Preserving home ownership benefits everyone
Published 9:13 am Thursday, May 14, 2009
One in every 31 Minnesota homes was foreclosed upon from 2005 to 2008. And today in the United States, a family loses a home to foreclosure every 13 seconds.
That’s the tragic reality. Yet, as bad as the crisis is, it could be worse. And, there are signs of progress in the fight to preserve home ownership. Last year, the Minnesota Home Ownership Center’s nonprofit counseling network prevented nearly 5,000 foreclosures. This is a substantial increase over the foreclosures prevented in 2007; the number of home owners who reached out for help also increased by 145 percent over the previous year.
Homeowners who have fallen behind on their mortgage, and those in danger of falling behind, are caught up in the mounting financial challenges increasingly common in our challenged economy. In reviewing the causes of strife that brought home owners to our network of mortgage support counselors in 2008, many have faced reduced income through a job loss, lost hours, or diminished salaries. Others are struggling under the weight of mounting health care bills or other outside debt. And the mortgage crisis is not isolated to urban centers and adjusting loans. It touches every county in Minnesota.
Investing in preventing foreclosures benefits both the homeowners directly impacted, and Minnesota’s communities as a whole. Each foreclosure can cost home owners, neighboring households, lenders and local governments up to $78,000, according to an analysis by the Joint Economic Commission of Congress. Using this analysis, the foreclosures prevented in 2008 saved Minnesota’s economy approximately $300 million — no small amount, particularly in these trying times.
The benefits of foreclosure prevention services are proven and documented. But to be successful in the long run, we must shift our thinking from viewing home ownership as a means of short-term financial gain, to reinforcing it as the basis of stability, community and growth for our local economies, families and schools. We need to reaffirms the true benefits of home ownership:
High home ownership rates within a neighborhood increase the presence and diversity of local businesses, according to a study by the Bipartisan Millennial Housing Commission.
Home ownership has also been shown to lead to decreased crime rates and increased private investment in communities.
And the children of home owners have been shown to perform better in school and attend college at a greater rate than the children of renters, even when accounting for income differences.
A home is undoubtedly one of the greatest investments that many families will ever make, but these outcomes illustrate a greater value of home ownership for Minnesota that has often gone unnoticed in recent years.
A vision of successful home ownership in Minnesota is achievable. It requires: the attentive prevention of foreclosures, as is currently under way in Minnesota; the education of home owners so they understand their purchases — benefits and liabilities — before securing a mortgage and buying a home; credit counseling to facilitate success even during times of hardship; and a shared commitment from policy makers and the home ownership industry to ensure that we are sustaining stable home ownership and communities in Minnesota.
The mortgage crisis has illuminated flaws in our system of valuing home ownership as a strictly monetary investment, but it does not diminish the true value that home ownership contributes to our families and communities. As Minnesota leaders contemplate the future of housing in our state, we must also restore our values in home ownership in order build a state of successful communities for our future.
Julie Gugin is the executive director of the Minnesota Home Ownership Center, a statewide nonprofit dedicated to supporting and sustaining successful home ownership for Minnesotans. For more, visit www.hocmn.org.