Minnesota Foreclosure Law Vetoed

Recently, Minnesota’s Gov. Tim Pawlenty vetoed a bill would have helped borrowers with certain kinds of loans put off their home foreclosures while they work to catch up on past-due payments. Their lenders would have had to delay action until they proved they made a good-faith effort to rework the loan terms. Bill supporters estimate it would have affected 12,000 homeowners with certain adjustable rate mortgages, provided they had sought foreclosure counseling.

Pawlenty’s reasons for vetoing the bill were that it would have allowed state government too much interference with existing private contracts. He reasoned that if the state stepped in to allow residents to remain in their homes, mortgagors will factor this into future mortgage arrangements, and mortgages will be more expensive.

First of all, that ship has already sailed. The housing fallout will undeniably create more expensive mortgages with greater checks and balances for the borrower. Secondly – and this is strictly my opinion – states should be taking the steps they can to relieve this crisis. An all-out bailout is not the answer, but if the bill can assist 12,000 people immediately AND there is a required element of counseling involved, how could this be a bad thing?

Supporters of the bill will try again next year.