Lawmakers in some states are proposing moratoriums on foreclosures as a way to deal with the ongoing crisis in the housing market.
In Minnesota, they're taking a slightly different approach that aims to keep people in their homes but also preaches personal responsibility.
Instead of trying to halt foreclosures outright, the measure in Minnesota would let homeowners delay foreclosure for one year â€” but only if they keep paying at least 65 percent of their monthly mortgage payment. The option is only for owner-occupied homes financed with subprime loans.
The Minnesota Senate passed the bill 34 -29 on Monday. The House is waiting for the rules committee to decide when to move a companion bill to the floor.
But Gov. Tim Pawlenty recently said the measure would do more harm than good.
"I won't support that," said Pawlenty, a Republican. "No other state has done that. It will impact the credit markets in Minnesota in a way that's detrimental to the other 99 percent of Minnesotans who are not in foreclosure."
An amendment added to the bill this week might quell some of the governor's concerns --and might avoid a veto that the Legislature would be hard-pressed to override. The amendment would let lenders stop the foreclosure deferment if they make a good-faith effort to renegotiate a borrower's loan.
Pawlenty has been named as a possible running mate to presumed GOP presidential nominee John McCain, and his action on a national issue such as foreclosure could come up during the run-up to the November election.
The Republic National Convention is scheduled for Sept. 1-4 in St. Paul.
Supporters say 12,000 Minnesotans potentially could benefit if the bill becomes law. That's fewer than half the homes predicted to be foreclosed on in Minnesota this year.