Groups create fund to help Duluth homeowners avoid foreclosure
A loan fund to help some Duluth homeowners who face foreclosure soon will be up and running in Duluth. Neighborhood Housing Services of Duluth (NHS), Lutheran Social Service and the Northland Foundation are working together to help homeowners who...
A loan fund to help some Duluth homeowners who face foreclosure soon will be up and running in Duluth.
Neighborhood Housing Services of Duluth (NHS), Lutheran Social Service and the Northland Foundation are working together to help homeowners who can't make their payments and are in danger of losing their property to their mortgage lenders.
The fund will help 30-35 homeowners who are judged to have situations that can be helped by a loan of about $3,000 to $4,000, said George Garnett, Neighborhood Housing's executive director. The low-interest, flexible loans will be available by the end of March, he said.
"It won't work for everybody," Garnett said, but if a small loan can prevent a foreclosure from happening, NHS will consider the case. The loans will be made on a first-come, first-served basis.
To qualify, a homeowner must live in Duluth and have income at or below 80 percent of Minnesota's median income, which is about $42,000 for a family of four.
Although Duluth has been somewhat insulated from the ups and downs of the real estate market that have hit other areas, foreclosures are increasing, Garnett said.
Many foreclosures stem from adjustable interest mortgages that have increased interest rates, boosting monthly payments so high that the homeowner can't afford them. Sometimes an expensive health problem, a job loss, divorce or other disruption to income can lead to foreclosure -- as can many other circumstances, including poor money management.
About 18 months ago, it became clear to Garnett through NHS's lending work that homeowners facing foreclosure needed help. Although he didn't know how many foreclosures took place in Duluth last year, HousingLink, an independent Twin Cities-based organization that collects housing information, estimates that about 400 foreclosures took place in St. Louis County in 2007. Many of them undoubtedly were in Duluth, Garnett said.
Lutheran Social Service's foreclosure prevention program counsels homeowners and will guide candidates for the Mortgage Foreclosure Rescue Fund loans to NHS. Dan Williams, director of LSS Financial Counseling, said it's the first loan fund of its kind in the city.
Right now that program has a six-week waiting list, when it should have a one-week wait for an appointment, Williams said, although on-call counseling is available.
"It's really hard to tell what the unmet demand is, he said. Four new counselors are being added to the staff late this month to handle the increased load.
The Northland Foundation has never before made a loan to an organization that will turn around and lend the money to others, said John Elden, loan officer at the foundation. The loan to NHS will have a six-year term, he said, a period that is intended to get through the expected period of high numbers of foreclosures.
"There's not a whole lot they're going to be able to do with $150,000," Elden said. But foundation officials hope Northland's participation will encourage others to contribute and enlarge the fund, Elden said.