Pawlenty announces foreclosure aid
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Gov. Tim Pawlenty says the state will hire additional foreclosure prevention counselors to help people who are having trouble paying their mortgages.
Pawlenty says the Minnesota Housing Finance Agency will dedicate $1 million, and private and local agencies will kick in another $800,000.
The governor estimates that the additional 19 counselors will reduce an estimated 5,700 foreclosures in Minnesota. Pawlenty says he hopes people who are struggling to pay their mortgages will ask for help.
"There is a resistance sometimes for people who are in these situations to ask for help. They feel like there is some shame, or some need to be secret or private about it," says Pawlenty. "We want to encourage people that there is no problem or shame, and they shouldn't let pride get in the way of asking for help."
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None of the aid will go directly to homeowners in crisis.
Pawlenty said the counselors can advise them on switching from adjustable to fixed-rate mortgages, working out more affordable payment plans and referring them to organizations that offer financial aid. He acknowledged it won't help everyone in need.
"We hope it leads to financial relief," said the Republican governor. "It won't in all cases, but in some cases it will. This is not going to solve all the problems but it will help."
The subprime mortgage crisis is causing problems for Minnesota's entire economy.
An estimate by the Greater Minnesota Housing Fund says 80,000 families are expected to fall behind on their mortgage payments by the end of the year.
More than 20,000 households will probably lose their homes to foreclosure by Dec. 31, according to the Minneapolis-based nonprofit HousingLink.
The figures are based on sheriff's sales of foreclosed homes in most Minnesota counties during the first nine months of 2007, and projections for the rest of the year.
The hardest-hit areas include the Twin Cities metropolitan area and outlying counties such as Isanti, Mille Lacs, Sherburne and Pine.
Commerce Commissioner Glenn Wilson urged struggling homeowners to contact their banks as soon as possible, because he said the chances of avoiding a foreclosure are best when payment problems are tackled quickly.