Is The Decline In Minnesota Foreclosures Going To Last
Are speculators about to move into the Minnesota real estate market is an excellent question. There are reasons to answer it either positively or negatively. That are bargains to be had is indisputable, but it is unlikely the market will reward speculators fast enough for hard core house flippers. Nevertheless, a 12 percent reduction in the total number of residential properties that went to auction from 2008 to 2009 is worth thinking about. It may be that the upward trend of Minnesota foreclosures is finally over.
There was an 1800 unit reduction in 2009 of the number of homes disposed of at sheriffs auctions. This may be a sign of good times ahead, or it may be that after five years of declines, the chaff has been removed and now even formerly solid mortgages are in dire straights. There is, on the other hand, reason to think the Minnesota foreclosures numbers may resume an upward trend as 2010 plays out. Pessimism rests in the states stubbornly high unemployment rate. Officials expect the rate will remain in 9 percent range throughout 2010 with at most a . 5 percent drop. And prospects for 2011 are about the same.
Without a significant increase in job opportunities in the state, homeowners that became unemployed in 2009 quite possibly will exhaust their unemployment benefits and go into mortgage default this year. The bleak employment forecast has continued long enough that the downward spiral may continue to play havoc for lenders and homeowners alike.
A mandated restructuring program for residential mortgages was included in some of the bail outs that the federal government extended to financial institutions. It requires certain lenders to extend mortgages in such a way as to drop monthly payments. The target figure is to get mortgage payments down to the 30 percent of income range. The problem is that the program does not apply if the homeowner is unemployed.
Under Minnesota’s amended foreclosure rules, homeowners who have been served with a forced sale date have the option of requesting a postponement in the sale of five months. While this certainly saved some dwellings, it was not as successful as had been hoped due to the ongoing lack of decent paying employment.
The new foreclosure legislation also increased the responsibility of mortgage holders to maintain abandoned properties. These responsibilities include securing the premises, changing the locks, protecting the dwelling from the elements and maintaining the surrounding land in a manner consistent with community standards.
There is some consideration that these new responsibilities have been enough to keep many investors out of either the market for foreclosed homes or out of the home mortgage sector entirely, tightening an already battened-down supply of money.
Supporters of the amended foreclosure process point out that all expenses incurred by the lender in maintaining abandoned properties may be added to the outstanding balance on the mortgage. Detractors counter with a rather tough argument to contradict. They point out that trying to recover your costs from someone you will likely force into bankruptcy is pointless.
Analysts are agreed that recovery for residential real estate in Minnesota real estate will not take place until there is a substantial improvement in the unemployment picture. When and if that occurs is anyone’s guess. There are certainly deals to be had at Minnesota foreclosures auctions. But it is clear that the house flipping days of the past have yet to appear on the horizon.
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