Foreclosures in Minnesota rose by 68 percent in April over the same period last year, according to the latest RealtyTrac study. Minnesota saw 1,405 foreclosures and 38 Notice of Defaults in April. In the first quarter of this year, Minnesota was hit with 4,231 foreclosures, or one foreclosure per 540 households. That’s a 72 percent increase over the first quarter or 2007.

In some good news for a change, there could be a slowdown to the rising trend that’s affecting the metro area more so than any other Minnesota region. The Subprime Foreclosure Deferment Act (SF3396) was approved by the Senate this weekend in a one-vote margin. The bill will help about 12,000 Minnesotans stave off foreclosure by requiring those with eligible subprime loans to pay either 65 percent of the payments due when the loan defaulted, or the minimum monthly payment when the mortgage was first created, whichever is less.

But the bill still faces a major hurdle: Pawlenty has said he’d likely veto it, claiming that it will dry up credit and force other homeowners to pay more for their mortgages. The irony in that thinking, consumer experts like bill author Prentiss Cox say, is that foreclosures cause foreclosures. Each foreclosure causes property values to decline and forces many homeowners into negative equity. In fact, according to the Center for Responsible Lending, one in three homeowners nationwide will see their property values drop by an average of $5,000 as foreclosures continue to eat away the market. In the Twin Cities, homeowners have already seen prices decline by ten percent this year.