Proposed Minnesota Law Would Delay Foreclosures Instead of halting foreclosures outright, Minnesota lawmakers consider a bill that would let homeowners delay the possibility of foreclosure for one year — but only if they keep paying at least 65 percent of their monthly mortgage payment.


Proposed Minnesota Law Would Delay Foreclosures

  • Download
  • <iframe src="" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript


Some states are proposing moratoriums on foreclosures as a way to deal with the ongoing crisis in the housing market. In Minnesota, lawmakers are taking a slightly different approach, one that tries to keep people in their homes but also preaches personal responsibility.

Tom Weber reports from Minnesota Public Radio.

TOM WEBER: Instead of trying to halt foreclosures outright, the measure in Minnesota would let people delay foreclosure for one year - but only if they keep paying at least 65 percent of their monthly mortgage payment. And that option is only for owner-occupied homes that were financed with subprime loans.

University of Minnesota law professor Prentiss Cox helped write the bill and says other proposals offer some good long-term solutions, but they don't address the immediate crisis. Still, Cox concedes you can't save every home.

Professor PRENTISS COX (University of Minnesota): I think the best policy is to figure out who has a chance to keep their home at the end and to do everything you can to help those folks. I don't think it benefits anyone to defer foreclosure on a property where the homeowner doesn't have a realistic possibility at the end.

WEBER: Supporters say 12,000 Minnesotans could potentially benefit if the bill becomes law, and that's fewer than half the homes predicted to be foreclosed on in Minnesota this year. But even with the measure's limited scope, there has been strong opposition, especially from the banking lobby. And there's also the political side of the story.

Here's how David Senjem, a top-ranking Republican, decried the measure on the Senate floor this week.

Mr. DAVID SENJEM (Republican Party): And now we propose through this bill that the Minnesota state government is going to intervene in a private contract and change that contract and put conditions on that contract that really involved the two parties, and we were never there to start with.

WEBER: As you stand on the steps of the Minnesota Capitol, which I'm doing right now, there's a huge cathedral off to the right and downtown St. Paul off to the left. But if you look straight ahead, behind a parking garage there's the top of a building, which is the Xcel Energy Center. That's the building where the Republican Convention will be held later this summer. It's less than a mile from here. And that convention's certainly been on the minds of plenty of people inside the Capitol this year, including the governor, Tim Pawlenty. He's been named as a possible running mate to John McCain. And Pawlenty's action on such a national issue like foreclosure could certainly come up later if he is, indeed, chosen.

State Senator ELLEN ANDERSON (Democrat, Minnesota): You know, for a governor of a state that has a major foreclosure problem and a governor who's interested in running for national office, this is something that he needs to be a leader on.

WEBER: That's Democrat Ellen Anderson, who is sponsoring the bill in the Senate. But Governor Tim Pawlenty says he is being a leader on bringing up important concerns, and recently said the measure would do more harm than good.

Governor TIM PAWLENTY (Republican, Minnesota): I'm not supportive of that and won't support that. No other state has done that. It will impact the credit markets in Minnesota in a way that's detrimental to the other 99 percent of Minnesotans who are not in foreclosure.

WEBER: Supporters say an amendment added to the bill this week should quell some of the governor's concerns and they say hopefully avoid a veto, which the legislature would be hard-pressed to override. That amendment would let lenders stop the foreclosure deferment if they make a good-faith effort to renegotiate a borrower's loan.

It's not the first time this year that Minnesota's Democratically controlled legislature has faced the threat of a veto from the Republican governor, and with all local politics suddenly going national here this year, it probably won't be the last.

For NPR News, I'm Tom Weber, in St. Paul.

Copyright © 2008 NPR. All rights reserved. Visit our website terms of use and permissions pages at for further information.

NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.