The Democratic Congressional Campaign Committee is targeting Rep. Michele Bachmann following a vote to defund the Home Affordable Modification Program (HAMP). Though the Democrats are targeting Bachmann, her Democratic colleagues, Reps. Tim Walz and Collin Peterson, joined the Republicans on the vote Thursday. Bachmann and Rep. Chip Cravaack both represent districts with a high rate of foreclosures.

The DCCC is hitting Bachmann because she voted against an amendment that would save a portion of the program for senior citizens whose mortgages are in negative equity or “underwater.”

“Rather than do anything to create jobs, Representative Michele Bachmann voted to force Minnesota seniors to face the tragedy of losing the home that they have worked their lifetime for,” Jesse Ferguson of the Democratic Congressional Campaign Committee said in a statement. “While cutting Foreclosure Assistance for the 90,206 Minnesota families, Representative Michele Bachmann wouldn’t even preserve it for the seniors who built our nation. Seniors deserve an opportunity to stay in the home they raised their family and not be driven out but Representative Michele Bachmann may have literally closed the door on the American dream.”

HousingLink's latest map of foreclosures in Minnesota. Click to enlarge.

The Washington Post notes that only $50 million has been spent from the $8 billion program. Applications are lower than anticipated: Dow Jones Newswire reports that 65 homeowners have utilized the program. HAMP was passed by the Democratic Congress in 2009 and signed into law by President Obama.

Republican Reps. Bachmann, Cravaack, John Kline and Erik Paulsen were joined by DFL Reps. Walz and Peterson in voting to eliminate the program. Reps. Keith Ellison and Betty McCollum voted against terminating the program.

While Reps. Bachmann and Cravaack voted to eliminate the program, both represent districts with high foreclosure rates. Bachmann’s district was the highest of Minnesota’s eight congressional districts in 2008 and 2009, and those number appear to be shifting to Cravaack’s district.

Eight of the top 10 counties by foreclosure rate according to HousingLink are in Bachmann’s and Cravaack’s districts. Two of the top 10 are in Kline’s district.

Sherburne County in Bachmann’s 6th Congressional District had the highest foreclosure rate with 2.93 foreclosures per residential parcel as well as Wright (2.18) and Anoka (2.08), which were 7th and 8th highest in foreclosures. Isanti (2.56), Mille Lacs (2.47), Kanabec (2.45), Chisago (2.32) and Pine (2.05) counties in Cravaack’s district were 2nd, 3rd, 4th, 5th and 9th highest. In Kline’s district Scott (2.23) and Rice (1.80) were 6th and 10th in foreclosure rate.

Sen. Al Franken participated in a U.S. Senate hearing on Tuesday regarding the foreclosure process and ways that the federal government could help Americans keep their homes while also preventing investors from losing their investments. Franken said that one of the biggest problems fueling the foreclosure crisis is “robo-signing,” a tactic used by lenders to speed up the foreclosure process.

“Many problems have come to light since the beginning of the foreclosure crisis,” Franken told the Senate Judiciary Committee. “Most recently, we have seen mortgage servicers fraudulently signing affidavits to execute foreclosures, when they have zero personal knowledge of the individual borrower’s situation. This problem, known as robo-signing, is particularly troubling to me.”

Robo-signing occurs when a mortgage is sold to as a trust to a company such as Ally Financial and JP Morgan Chase and payments are missed. Those companies have to swear under oath that they actually own the mortgage in order to initiate foreclosure proceedings. In a number of companies, servicers robo-signed those documents without carefully reading them.

Franken attempted to contact those companies and was sent a form letter that was robo-signed by Ally Financial.

“Last year, I sent a letter to Ally Financial and JP Morgan Chase calling for a suspension of all foreclosure proceedings until this issue is resolved,” he said. “I got a form letter from ally touting their efforts.”

Franken added, “It’s nice to see that they don’t treat their homeowners that they are servicing any worse than they treat a senator.”

“Borrowers are at such an extreme disadvantage in these foreclosure proceedings that I fear robo-signing is only one of many ways that servicers have been able to take advantage of vulnerable families and homeowners,” said Franken. “And because most homeowners don’t have access to legal advice or even basic counseling, most of these abuses never come to light.”

The Senate committee discussed different ways to help homeowners in the foreclosure and bankruptcy processes including ensuring access to legal advice and scrutinizing lenders more closely.

“Too many Minnesotans have lost their jobs through no fault of their own, and are now in danger of losing their homes,” Franken said in a statement on Friday. “When they feel they’re being treated unfairly, they need to know there’s someone who has their back. My proposal creates an office dedicated to these families. They’re doing their best with an incredibly stressful situation in a tough economy that they didn’t create, and we ought to do what we can to help them.”

Republican Sen. Olympia Snowe of Maine is a cosponsor with Franken.

“For far too many Mainers and Americans, these turbulent economic times, in which we have witnessed record high unemployment rates, are confounded by the housing market crisis and certain mortgage servicers who are, frankly, taking advantage of our nation’s families,” said Snowe. “By creating an Office of the Homeowner Advocate, these Americans will receive the vital assistance they require when they are faced with the daunting foreclosure system.”

Franken and Snowe say the office will be paid for with existing funds from the Home Affordable Modification Program. The office would have the authority to take action against mortgage servicers who don’t play by the rules.

In Minnesota, the amendment has picked up considerable support from religious and charitable organizations including Catholic Charities of St. Paul & Minneapolis, Community Action Partnership of Ramsey & Washington Counties, Family & Children’s Service, Family Housing Fund, Greater Minnesota Housing Fund, Housing Preservation Project of St. Paul, Jewish Community Action, Legal Services Advocacy Project, Lutheran Social Service of Minnesota, Minnesota Community Action Partnership, Minnesota Housing Partnership, Northside Resident Redevelopment Council, and Project for Pride in Living.

Rep. Keith Ellison. Photo: WDCpix

Rep. Keith Ellison, along with Rep. Brad Miller, D-N.C., introduced legislation last week that would fix a problem in mortgage lending. The bill would eliminate conflicts of interest among large banks that prevent them from modifying troubled mortgages. The bill would prohibit a bank that owns a mortgage from owning a second mortgage on the home — a form of investment — which prevents that bank from modifying the original mortgage.

Miller said that most mortgages are owned by four banks: Bank of America, Wells Fargo, Chase and Citibank. “Servicers are required to act in the best interests of the investors who own the mortgages. In many, those four banks hold interests in other debt secured by the same home that would be affected by a decision to modify the mortgage or to foreclose, placing the banks’ interests in irreconcilable conflict with the interests of investors,” he said in a statement.

“The obvious conflict of interest between the investors and servicers may well be a factor in the failure of servicers to modify mortgages voluntarily,” said Ellison.

The Mortgage Servicing Conflict of Interest Elimination Act would give banks time to divest from the investments in home loans and allow them to make decisions on mortgages without running into conflicts of interest with the hope that more homeowners would be able to modify their mortgages and avoid losing their homes.

Photo: iStockPhoto

In 2008, Rep. Michele Bachmann’s district had the highest number of foreclosures in Minnesota and the highest rate of foreclosures. Now, as 2009 draws to a close, that trend continues. According to new data from HousingLink and county sheriffs’ offices, the Sixth Congressional District is being disproportionately impacted by the foreclosure crisis despite its representative’s reticence to vote for foreclosure relief legislation.

Bachmann’s district had 1,097 foreclosures in July, August and September of 2009, the highest in the state and almost three times as many as Rep. Tim Walz’s district, which had the state’s lowest number of foreclosures, at 396.

As the Minnesota Independent noted in April, the second-term Republican voted against every major piece of foreclosure-relief legislation brought before the House:

Bachmann voted against five key foreclosure relief bills, including the Mortgage Reform and Anti-Predatory Lending Act, which would set standards for mortgages and reduce predatory lending, and the Neighborhood Stabilization Act, which would provide funds for buying and rehabilitating foreclosed properties in affected neighborhoods. She also opposed the Expanding American Homeownership Act, which allows more people to qualify for FHA-backed mortgages, and the Expand and Preserve Home Ownership Through Counseling Act, which aims to improve financial literacy. Bachmann additionally voted against the Housing and Economic Recovery Act of 2008, a law signed by President Bush that contained many provisions to assist struggling homeowners and also the only one of the bills to become law.

And since April, she successfully spearheaded an effort to strip the Association of Community Organizations for Reform Now (ACORN) of Housing and Urban Development funds aimed at preventing foreclosures in low and middle income neighborhoods.

Bachmann did, however, cosponsor a bill “to direct the Architect of the Capitol to acquire and place a historical plaque to be permanently displayed in National Statuary Hall recognizing the seven decades of Christian church services being held in the Capitol from 1800 to 1868, which included attendees James Madison and Thomas Jefferson.”

Here’s a breakdown of foreclosures by Congressional district for the 3rd quarter of 2009:

Bachmann’s office has not responded to the Minnesota Independent’s request for comment.

The group raised the issue in a statement criticizing Bachmann’s opposition to foreclosure relief, and citing the Minnesota Independent’s report that Bachmann’s district has the state’s highest rate of  foreclosures.

On Wednesday, the House Financial Services Committee passed an amendment Bachmann offered to the Mortgage Reform and Anti-Predatory Lending Act, which would ban groups facing federal indictment for voter fraud from receiving federal foreclosure relief funds.

Bachmann praised the passage of her amendment, writing, “Before we commit anymore taxpayers’ dollars, I want to ensure that organizations, such as ACORN, are prohibited from receiving funds while simultaneously facing charges of voter fraud and tax violations. Although I do not support the underlying legislation, I am pleased that the Committee took these measures to provide some layer of protection for taxpayers.”

But ACORN says they haven’t been indicted. “The truth is, no criminal charges related to voter registration have ever been brought against ACORN, its leadership, or partner organizations,” the group said in a statement.

ACORN further criticized Bachmann for indicating that she would vote against the bill that bears her amendment, saying that her district has the highest number of foreclosures in the state.

Sunday Alabi, an ACORN board member from Minnesota, said, “Michelle Bachman’s district had 5,934 foreclosures in 2008, more than any other Minnesota Congressional district. She should focus on stopping predatory lending and foreclosures, not attacking the organizations that are working hard everyday to protect Minnesotans’ homes.”

Bachmann also said that ACORN was under IRS investigation, but thus far the agency has not announced such an investigation. Several Republican members of Congress are pressing the IRS to investigate ACORN for electioneering.

Source: Housing Link 2008 foreclosure report

Foreclosures have hit Minnesota’s economy hard, leading to a debate among policymakers over how best to provide relief to the state’s families.

But a Minnesota Independent analysis of foreclosure data from across the state reveals that the crisis is worst where congressional representation is doing the least to address the issue.

Foreclosure rates were calculated using data from Housing Link, a non-partisan Minneapolis-based housing nonprofit, along with county sheriffs’ sale records and estimated numbers of households in 2007 from the state demographer’s office. Congressional district rates were determined using city- and township-level data where boundaries did not follow county lines. The calculations used are the same as those spelled out in the state statute for determining foreclosure rates.

The data show that the northern suburbs and exurbs of the Twin Cities have seen the bulk of the foreclosures in 2008, and the southern suburbs have experienced a high number as well.

While much of the crisis is centralized in an area covering two congressional districts, a search of the congressional record reveals that the representatives in those districts are dealing with the crisis very differently. Rep. Michele Bachmann has voted against all but one measure aimed at foreclosure relief, while Rep. Keith Ellison in the neighboring district has supported or introduced more than a dozen bills to address the issue.

Trouble in the Sixth

Just to the north of the Twin Cities, the 6th district, represented by Republican Rep. Michele Bachmann, had the most foreclosures of any of Minnesota’s eight congressional districts, with an estimated 5,227 in 2008. Her district also had the highest rate of foreclosures as a percentage of households, at 1.80 percent, nearly that of the city of Minneapolis at 1.85 percent.

The situation was similar in 2007, when, according to a Housing Link study, Bachmann’s district had a higher foreclosure rate than the rest of Minnesota and the rest of the country.

But Bachmann’s record in Congress is not one of a representative whose district faces such a crisis. Bachmann hasn’t authored or sponsored any legislation to assist homeowners facing foreclosure, but she has co-sponsored 14 bills to restrict abortions and five to promote Christianity in government.

Bachmann voted against five key foreclosure relief bills, including the Mortgage Reform and Anti-Predatory Lending Act, which would set standards for mortgages and reduce predatory lending, and the Neighborhood Stabilization Act, which would provide funds for buying and rehabilitating foreclosed properties in affected neighborhoods. She also opposed the Expanding American Homeownership Act, which allows more people to qualify for FHA-backed mortgages, and the Expand and Preserve Home Ownership Through Counseling Act, which aims to improve financial literacy. Bachmann additionally voted against the Housing and Economic Recovery Act of 2008, a law signed by President Bush that contained many provisions to assist struggling homeowners and also the only one of the bills to become law.

Before the first four of these measures reached the House floor, Bachmann opposed them in the House Financial Services Committee. She also voted against the FHA Housing Stabilization and Homeownership Rentention Act of 2008, which did not receive a floor vote. The bill would have provided mortgage refinancing assistance to struggling families and expanded FHA loan programs.

Bachmann further offered an amendment to block increased funding for HOPE for Homeowners, a Department of Housing and Urban Development program that helps families facing foreclosure to refinance their mortgages.

When Congress was debating strategies to assist families facing foreclosure, Bachmann called those homeowners “irresponsible.”

“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,” she said in Febraury. “When President Obama released his plan … 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.”

Those homes that residents of the 6th district couldn’t afford had a median value of $239,000, according to the 2007 American Community Survey, just above the national median of $229,000. Prices have likely declined considerably since the 2007 survey.

Bachmann’s office did not respond to a request for comment on the foreclosure data or her voting record.

Different tactics in Minneapolis

While foreclosure rates are nearly as high in the neighboring 5th Congressional District, Democratic Rep. Keith Ellison has been working to address the crisis.

The 5th district, encompassing Minneapolis and its surrounding suburbs, has the second-highest foreclosure rate in the state, with an estimated 4,413 foreclosures in 2008 at a rate of 1.63 percent.

Ellison’s efforts to address the foreclosure crisis have been noticed on a national scale.

He authored a bill that gives renters 90 days notice when a housing unit goes into foreclosure and allow them to finish their lease.

“I think it’s in the best interest of the banks to keep people in these [housing] units,” Ellison told the Independent. “These empty buildings create nuisances for crime, they get vandalized. While they sit empty, people come in and steal copper piping and it creates a risk for fire.”

The New York Times editorial board hailed Ellison’s bill. “This legislation would be good for renting families, which have been unfairly penalized by this crisis,” wrote the Times. “It would also help to stabilize heavily foreclosed neighborhoods by keeping buildings occupied and alive in areas that might otherwise become ghost towns.”

In the last session, Ellison authored the Fairness for Homeowners Act, which would add new regulations to mortgage lenders such as verifying a borrower’s ability to pay and eliminating pre-payment penalties. Last Tuesday he and Sen. Amy Klobuchar reintroduced that bill.

“Throughout all this, we still haven’t passed anti-predatory lending legislation,”  Ellison said. “We need to get some actual regulation. The industry keeps saying that anti-predatory lending has dried up, but there is still a lot of it out there.”

Ellison said he’s introduced the bill every session, and others have offered it before he got to Congress, but still Congress fails to act on the bill.

Ellison is also a co-sponsor of 12 other bills aimed at providing relief to individuals and communities impacted by the foreclosure crisis. His voting record in Congress on housing is virtually the opposite of Bachmann’s.

Bachmann and Ellison both sit on the Financial Services Committee. Ellison voted for all five of the foreclosure-related committee bills that Bachmann voted against, and the same was true of the five floor votes on foreclosure legislation.

But the two did vote together on one House resolution that directs the government to protect “buyers from unscrupulous mortgage brokers and lenders.”

That resolution says that government should establish minimum standards for lenders, increase opportunities for homeowner counseling and strengthen lender evaluations of a borrower’s ability to repay a mortgage.

Bills were offered to address each of those needs identified by the resolution, but Bachmann voted against them.

Ellison says that Congress needs to do more for homeowners, and for the middle class in general, than it’s currently doing.

“How can we sit by and act like we don’t care? A home is a big deal,” he said. “The largest asset that people own is their home.”

In its pilot period, Minneapolis Advantage gave out approximately 50 grants to low-income, first-time home buyers in foreclosure-impacted neighborhoods in the North, Northeast and South Minneapolis neighborhoods. Buyers receive up to $10,000 to help with down payment and closing costs so long as they buy a home on the same block as a foreclosed or vacant home.

In its pilot period, 62 percent of the properties purchased were foreclosures and 9 percent were boarded up and vacant. The program encouraged more owner-occupied homes, as 62 percent that were rental units became homestead properties. The majority of the new home owners bought in North Minneapolis, had incomes under the median and bought homes priced under $150,000.

Seventy-eight percent where first-time home buyers.

The FHLB of Des Moines grant will triple the amount of grant awards for the program.

“The key to rebuilding neighborhoods overwhelmed by foreclosures is to get solid, responsible homeowners into these neighborhoods,” Mayor R.T. Rybak said in a statement Wednesday. “The success of the Minneapolis Advantage program has shown us that there are great homes to be had and that people are ready to move into these neighborhoods. Our job is to help make that happen and this funding just made our job a whole lot easier.”

It’s become a broken record of late: Home-price declines breaking records. With the economy on the skids and the subprime crisis still unfolding, home values are getting devoured first. This morning the S&P/Case-Shiller home-price index was released, revealing that the trend doesn’t show any signs of slowing down. The 20-city index showed year-to-year August price declines of 16.6 percent. Minneapolis saw a drop of 13.3 percent over the year period, with a 1 percent decline from July to August.

Recent reports indicate that home sales are up, a possible sign of a turnaround, some analysts say. But trusting in that marker is like Greenspan relying on capitalism or ghosts relying on astrology–it’s meaningless and totally futile. Home sales are up as a result of the sharp increase in foreclosures and short sales, a bad sign for homeowners and an already shaky economy. In fact, according to the most recent report from the Minneapolis Area Association of Realtors, the inventory of foreclosures and short sales–property sold for below its current loan value– has increased more than 64 percent of the past year. Of the current homes for sale in the Twin Cities, nearly 30 percent are foreclosures or short sales.

The hardest hit neighborhood in Minneapolis is on the Northside, where lender-mediated sales (short sales and foreclosures) account for 69 percent of the inventory of homes for sale in October. Powderhorn is a close second with nearly 52 percent. And the suburbs aren’t immune to the growing problem. Foreclosures and short sales make up more than 63 percent of all the October homes sales in Brooklyn Center.

In St. Paul, the Central neighborhood’s current home sales are more than 63 percent lender-mediated, while Phalen’s foreclosures and short sales have risen to 60 percent this month.

And there’s a variation on that theme where someone with a fake identity promises to help those in mortgage trouble with refinancing, but they end up stealing the title and the money.

Sounds complicated. But it’s no more complicated than the millions of dollars in mortgage fraud cases that Minnesota was targeted with in 2007, landing the state in the top 10 for mortgage fraud cases that year. FBI Special Agent Paul McCabe says that no cases of home stealing have been reported to the Minneapolis Division yet. But with foreclosures and abandoned homes on the rise, he warns to be on the lookout.

“We haven’t seen anything yet,” he says. “And I say ‘yet.’ I know it’s been happening in other parts of the country. But we don’t have any active cases here at the current time. We’ve had plenty of mortgage fraud cases. But not this yet.”

With new predatory lending laws in place in Minnesota, it makes it harder for mortgage brokers to defraud consumers. But it doesn’t stop home stealing or help the tens of thousands of those with subprime or Alt-A loans — and those with prime loans who are in negative equity as a result of the subprime fallout — who are forced to abandon a home they can’t sell.

Foreclosures in Minnesota have risen 68 percent this year, according to the lastest RealtyTrac study. The number of abandoned homes in Minneapolis has risen to nearly 1,000. And it’s not just homes saddled with subprime loans that are left vacant. According to the May numbers from the Minneapolis Area Association of Realtors, it will take an average of 9.8 months to sell a single-family home. That means more owners will have to leave their old homes behind.

McCabe says that the best way to avoid the home-stealing problem is simply by reporting any suspicious activity. “A lot of times it’s just the information intake,” he says. “If there is a case and someone is reporting it, it can lead you to a group or criminal enterprise.”