3 things to know about the mortgage messby Paul Tosto, Minnesota Public Radio
St. Paul, Minn. — All day Tuesday, Oct. 25, The Big Story Blog followed the Minnesota mortgage mess, after President Obama announced a new plan to provide some refinancing relief for Americans who are "underwater" on their mortgages. Here are some conclusions:
1.) Help for 100,000 Minnesotan homeowners, maybe.
It can't hurt. President Obama's plan to expand eligibility for a federal program that helps people get refinancing on homes where the debt owed is bigger than the home value will bring relief to some who need it. A Minnesota housing official said it could aid another 100,000 Minnesotans.
But as mortgage banker Alex Stenback pointed out, "While this is an encouraging set of changes...implementation and participation by the private lenders, servicers, mortgage insurers and others remains THE key to the success, and availability" of new refinancing options.
2.) The mortgage and housing crisis is changing us.
Coincidentally, the New York Times today reported on the jump in suburban poverty. In a graphic, the paper showed Minneapolis among nine metro areas that shifted to majority suburban poor in the last decade.
The mortgage mess isn't completely to blame. But it's no stretch to connect the dots: Your suburban home value crashed in recession, you lost your job but the mortgage is still there.
This economy has shattered 60 years of belief that a house in the suburbs was a fool-proof investment, an asset that would always grow in value and build equity that could be tapped for family vacations, cars, college tuition and other luxuries.
The economy and housing markets will recover. But it may come too late for people who were depending on their home values for so many things.
For more perspective on this, check out the responses we got to the MPR News question of the day: Is home ownership an attractive option these days?
3.) "We didn't do anything wrong."
Minnesotans in the MPR News Public Insight Network shared a ton of heartfelt stories with us about dealing with mortgage problems. These are folks, for the most part, who made what looked like a smart economic decision and were blindsided by plunging home values and a crumbling economy that put them ultimately damaged them -- and their neighborhoods.
Recovery comes eventually. But it's anyone's best guess when.
Phil Larson of Duluth spoke for many Minnesotans in the current straits.
"The most frustrating thing is, we didn't do anything wrong," he wrote us. "We didn't borrow more than we could afford or take on a risky loan. We simply paid the market price for a modest house."
Learn anything today about underwater mortgages and plans to help that we missed? Post something below or contact us directly.