Minneapolis Foreclosures Have Cost Public Schools $150 Million, Study Says

The housing crisis has cost Minneapolis Public Schools $150 million in state funding as students were forced to move from the area after their families' homes were foreclosed, according to a new report.

The report, by nonprofit advocacy group Minnesota Neighborhoods Organizing for Change, found that there have been more than 13,000 foreclosures in Minneapolis since 2006, leading to an estimated loss of 4,000 students from MPS. The majority of state funding for school districts is based on enrollment numbers.

Those figures are derived from research by the Center for Urban and Regional Affairs at the University of Minnesota that indicates 58 percent of households moved away from MPS zones after foreclosure and enrolled in other school districts.

Foreclosures in Minnesota also disproportionately affected homes with school children -- 17 percent of all Minneapolis households have children in MPS, while 39 percent of foreclosures in the city affected a household with a child in MPS, according to the CURA research cited in the NOC study.

The NOC report contends that banks, particularly Wells Fargo and U.S. Bank have driven the housing crisis in Minneapolis through their combined foreclosures of more than 500 homes in Minneapolis in the last year, costing MPS an estimated $47 million in state funding.

A spokesperson for U.S. Bank, however, told KARE that the NOC foreclosures figures are dubious, arguing that U.S. Bank only served as a trustee for many properties.

Wells Fargo issued a statement noting that it prioritizes foreclosure prevention and will continue to work directly with customers to do so, according to Minnesota Public Radio.

Johnny Jones Jr., an NOC supporter and father of two, told KSTP that banks must be more open to loan modifications for families facing foreclosure.

"If they don't, our kids are going to end up in jail and prison," Jones said. "They're not going to go to school. They're going to drop out."

NOC is calling for several changes to state policy, including adopting a foreclosure mediation program, requiring mortgage providers to submit a disclosure affidavit indicating why it couldn't modify a loan on a foreclosed home and having local governments, school boards and public agencies require "responsible lender criteria."

NOC leaders will present its findings to the Minneapolis school board Tuesday. School officials say they comment after they review the NOC's findings, KSTP reports.

The report on Minneapolis comes amid large statewide budget cuts, forcing districts to seek out lenders for funding. In July, Gov. Mark Dayton signed a budget to end a 20-day government shutdown that in part delayed another $700 million in payments to schools.

Comments

[FancyAmerican]

03:34 PM on 10/12/2011

Sometimes I wonder, and I know this is a stretch, but what if all of these foreclosures were planned in order to "starve the beast." What if there was a goal to somehow seriously affect tax revenue so that certain things end up privatized?

Okay, I know it's a stretch but you never know!

I'll just go back to my day now...

[Jond0]

04:08 PM on 10/13/2011

They definitely want to starve the citizen so we'd be willing to take any job at any pay. Just sayin'...

[gomezcorp]

11:20 AM on 10/12/2011

So the People's Republic of Minneapolis Public School system is sucking wind. Those kids went somewhere else to another school system. They voted with their feet. That's the American way.

[Jond0]

04:08 PM on 10/13/2011

That's not how it happened...

[Mark Coble]

09:01 AM on 10/12/2011

The banks can not modify a loan they do not own. Hence the massive failure of the loan mods. Better to ask the "lender" or "servicer" if they even have standing to foreclose. They don't. No original mortgage note, no assignments, no indorsements. Get a good attorney and fight the bank. Call their bluff. Answer the foreclosure complaint with a discovery motion asking for a clear chain of title. Who bought the note? How many times was it sold? All properly recorded? All assignments in place? I doubt it. THAT is the real problem for the banks if only people would fight the banks FRAUD aka "robo-signing". Investors know this hence all of the lawsuits against all of the major banks. Google MERS CONSENT ORDER as well to see their abuses.

[tpsdodger]

11:04 AM on 10/12/2011

So, even if those things happened, that would allow the borrower to not have to pay the money back, as agreed too?

[Mark Coble]

11:17 AM on 10/12/2011

Yes. But here is the catch. Who did you agree to pay? The original lender. The original lender sold your note to whom? The original note was paid off when it was sold into a security. OK no problem. The banks DID NOT FOLLOW THEIR OWN RULES regarding the assignments, etc. So that is why the banks can not even find the original note. If they CLAIM to have the note, were the banks and the states rules followed in regards to assignments and indorsements? Don't believe ME. Read a Prospectus from any bank. Go to SEC.GOV and type in Banc of America. Yep, Banc with a "c". Document 425b usually...
So once someone reads a Prospectus they are truly shocked. Then they understand why investors are suing all of the major banks over this. UNSECURED MORTGAGE BACKED SECURITIES. Securities FRAUD in other words. This is the real deal that you can read about once you know what it is.

[veracruise]

01:35 AM on 10/12/2011

The (Somali) Muslims will love that since they are all trying to take over.

[bdzdean]

08:51 PM on 10/11/2011

What actually angers me is, It was the banking business's that caused our economy to collapse in the first place. Our Government then bails out the banks to the tune of BILLIONS and BILLIONS using our tax dollars. The banks turn around and smack every tax paying citizen in the face by reducing consumers lines of credit, raising APR rates on credit card holders, do little or nothing for families/home owners who due to temporary financial circumstances beyond their control fall behind on their mortgage or credit card payments. Now rather then the banks trying to work with individuals who find themselves in a temporary sudden financial crisis. The banks foreclose on their homes, raise their credit card interest rates and payments even higher. Why? Why did and do the banks find it so necessary to destroy and further add to the financial and emotional pain and suffering of individuals. Yet, the banks depended on the tax payers to financially keep them solvent in their time of financial crisis. That they "the banks" themselves caused.

Is it really any surprise to anyone with half a brain cell functioning that people in general are upset? Seems like a normal logical human reaction to me.

[dfinch]

09:50 PM on 10/11/2011

The housing bubble is what started the collapse. Fannie and Freddie were audited and the downfall began. Countrywide carried a lot of these loans and they were toxic. Knowing what bad shape Countrywide was in I'm surprised that B of A bought them unless it was forced upon them but no one will ever know.

[tpsdodger]

11:12 AM on 10/12/2011

Don't believe everything you read. Wells Fargo exec. DID NOT want the money from Wash. But was forced to take it. I now believe that all of the bank bailout money has been repaid to Wash. WITH INTEREST.
You can't expect the banker to be your financial advisor. Decisions to take out a credit card, mortgage note, car loan, are strictly an individual one.
Do you hold your employer responsible for bad decisions that you make?

[luckyfreeman69]

08:43 PM on 10/11/2011

Front and center CHIEF.. Assume the position.

[luckyfreeman69]

08:41 PM on 10/11/2011

Education education education but still can't do matematics...even simple math...Talk crap and just more and more crap but you can't kid a kidder...The facts are quite simple these educated idiots can't do math and dont have the intelligence to represent the people that pay thier salkaries otherwise they would still have thier jobs...Provable fact of the matter is simple 13,000 homes times 2000.00 dollars property taxes...===26 million dollarsw a year Just what is it that these overeducated idiots don't understand..Once its gone brothers and sisters its all gone..You all had a blast driveing all these people into bankruptcy and foreclosure now its your turn......The only chance you have is to vote these idiots out and put the (tea party in) Save the property owning taxpayers, volunteer police departments on rotation, volunteer teachers, and fireman that are laid off workers from other jobs will have to put in 20 hours a week of volunteer service to recieve a unemployment check....

[luckyfreeman69]

08:31 PM on 10/11/2011

13000 times 2000.00 dollars in property taxes = 26 million dollars times 10 years = 260 million dollars. Really do I have to sitdown and put it into simple mathematics so you can all understand you know even these numbers get rather big for me to do in my own head I have to try to use scientific notation to deal with these kind of numbers ... Next question is a simple one...What was the school budget for 1 year and the police budget and the firehouse budget...Just do 1 year and you will see that 26 million would have paid for everything with a surplus had the greedy public servants only represented the Property Owning taxpayers..The landlords...Not the NON paying tennants. Next time a landlord is tryingh to evict a non paying tennent if you value your childrens schooling and your public servant job you had better start representing the very responsible trustworthy law abiding property owning taxayer...The landlords have the constitutional right to a speedy trial without the houseing specialist dragging things on foprever until the landlord loses his house.. Now the city loses another property owning taxpayer..Rental laws have to be changed ..Good enough to move into good enough to pay rent and pay your own gas and electricity...You don't pay you don't stay...You don't put the utrilitiues in your own name imediate grounds for eviction at the tennants own expense...Enough is enough save the taxpayers

[luckyfreeman69]

08:17 PM on 10/11/2011

Oh ya thats to bad HUH all those teachers lost thier jobs HUH and the police and the Firedepartments had to lay off people why...Because the greedy corrupt government refused to represent the property owning taxpayers..Next time these mentally deranged liberal incompetent public servents should learn who it is that pays thier salaries and start to represent them and nobody else...You save the property owning taxpayer you might just be saving the only people that pay for your own jobs. Its not the non paying tennants or the people that don't work or own a building that pay your salaries. TEACH its the landlords that pay for everything even the water you drink comes from the landlords..enjoy that coffee but remember the landlords paid for it...and the bathroom functions as well...that goes for all you over educated imbeciles that can't do math..For once in your life stand on your own 2 feet and stand for something enough is enough. demenad that the public servents represent the property owning taxpayers. Just what is it that you will stand for ??? who are you suppose to represent.. How about the property owning taxpayers..Thats the people that pay your salaries...Its not anybody else..wake up

[Jond0]

05:13 PM on 10/13/2011

It has way more to do with the fact municipalities bought into the CDO and REIT scams and invested all their tax dollars hoping for a big payout and got taken to the cleaners by Wall Street instead.

[Bobbie Jo Justice]

08:06 PM on 10/11/2011

what we need in this country that tells the thieves, er, I meant banks, NO MORE FORECLOSURES...PERIOD, put a PERMANENT STOP to all foreclosures, and for any of the bank thieves that were caught using "robo-signers", their senior management will be thrown in jail for the rest of eternity.

[musterseeds]

07:57 PM on 10/11/2011

Property taxes very high, home value gone down, just made me sick try to hold on my home as single person like me. can't blame the bank but rather blame on goverment state property taxes collecter.

[treasuredtrophie]

08:07 PM on 10/11/2011

Alabama going to save a bundle all the illegals left school. Won't be handing out free meals, less staff, smaller class rooms.

[hudmason]

07:53 PM on 10/11/2011

I've lost jobs my money is low so I HAVE TOO STOP SPENDING AS USUAL you had time too see this coming things have changed so must we

[bdzdean]

07:46 PM on 10/11/2011

How can foreclosed properties cost the schools and Counties loss of revenue. The foreclosing bank is now the legal owner of a foreclosed property, and therefore should be held financially liable by the County assessors to pay the property tax's.

Is there a law I'm unaware of with regard to foreclosed properties that exempts banks from paying property tax's on properties they legally own.

Its bad enough the banks aren't held legally liable and fined by Counties for code violations on foreclosed homes. The banks just let these homes and properties sit and decay bringing down the value of other owner occupied well maintained properties in a neighborhood.

[dfinch]

08:43 PM on 10/11/2011

The banks are responsible for the property taxes after foreclosure. Once a property is sold after a foreclosure it's a negotiation between the bank and the prospective buyer as to what it will be sold for and who would be responsibility for whatever repairs. I don't know how it would effect the school systems.

[tpsdodger]

11:18 AM on 10/12/2011

I get from the article that it is Fed funds that they will stop recieving, since it is based on enrollment numbers.
Funny...Minn. school district will stop recieving fed funds, and they blame the banks.
My daughter just got pregnant, I blame the banks....
My son was just arrested, I blame the banks.....
Food prices are rising, I blame the banks....
Pres. Obama was elected, I blame the banks....

[Justthom]

07:44 PM on 10/11/2011

Want to force the banks to work with people being foreclosed on? Make the banks keep the property taxes current on every property that they foreclose on. They'll either work with the folks in trouble or will be more amiable to selling the forclosed properties to get out of paying those property taxes.

[Bobbie Jo Justice]

08:07 PM on 10/11/2011

or just start bombing banks

[dfinch]

08:50 PM on 10/11/2011

The banks don't want these homes. They're not in the real estate business. Most banks will either set up payments for you and tag that on to the end of the loan or they'll do a refinance. if that doesn't work then they're forced to foreclose. I don't know what the B of A type banks do but this is normal procedure with your smaller banks.

[Mark Coble]

09:04 AM on 10/12/2011

What if the banks get the houses for free as they had sold the mortgage note way back when? ILLEGAL foreclosures make huge money for the banks.

[Justthom]

08:16 AM on 10/14/2011

Want them or not, they have them. Taxes are due on them now.

With most every municipality hurting budget wise, they should be collecting the property taxes from the banks and the banks should be paying the taxes. It is a cost of doing business.

[The Fosz]

07:43 PM on 10/11/2011

Yes, all the forclosures, maybe as high as 1 in every 4 houses will have terrible effect on the public schools for many years to come and some areas may never recover. Forclosures destroy home values and the public schools by destroying the tax base.