technology’s layoffs.

The March 10 call-in seminar will be a radio-format conversation with Mr. Nelson and two other financial advisors. The program will run from 7 to 8 p.m. The toll-free number is (877) 850-7042.

Callers will be able to ask questions anonymously — their names will not be known to the advisors. The service will be free and confidential, just like the support offered by the 25 nonprofit organizations.

Beware of the predators
Mr. Nelson made it clear that no one should have to pay for mortgage support or foreclosure counseling. “Why pay for something that is available completely free of charge?” he asked.

Unfortunately, the same type of predatory practices that got our nation into the current financial crisis is being used by some unscrupulous firms to prey on homeowners having difficulty make house payments.

So-called “foreclosure consultants” typically say they will save a homeowner’s home from foreclosure by negotiating or modifying the terms of the homeowner’s existing mortgage. They’ll provide this service for a fee ranging from $500 to $3,000 or more — and they typically take the homeowner’s money upfront.

But a 2004 Minnesota law bars “foreclosure consultants” from charging until after the consultant has “fully performed each and every service the foreclosure consultant contracted to perform or represented he or she would perform.”

Minnesota Attorney General Lori Swanson also is concerned about a new breed of company that operates like a foreclosure consultant in promising to negotiate or modify the terms of the homeowner’s existing mortgage. Instead, it targets homeowners who may be struggling financially but are not yet in default or foreclosure.

Ms. Swanson and state legislators have proposed legislation to close loopholes in existing state law regulating foreclosure consultants.

“Right now, consumers are really being taken advantage of,” Mr. Nelson said. “… There’s nothing that these for-profit entities can do that our network of agencies can’t do for free.”

Simple questions
The most important step at-risk homeowners must take is to recognize they are in trouble. For example:

< Are you worried about being stuck in your mortgage?

< At the end of the month, do you find yourself struggling to get ahead, or even to catch up?

< Are you questioning the future because you worry how you will make ends meet today?

Those who answer “yes” to these questions might benefit from mortgage counseling. It doesn’t necessarily mean they’ll lose their home. In many situations, a counselor can work with the homeowners’ lender to restructure a loan, so payments are more affordable. Counselors also can look over the family’s entire budget, and might connect the family to other resources, such as Medical Assistance, if needed.

In other cases, it might be better for a family to walk away from their mortgage. They might even need to declare bankruptcy. Mr. Nelson said counselors work with many resources — including the Attorney General’s office, the Minnesota Commerce Department and banks — to help families work themselves into a better financial situation.

Homeowners from all walks of life are struggling to make ends meet. If you answered “yes” to any of the above questions, consider participating in the March 10 call-in seminar. Or feel free to call the Minnesota Home Ownership Center at (866) 462-6466, or visit www.hocmn.org.

(Editorials are written by Publisher Matt McMillan and Editor Doug Hanneman. They can be reached at mcmillan@hutchinsonleader.com, or hanneman@hutchinsonleader.com.)