By Al Franken
St. Cloud Times

As any homeowner in Central Minnesota can tell you, we’re in the midst of a housing crisis.

In just the first three months of 2008, Benton County suffered 41 foreclosures. Stearns County had 119. Sherburne County lost 125 homes. And in Wright County, the crisis has taken a particularly devastating toll, with 268 homes lost in the first quarter of the year – an increase of 58 percent
from 2007.

One foreclosure in a community tends to lead to others. Between those four counties, the Minnesota housing issues group Housing Link estimates that almost 2,500 homes could be lost by the end of the year. This crisis stretches to every corner of Minnesota (where we had more than 20,000 foreclosures last year) and across the country (where a recent report indicated that one in every 10 homeowners is either late on payments or already in foreclosure.)

For everyone who loses a home, there are many more who lose their home equity. In the Twin Cities, for instance, home values have declined 14.8 percent in the past year. The Center for Responsible Lending estimates that the crisis could end up affecting more than a half-million Minnesota homeowners, costing us $2.3 billion in wealth.

Home equity is the foundation on which middle-class wealth is built – and the foundation is now cracking. With this crisis threatening our neighbors, our communities, and our middle-class economy, we need immediate action. That’s why I’ve called for three steps to fix our housing market.

First: a lifeline for struggling homeowners. I want an immediate and temporary moratorium on foreclosures of primary residences so that we can stop the bleeding in the housing market and allow our neighbors to get their heads above water.

Anyone at risk of losing their home should go through a mandatory program of “workouts” and financial counseling. And bankruptcy judges should have the option of rewriting the terms of loans on people’s primary residences.

Second: a plan to help communities devastated by foreclosures. Anyone who’s seen a home on their block abandoned knows that it can be a blight, bringing down the value of surrounding properties and potentially leading to more foreclosures.

I’ll work to help cities and towns redevelop abandoned and foreclosed properties – even retrofitting them for energy efficiency where we can. This will create jobs, build a more productive tax base, and increase the value of homes in the area, helping middle-class families build more wealth.

Third: crack down on predatory lending. We need strong standards for brokers who originate mortgages. And although I believe borrowers have a responsibility to manage their debt carefully, I think brokers have a responsibility to prove that borrowers have an ability to pay before they
sign over that loan.

In Minnesota, we give brokers a financial responsibility to their customers – we should do that in every state.

Unfortunately, Norm Coleman hasn’t been on the side of Central Minnesota homeowners during this crisis. Instead, he’s chosen to stand with the mortgage companies and the big banks and the credit card companies. (And no wonder. The Center for Responsive Politics shows he’s taken about $500,000 in campaign contributions from those special interests, more than any other politician in the history of Minnesota!)

Coleman voted against allowing bankruptcy judges to help struggling homeowners – but he voted to allow predatory lenders to get rich off those same Minnesotans. Worse, he voted for a bankruptcy bill that those big banks spent over $100 million lobbying to pass, and that the Star Tribune said “put the interests of lenders above those of consumers.”

He specifically voted against amendments that would help people with high medical expenses, single moms whose husbands weren’t paying child support, victims of identity theft and the elderly keep their homes.

I grew up in a middle-class home in St. Louis Park. We weren’t rich, but we did have that house and we never worried that we’d lose it. We used the equity on that home to help me and my brother go to college and to secure my parents’ retirement. That’s how it’s supposed to work.

But for too many Minnesotans, that’s not how it works anymore. Homeowners in Central Minnesota at risk in this crisis need a senator on their side.

This is the opinion of Al Franken, the Democratic-endorsed candidate for U.S. Senate.

The St. Cloud Times published this op-ed on September 26, 2008.

This entry was posted on Friday, September 26th, 2008 at 12:33 and is filed under From Al's Desk, News Clips. You can follow any responses to this entry through the RSS 2.0 feed.