But Bachmann’s voting record in the U.S. House of Representatives has not reflected her rhetoric at last night’s debate. From the transcript:

ANDERSON COOPER: Congresswoman Bachmann, does the federal government have a role in keeping people in their homes, saving people from foreclosure, in the state of Nevada?

MICHELE BACHMANN: That was the question that was initially asked. And what I want to say is this — every day I’m out somewhere in the United States of America, and most of the time I’m talking to moms across this country. When you talk about housing, when you talk about foreclosures, you’re talking about women who are at the end of their rope because they’re losing their nest for their children and for their family. And there are women right now all across this country and moms across this country whose husbands, through no fault of their own, are losing their job, and they can’t keep that house. And there are women who are losing that house.

I’m a mom. I talk to these moms. I just want to say one thing to moms all across America tonight. This is a real issue. It’s got to be solved. President Obama has failed you on this issue of housing and foreclosures. I will not fail you on this issue. I will turn this country around. We will turn the economy around. We will create jobs. That’s how you hold on to your house.

Hold on, moms out there. It’s not too late.

As The Minnesota Independent previously reported, in March, Bachmann voted to defund the Home Affordable Modification Program (HAMP) in a bill titled the “FHA Refinance Program Termination Act.” Within that same bill, Bachmann voted against an amendment that would have saved a portion of HAMP for senior citizens whose mortgages are in negative equity, or “underwater.”

The Minnesota Independent has also reported that Minnesota’s 6th District, which Bachmann represents, suffered the highest foreclosure rates in the state in 2008 (estimated at 5,227) and 2009. Nevertheless, the congresswoman has voted against all but one measure aimed at foreclosure relief during her time in office, including: the Housing and Economic Recovery Act of 2008, which included provisions to help struggling homeowners, signed into law by former President George W. Bush; the Mortgage Reform and Anti-Predatory Lending Act; the Neighborhood Stabilization Act, intended to provide funds to communities to buy and rehabilitate foreclosed homes; and the Expand and Preserve Home Ownership Through Counseling Act, the goal of which was to improve homeowners’ financial literacy.

In February 2009, Bachmann talked about the national foreclosure crisis on her blog in a way that did not reflect the sympathy she was trying to convey to women during Tuesday’s presidential debate:

When President Obama released his plan this week to prevent home foreclosures, the point he wanted to get across to everyone watching was that money from folks who have been making their payments on time will not just be handed over to those folks who got in over their heads and bought a house they knew they couldn’t afford.

It’s estimated that around four million homeowners are in danger of foreclosure, and in order to help them out, part of the President’s plan creates a $75 billion program that would go towards reducing a homeowner’s monthly mortgage payment. That breaks down to about $18,750 per home.

Now, we can debate whether this is the right thing to do as it may seem that you’re rewarding the irresponsible while punishing those who have been playing by the rules.

Watch snippets from last night’s debate, including Bachmann’s statements on foreclosures and her promise to moms, produced by HuffPost Politics:

Chicago has been ground zero for the national mortgage crisis in many ways, and critics say that a welcome like the one received by the bankers isn’t surprising in an area where 1/3rd of the homes have underwater mortgages. The problem isn’t confined to Chicago, Minnesota has seen more than 22,000 foreclosures filed in the last year, with 2,400 in August alone, according to RealtyTrac.

Take Back Chicago, organized by a coalition of labor unions and community groups and joined by Occupy Chicago, is just the latest show of public anger at the financial system in the Windy City — and in particular at its handling of the housing crisis.

“The government bailed the banks out on our backs, but they haven’t bailed us out,” said Thurlester Ibrahim, a member the Anti-Eviction Campaign. “We’re losing our homes.”

In a statement to The Wall Street Journal, the Mortgage Bankers Association acknowledged that they share responsibility for the financial crisis that has devastated communities around the country, and that it has cause their industry a “trust deficit.”

Groups on the state and federal level have tried to remedy this mistrust – most recently, Illinois Attorney General Lisa Madigan opened an investigation into ‘mortgage rescue companies’ in Chicagoland alleged to have used attorneys to collect fees to help customers and then not delivering, cheating homeowners out of nearly $375,000.

Madigan also opened an investigation into allegations of mass robo-signing in Illinois – a practice in which companies signed thousands of foreclosure documents without verifying their accuracy. Yet some demonstrators say these moves are only a Band-Aid.

“We must target additional revenue for investment in public services and critical infrastructure that will create jobs and stimulate private investment in job creation,” said Curtis Smith, President of Lakeview Action Coalition, calling for a more long-term solution. “Serious living wage job creation is the fastest way to fix the economy – America is not broke, but our economy is broken.”

DFL chair Brian Melendez questioned the finances of Republican gubernatorial candidate Tom Emmer at a press conference on Thursday. According to public documents, Emmer has taken out seven separate mortgages on his Delano home for a total value of $1.6 million. Melendez said the DFL is raising the issue because Emmer frequently uses the phrase “live within your means” on the campaign trail.

“We are all aware of Tom Emmer’s favorite campaign slogan, ‘live within your means,’” said Melendez, “but Emmer’s slogans and the public record don’t match up.”

Melendez said that information from the Wright County Auditors Office and Hennepin County show that Emmer has taken out seven short-term mortgages since 2002 on his house in Delano and six additional mortgages on a home he previously owned in Independence.

News of Emmer’s series of mortgages was first reported a month ago by Sally Jo Sorensen at the Hutchinson-based website Bluestem Prairie, but — despite that site framing the issue in terms of Emmer’s “live within your means” slogan — Melendez denied that that’s where the party got the information. Bluestem also noted that in November 2005, foreclosure proceedings were started against Emmer. They were later dropped.

Melendez said that Emmer should release his tax returns as his opponent Mark Dayton has done.

“I’m not faulting Emmer for using his house as an ATM; many Minnesotans have done the same thing,” said Melendez. “I’m asking Mr. Emmer to be more forthright about his personal finances and his plans for the state’s finances.”

“Emmer needs to answer questions about his own finances before anybody lets him run the state’s,” he said.

Emmer’s campaign told the Star Tribune simply, “He’s paid his bills.”

GOP deputy chair Michael Brodkorb called the line of attack a mistake in a tweet. “Big mistake by the Minnesota DFL today — attacking someone for having a mortgage on their home — contrast with Dayton’s taxfree trusts in SD

“Unfortunately you didn’t have information before you went to press with your story which is important,” said Amy Rotenberg on Tuesday. “Living Word Christian Center actually sold that property to another entity and has had no continuing interest in it since 2006.”

She said that TCF Bank had released LWCC from the mortgage at that time.

The Minnesota Independent checked with Hennepin County officials on Monday for information about the sheriff’s office foreclosure notice, which lists LWCC as the holder of the defaulted mortgage.

Lisa Kiava, public information office for the sheriff’s office, said, “The document listed online is the extent of the information that the sheriff’s office has. We don’t have any addition information than what you see online.”

Rotenberg passed along a document dated June 15, 2010 (PDF), that describes a transaction in 2005 with HMW-Brooklyn LLC.

She told CityPages this morning that the Hennepin County listing was “misleading.”

Mac and Lynne Hammond. Photo: LWCC.org

Updated: Property owned by Living Word Christian Center has gone into foreclosure, according to the Hennepin County Sheriff’s office. On July 28, four parcels of land owned by the Brooklyn Park mega-church was bought at a sheriff’s sale for $5.1 million. Pastor Mac Hammond, who preaches a “prosperity gospel,” has been plagued by financial problems over the last few years. The church took millions from a man who was later convicted of fraud, and the IRS opened an investigation into the church’s finances stemming from favorable financial dealings between the church and Hammond.

County records show that TCF National Bank, which is also the mortgage lender to LWCC, bought the property. Per Minnesota law, Living Word has until July 28, 2011, to redeem the property by securing new financing. The church bought property in 1995 for $3.5 million. It’s unclear from county records whether the foreclosed property is the land on which the church itself sits; Living Word has not responded to the Minnesota Independent’s request for comment on the foreclosure or the church’s financial future.

Update: LWCC told the Minnesota Independent on Tuesday that they sold the property in 2006 and that Hennepin County records are misleading. Said Amy Rotenberg, “Living Word Christian Center actually sold that property to another entity and has had no continuing interest in it since 2006.” We’ll update this story should those records be modified.

Also, according to Rotenberg, “The church is not currently facing any financial issues.” She said, “We won our battle with the IRS” and that the church’s defense of the $2.2 million donated before Gerard Cellette was convicted of fraud should not be seen as a “financial problem.”

In early 2008, the church began to fall behind on its budget by $40,000 to $70,000, prompting Hammond to sell off his jet and forcing the church to cut its hour-long television broadcast to a half hour.

In May, the church was served with papers demanding the return of $2.2 million in money it received from Gerard Cellette, who had been convicted of fraud. Cellette ran a Ponzi scheme and lawyers for the victims were attempting to collect the money from Living Word for remuneration.

The church said in a statement in May that it felt it shouldn’t have to give the money back to the victims because of its status as a church. “This lawsuit, on behalf of Mr. Cellette’s investors, to take back the funds from LWCC and repay the investors is unfair. Our church is essentially being asked to be the guarantor to principally out-of-state, sophisticated investors that made bad investments with Mr. Cellette.”

It’s not the first time the church has invoked religious privilege following questions about its finances.

In 2007, the Minnesota Independent reported that Living Word had arranged favorable loans for Hammond and that Hammond had bought a stunt plane from the church and then leased it back to the church. That reporting led to an IRS investigation, and in 2008 the church sued to block the IRS from investigating.

The IRS wanted a look at Hammond’s and Living Word’s financial books, but Hammond invoked religious privilege.

“This case is about the First Amendment, the free exercise of religion and separation of church and state,” Walter Pickhardt, attorney for the church, said at the time. “Living Word did cooperate but the IRS didn’t follow correct procedures. It was an overbroad request.”

A judge ruled that the IRS did not follow the proper procedures in its investigation and the agency dropped its investigation.

In 2006, the church gained notoriety when Hammond took to the pulpit to endorse Rep. Michele Bachmann for her first election to Congress. Hammond’s backing prompted complaints to the IRS and raised eyebrows, since Hammond didn’t live in Bachmann’s district.

Hammond’s financial troubles come after years of financial growth for the church and for Hammond personally. The “prosperity gospel” Hammond preaches asserts that financial gain is a sign of God’s love. The church has several prayers about becoming debt-free.

“We, the body of Believers of Living Word Christian Center, declare we have been carved out for an end-time expression of El Shaddai, the God of abundance and no lack,” reads one such prayer on the church’s website. “We are taught how to live independent of this world system and how to have dominion over it, therefore, in Jesus’ name, we declare we are debt-free! The spirit of debt is destroyed over our lives and over this local church because of the anointing. We are the lender and not the borrower, the head and not the tail.”

Hammond isn’t the only prosperity preacher to have faced money troubles. As Christianity Today reporter Bobby Ross, Jr., notes, more than a few such figures are now struggling financially.

Photo: Dan Simpson, Flickr

Bill Gustafson worked at his family’s bakery on Minnesota’s North Shore for 40 years. After his rheumatoid arthritis knocked him out of the workforce, he racked up debt, at one time spreading it across six credit cards. When the phone rang about a year ago, it was a representative of an outfit insiders refer to as a debt settlement company. “They said I could lower what I was paying every month,” Gustafson recalls. “It sounded like a good deal to me, so I went into it.”

Each month, Gustafson paid $519 of his Social Security stipend to the company, the name of which he prefers not appear in print. When unexpected medical expenses made even those payments more difficult, he contacted financial counselors at non-profit Lutheran Social Services (LSS) of Minnesota. That’s when Gustafson discovered that, despite the monthly payments he’d been making for almost a year, the debt settlement company hadn’t given a dime to his creditors. Almost three-quarters of his monthly payments to the company were being eaten up by fees, with the small remainder being deposited in an account the company said they were only planning use to negotiate a settlement to his debts after 22 months.

In Minnesota, a law that went into effect last August was designed to limit the worst practices of these companies. But of the estimated 2,000 debt settlement companies operating in the country — many that advertise on the radio or telemarket in the state — only seven companies have voluntarily registered for licenses with the Minnesota Department of Commerce, leaving Minnesotans like Gustafson at the mercy of people whose only aim, consumer advocates say, is to squeeze profit from those already in desperate financial straits.

Squeezing the middle class

Debt settlement companies really emerged as a product of the economic downturn. They cover the spectrum of respectability, from fly-by-night outright scams to multimillion-dollar businesses. But what they have in common is that they tell consumers they’ll settle their debts, but often just leave them in worse shape, says Dan Williams, Director of Lutheran Social Services Financial Counseling.

“All of the data around debt settlement companies says that they don’t ultimately do debt settlement and put a person in a more stable financial situation,” he says. “While there’s exceptions to that, the vast majority of clients that enter a relationship with a debt settlement company ultimately do not pay off their debts.”

Instead, consumers are told to avoid contact with creditors while the debt settlement company purportedly negotiates a settlement. Often, it takes months for a consumer to realize, as Gustafson did, that payments weren’t being made to their creditors at all. By that time, Williams says, their credit is shot and they’re even deeper in debt than before, plus out the money they paid the debt settler.

“They’ll just be devastated. Their entire financial situation is devastated over $2,000 or $2,500 in fees these places collect,” Williams says “Getting sucked into a debt settlement scam, it’s only $2,000 in revenue to the scammer, but to the person, to the family, it might just mean moving away from their family; losing their home; having their car dispossessed; filing for bankruptcy.”

Debt settlement companies have a hand in knocking people off the cliff of stability, contributing to a string of broader problems, from the foreclosure crisis to growing patient debts at hospitals. Many who end up in debt settlement plans are formerly middle-class people, pinched by the economy, for the simple fact that these companies want to enroll those who can afford to pay their fees, Williams says, instead of desperately poor people, who can’t.

“Part of what they tell people is, ‘Everyone else you talk to is a scam,’” Williams says of a common lure. “The consumer will still be like, ‘No, Bob’s great, I know he wouldn’t send me in the wrong direction.’”

Even when people do figure out that the company isn’t helping them pay their debts, many are embarrassed to report the incident, or just plain overwhelmed by the financial hole they find themselves in: “Everyone thinks, ‘That won’t happen to me,’” Williams says, “so when it does, I’m not going to shout from the rooftops,” which leads to fewer complaints to state agencies.

Or as Minneapolis consumer attorney Todd Murray hears from clients who previously contracted with debt settlers: “‘I was skeptical. I wasn’t sure about this — in hindsight it seems a really stupid thing to do — but I was desperate.’”

Slippery when debt

Minnesota has been a leader in aggressively countering debt settlers. The office of the Minnesota Attorney General has taken nine companies to court since September 2009, according to spokesman Benjamin Wogsland. (Of five of those companies contacted about a prospective debt settlement in Minnesota, only one responded, and their representative admitted they’re unable to work in the state at this time.)

And the state has had a law on the books since August 2009 that Williams calls “one of the best in the country.” But that law requires that debt settlement companies register for licenses through the Minnesota Department of Commerce, and despite airwaves bombarded with advertisements for debt settlers, only seven companies are legally licensed to practice in the state.

Wogsland says the attorney general’s office will absolutely pursue cases where it appears debt settlement companies are showing a “pattern of fraud.” But the primary regulator is the Department of Commerce, which has taken action against three debt settlement companies since the new law went into effect a year ago, all of which were prompted by consumer complaints, says Rochelle Barnhart, the department’s spokesperson. The department plans to maintain its current approach.

“Some issues we attempt to resolve informally. Other problems rise to a higher level and we would open a formal investigation of the company with the intent of taking some sort of action against it,” Barnhart says. “We are limited to taking civil actions. In very serious cases we might share our investigative results and work with authorities which could take criminal action.”

The problem is that the fines leveraged against companies that violate the rules are piddly compared to the potential profits the companies can earn. If a company applies for a license, it costs $1,000 and the deposit of a $5,000 Surety Bond, and they’re required to follow a number of business practice restrictions imposed by the state law. The statutory base penalty is $5,000, although the Minnesota Department of Commerce can leverage much higher fines. For many companies, it could come down to the cost of doing business.

“If there’s legislation that says, ‘Hey, you can’t earn any money until you’ve actually stabilized a person’s financial situation and the debts are paid off,’ why would they even bother getting registered,” Williams asks. “All of the history of debt settlement companies and Congress’ report on debt settlement really would tell us that’s not a business model that works.”

But it’s also a problem rooted in the nature of the industry, where companies pop up under multiple names and can quickly shift how they describe themselves, using euphemisms from “debt management” to “debt counseling” while maintaining essentially the same business model. Although the Federal Trade Commission ruled last week that collecting upfront fees for debt settlement is against the law, debt settlement companies already appear to be making adjustments, Williams says.

There are few actual studies of debt settlement, making it difficult to even peg down the number of companies that are operating in the country, although the New York Times put the number at 2,000. Of the nine companies sued by the Office of the Attorney General, none were from Minnesota, says Wogsland. The company Bill Gustafson dealt with eventually claimed to be two companies, one dedicated to advertising and one to settlement. Each insisted it had little knowledge of the other’s activities. This sieve-like nature makes it difficult to get a grip on debt settlement as an industry.

There are some areas where legislators could potentially tighten the industry’s access to consumers. In Duluth, as across the state, Williams says, radio and television stations are regularly broadcasting paid advertising from unlicensed debt settlers. Advertising is an area where the industry’s top group, The Association of Settlement Companies, which opposes most regulation, has pushed voluntary standards.

“Local radio stations all over Minnesota are getting money from debt settlement companies that aren’t licensed by the Department of Commerce,” Williams says. “If people really understood the consequences that these scams cause to families and communities, I think that radio stations and TV stations might even think twice about taking the advertising revenues from these places.”

In the end, Gustafson, with the help of financial counselors at LSS, was able to cancel his debt settlement program. And after a complaint to the state attorney general’s office, the debt settlement company, which was unlicensed, returned much of the money he’d paid them. He spoke to the Minnesota Independent to warn others away from making the same financial misstep.

“It turned out that most of what I was paying was fees and just a little bit was going towards settlement, when I found that out it was a little bit disgusting,” Gustafson says. “When you first get into it, it sounds good, but then you have to really explore what the whole thing is about.”

Freedom Fidelity Management One example of a Minnesota Department of Commerce action against an unlicensed debt settlement company

John Dugan (Photo: Harry Connolly)

… [C]urrent market disruptions have clouded the accomplishments that CRA has generated, many of which we recognized last year during its 30th anniversary. There are even some who suggest that CRA is responsible for the binge of irresponsible subprime lending that ignited the credit crisis we now face. Let me squarely respond to this suggestion: I categorically disagree. While not perfect, CRA has made a positive contribution to community revitalization across the country and has generally encouraged sound community development lending, investment, and service initiatives by regulated banking organizations. CRA is not the culprit behind the subprime mortgage lending abuses, or the broader credit quality issues in the marketplace. Indeed, the lenders most prominently associated with subprime mortgage lending abuses and high rates of foreclosure are lenders not subject to CRA.

Dugan, a 2005 Bush appointee, also served the Department of Treasury under the first President Bush, and was Republican general counsel to the U.S. Senate Committee on Banking, Housing, and Urban Affairs. His remarks (full transcript) came during the Economic Community Partners annual meeting in Baltimore.

Kucinich, who ran losing presidential bids in 2004 and 2008 and faced a stiff primary challenge earlier this year, drafted the legislation following a report in the Michigan Messenger that a Macomb County Republican Party official said he planned to gather lists of foreclosed homeowners to challenge their eligibility.

The Obama campaign and the Democratic National Committee have since filed a lawsuit in federal court over the reported plans.

The tactic is a version of a practice known as “caging,” which allows political opponents to identify voters who might not meet the proper residency requirements. Democrats and voting-rights activists argue that
victims of foreclosure may still live in their homes, and that the tactic disproportionately affects poor and African-American voters. Republicans argue that the practice preserves the integrity of the ballot.

Kucinich’s bill is unlikely to get a hearing or consideration on the House floor, as Congress races to pass a $700 billion rescue package for Wall Street banks before recessing until after the election.

Jonathan E. Kaplan is Washington correspondent for the Center for Independent Media’s network of online news sites.

The article author, Amy Merrick, writes that “if the governor takes a higher profile in the presidential election, amid a widespread housing crisis, a veto of the deferment plan could be portrayed as insensitive to homeowners.”

Critics of the legislation, Pawlenty included, believe the bill would cause the cost of credit to increase. DFL leaders say a late compromise put the legislation in line with the governor’s goals.

“This legislation now allows lenders to choose whether to negotiate with a home owner or to allow the deferral to go forward. This legislation strikes a fair balance between the rights of legitimate lenders and the need to help home owners who were victims of predatory lenders,” said Senate Majority Leader Larry Pogemiller, DFL-Minneapolis.

Pawlenty has until Monday, June 2, to sign the legislation.

Short sales are when the homeowner makes a deal with the lender to sell the home for less than the outstanding balance of the loan, either as a means to avoid foreclosure or because an unstable market has caused homeowners to be underwater in negative equity. Like when used cars became “pre-owned vehicles,” Realtors like to call these new and popular sales “lender-mitigated sales.” Currently, the sellers are required to pay the taxes on the outstanding balance of the original loan as if the bank gave them a gift for tens of thousands of dollars.

MAAR says the increase in lender-mediated sales skews the median home price and makes it look as though the average Twin Cities home will be hit with precipitous drop of 9.7 percent this year. The researchers claim that the actual price decline of non-lender-mediated sales (regular old home sales) is only 3.9 percent this year.

While that might be true at first blush, there’s a handy bit of information missing in this study. For one thing, it doesn’t break out the number of non-lender-mitigated sales that have to include deep seller concessions in a deflated market. Seller concessions, money given to the buyer for closing costs and repairs in part of the sale, can make up six percent of the total sale price. And the final sale price recorded is the amount before the seller concessions.

Continued: Click “Read more”Jeff Allen, a research manager for MAAR, says the organization doesn’t have any prepared data on what percentage of total sales include seller concessions. “Seller’s concessions are an issue which we are researching as we speak,” he told MinMon. “But I won’t have anything I can share with you today.”

TJ Larson, a Realtor with Edina Realty, says almost all of his sales these days include seller concessions. “In this market, I would say in most cases buyers ask for seller-paid closing costs. The difference now is that buyers look at it as part of the discount in addition to reduced sales prices. A few years ago, a seller would be willing to pay a buyer’s closing costs as long as the buyers were willing to raise the purchase price to compensate. The balance of power has shifted and now
buyers are controlling the ball, at least most of the time, on that one.”

In other words, sellers are being hit with an additional three- to six-percent loss as buyers have the leverage to make more demands. So while it’s better news for sellers who aren’t in dire straits that the decline in non-foreclosed home values  this year is closer to four percent than ten, they should also plan to add another four percent or so to that loss for concessions.