Housing Groups Worried About Economic Fallout Due to Increasing Foreclosures

(KNSI) — Programs that allowed struggling homeowners to pause monthly payments during the pandemic have reached their limits for millions of borrowers.

Former St. Paul mayor and current Twin Cities Habitat for Humanity president Chris Coleman says creating more pathways for debtors to dig out from past due amounts is vital. A foreclosure not only harms the borrower, Coleman says, but the community as well.

“You have the physical impacts of having abandoned homes or homes that are not being kept up, or you have the costs of that, which number in the millions.”

The Minnesota Homeownership Center says Congressional estimates show every foreclosure costs a community 80-thousand dollars because of resources tied to the process.

Coleman says as mayor, he saw firsthand the long road to recovery after the Great Recession of 2008, when properties wound up in the hands of investors elsewhere in the country.

“All of this money is flowing out of the state of Minnesota. You’re not building equity that can help that family be secure for years and years, and generations to come.”

Center president Julie Gugin says falling behind on payments can be frightening for a homeowner. She says that often sets up barriers to taking action.

“A natural reaction to crisis is to try and ignore it. It’s a way to manage the stress of the trauma.”

She says reaching out is an important step in getting the ball rolling on saving your home.

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MNC Reporter Mike Moen contributed to this report.

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