What is the Minneapolis Foreclosure Recovery Plan?
In Minneapolis, residential mortgage foreclosures continued to rise until 2009 when decreases occurred. The decreases are partially due to lenders voluntary moratorium on foreclosures, short sales, and the increase foreclosure prevention loan modifications or other foreclosure recovery activities. The foreclosure rate was slightly higher in 2010 with 2,308 foreclosures , but close to 2009 rates with 2,233 foreclosures in 2009; significantly down from 3,077 in 2008 and 2,895 in 2007. Many of these foreclosures are on rental investment properties. Minneapolis neighborhoods hardest hit by foreclosures are in South Central, Northeast and North Minneapolis. Statistics and maps of mortgage foreclosures in Minneapolis.
The City of Minneapolis focus on prevention, reinvestment and market repositioning in 2011 and beyond will continue to lead to market recovery in our communities. The Minneapolis foreclosure recovery plan is a strategic and timely government intervention for prevention, reinvestment and repositioning the market place only to the extent necessary to "tip" the market toward restoring a healthy housing market.
Minneapolis strategies to recover a healthy housing market are:
- Prevention—Continue foreclosure prevention outreach and counseling;
- Reinvestment—Pursue aggressive property acquisition and promote property development;
- Repositioning—Engage in community building and marketing efforts.
Mortgage foreclosure prevention counseling shows that is costs approximately $400 to prevent a foreclosure, where the estimated cost is $78,000 once a property is in foreclosure. In 2009, 461 foreclosures were prevented in the City of Minneapolis.
City partnerships that address mortgage foreclosures:
- 311 links callers with the MN Home Ownership Center and Twin Cities Habitat for Humanity to counsel prospective homebuyers and homeowners at risk of foreclosure.
- The Northside Home Fund works with neighborhoods to revitalize specific housing clusters in Hawthorne, Jordan, McKinley, and Willard-Hay. The Home Depot Foundation is supporting this targeted approach with an award of $500,000 for the Hawthorne neighborhood cluster.
- The Minnesota Housing Finance Agency has loaned the Family Housing Fund $10 million, with which Greater Metropolitan Housing Corporation will purchase and rehabilitate vacant homes and resell them. The Agency continues to invest in neighborhoods impacted by foreclosure.
- The Minnesota Foreclosure Partners Council works to identify, fund, and implement coordinated policies and programs that effectively address the impact of the recent surge in mortgage foreclosures on families, neighborhoods, and communities. Partners confront the practice and consequences of predatory and inappropriate lending by taking specific, innovative, and collaborative action including changes in policies and practices and the provision of resources. The Council’s Coordinated Plan addresses foreclosure in Minnesota.
How the City is Reinvesting and Repositioning
The Neighborhood Stabilization Program
The Neighborhood Stabilization Program (NSP) provides assistance to state and local governments to acquire and redevelop foreclosed properties that might otherwise become sources of abandonment and blight within their communities.
The Minneapolis foreclosure recovery plan identifies over 20 neighborhoods that are hardest hit by foreclosure for strategic investment of NSP resources to dramatically impact blocks in these neighborhoods to protect public and private investment and to ultimately restore a healthy housing market. In order to achieve this impact, Minneapolis is collaborating with the development community with significant involvement from general contractors, property management companies, material suppliers, and marketing and real estate professionals.
Real Estate Acquisition
Minneapolis uses two innovative concepts in its efforts to purchase real estate owned properties the First Look Program and the Twin Cities Community Land Bank.
- First Look Program
Minneapolis was one of the first cities in the nation to partner with National Community Stabilization Trust in 2008 to pilot a new, innovative national program to address the housing foreclosure crisis - the First Look Program.
The First Look Program will help restore neighborhoods hit hard by foreclosures by allowing the City the opportunity to acquire foreclosed properties before they hit the open market. The First Look Program is coordinating the transfer of real estate-owned properties from financial institutions nationwide to local housing organizations, in collaboration with state and local governments. Lenders Wells Fargo, CitiGroup, Chase and others will make the properties available pre-market at adjusted pricing. The First Look program will provide a key component of recovery efforts, to gain control of properties and then manage the disposition and redevelopment of those properties at a scale large enough to build confidence and stimulate investment.
The First Look Program was developed by the National Community Stabilization Trust, a consortium of nonprofit housing and community development organizations (Enterprise Community Partners, the Housing Partnership Network, the Local Initiatives Support Corporation, NeighborWorks America, and others).
- Twin Cities Community Land Bank
The Twin Cities Community Land Bank is a public-private venture with a focus on community re-building objectives. As a non-governmental entity, it is designed to be quicker to respond and more flexible than government, thereby being in a position to compete with undesirable investors whose bottom line is profit and not necessarily stabilizing the community.
Twin Cities Community Land Bank acts as intermediary and as an interim acquisition lender, advancing funds to allow for a quick and strategic response to acquisition and redevelopment opportunities, and as lender to non-profit developers undertaking rehabilitation and new construction.
The Northside Home Fund Cluster Developments
The cluster approach focuses on small geographic areas, or "clusters", intended to make a noticeable positive impact on the housing stock and to stabilize and strengthen the homeownership market of North Minneapolis neighborhoods. The Northside Home Fund, commit to developing sustainable solutions to the serious community and economic development issues facing North Minneapolis, and its partners have removed the blighting influence of more than 100 boarded and vacant properties in the clusters through property acquisition, demolition, and working with property owners to bring their buildings up to code for re-sale to stable owner-occupants.
As properties are acquired, the City and its partners are working collaboratively to reposition neighborhoods for market recovery. To rebuild a healthy housing market in neighborhoods affected by foreclosures, the City works with neighborhood and community-based marketing efforts to bring in new buyers. The City's goal is to engage the private market as much as possible in achieving a stable, healthy housing market.
Green Homes North
The City of Minneapolis and its partners will create the Green Homes North program, a loan and subsidy pool to build 100 green homes in North Minneapolis. Green Homes North will fund the construction of approximately 20 homes a year for the next 5 years.
Design Competition Helps Rebuild Willard Hay Neighborhood in North Minneapolis
Part of the strategy and commitment to rebuilding communities affected by foreclosure, the Bearden Place Design Competition is sponsored by the City of Minneapolis and the Builders Outreach Foundation (BOF).
Interactive Website Promotes City Living
LiveMSP.org promotes Minneapolis and Saint Paul neighborhoods with the goal to sell homes and celebrate city living. This interactive website helps prospective home buyers learn more about what Minneapolis and Saint Paul have to offer, showcases all of the neighborhoods, and educates people about the dozens of home purchase/renovation incentives available. The site is also a destination for those who already live here to share their enthusiasm for city living, find home renovation loan and grant programs, and stay current on local events and entertainment.
City offers homeownership incentives and mortgage & home improvement programs
The Minneapolis Advantage NSP Mortgage Assistance program provides a forgivable loan to help assist homebuyers purchasing in neighborhoods challenged by foreclosure.
Last updated Nov 1, 2016