Hennepin County reports record foreclosure numbers
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2008 is off to a bad start, where foreclosures are concerned.
According to Julianne Ortman, director of finance for the Hennepin County Sheriff's office, in January there were more than 700 foreclosures in Hennepin County. That beats the previous high mark set last October by nearly 200.
But that's not the worst of it. Ortman says redemptions are down. That's when a person is able to get their house back after it's gone into foreclosure.
"So in January of 2007, we had 436 sales and 37 redemptions. In January of 2008, we had 711 sales and redemptions I believe were 10," Ortman says. "So we've seen those numbers of redemptions drop as the number of sales have increased and that's one of the more alarming statistics."
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Ortman says a person can redeem their mortgage by buying up the entire amount of the debt -- or finding a way to refinance the mortgage, but that's become more difficult lately.
Alexa Milton, midwest regional director of housing for Minnesota ACORN, says few people can redeem their mortgage.
"I think some of that may be due to tightening credit standards," Milton explains. "Most people can't redeem because they can't get financing to pay off the amount they owed before. When you've just been through a foreclosure, that can be very difficult."
"We've seen those numbers of redemptions drop as the number of sales have increased and that's one of the more alarming statistics."
ACORN is a community activist group which took up the fight against predatory lenders about a decade ago.
Milton says she believes the nation's foreclosure problem began with lenders who convinced borrowers to take on more debt than they could afford.
ACORN offers loan counseling for homeowners who are on the verge of losing a house to foreclosure. They also try to convince lenders to restructure loans to make them more affordable, but Milton says the key is to start the process early.
"The main thing is to get people in before the sheriff's sale, when there really are options for negotiating with the lender," Milton says. "Once you've passed that sheriff's sale, that's no longer an option. That's really where the most potential for stopping a foreclosure and saving somebody's house is."
Milton says ACORN is seeing an increase in clients who can't afford to pay their mortgages.
Experts say most of these people financed their homes with adjustable rate mortgages.
Another big group of those adjustable mortgages will reset to a new, higher level in March. It's likey that foreclosure numbers will also go up then.
2007 saw foreclosure numbers that were nearly 90 percent higher than 2006. Hennepin County officials say they're reluctant to predict a total for 2008.
