To provide Minnesota homeowners with additional tools to prevent foreclosure, Gov. Tim Pawlenty, R-Minn., has expanded foreclosure counseling workshops to be held around the state, created a compact with lenders to reduce foreclosures, and designated state funding for voluntary third-party mediation when counseling is unsuccessful.
The new series of workshops, sponsored by the Minnesota Home Ownership Center, will be greatly enhanced with additional lender participation, the governor's office adds, and lenders are being contacted directly by the Department of Commerce to participate in these events.
Principles of the new Minnesota Foreclosure Prevention Compact include the following:
- Work with mortgage foreclosure prevention counselors, and when necessary, participate in voluntary mediation;
- Participate in all foreclosure counseling workshops in Minnesota;
- Engage in a substantial and large-scale loan modification effort for subprime mortgages and adjustable-rate mortgage resets;
- Identify, evaluate and make good faith attempts to contact at-risk or defaulting borrowers as soon as possible;
- Modify loans to the extent permissible within existing fiduciary, contractual or other legal obligations and in accordance with prudent mortgage lending and servicing practices; and
- Report progress to the Minnesota Department of Commerce.
In addition, the Minnesota Department of Commerce has established a hotline for loan counselors if they experience problems contacting or negotiating with lenders. The department will then be able to contact the lender or servicer to ensure it is responding and acting in good faith.