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In economic downturn, county maintaining lower foreclosure rate than rest of state

WILLMAR -- Foreclosure is a serious business and banks take it seriously. But in the global picture, Kandiyohi County is better off than the rest of the state, says a local banker.

"The message we're trying to convey is that we have problems. We have foreclosures, but it's not as serious as it is in most other counties in the state,'' says Duaine Amundson, vice president of Heritage Bank of Willmar and a former Realtor. He gave a couple reasons why Kandiyohi County's foreclosure rate is lower compared with rates for the Twin Cities metro area, for Greater Minnesota and for Minnesota overall.

"Historically, I think we never hit the peaks in the good times and conversely we don't the hit valleys in the bad times. We have stable employment. We have a stable work force and we have just good, hardworking people,'' said Amundson.

"We also have strong community banks who make good credit decisions. We're not always perfect, but we do make good credit decisions. And a high majority of the foreclosures were funded by out-of-area banks,'' he said.

"Any of the community banks have subscribed to very sound underwriting and credit guidelines, and they have not gotten carried away with the sub-prime mortgage business,'' Amundson said in an interview after speaking to business people Monday noon about the mortgage crisis and state and local economic conditions.

Amundson said foreclosure is a devastating and traumatic experience for the borrower, is an expensive and loss situation for the bank, and is a "last resort'' for both the borrower and the lender. However, Amundson is optimistic about the future.

"We survived 17 percent interest in the early 1980s. We survived the ag crisis of the 1980s. We survived the savings and loan crisis of the early 1990s. We survived the refinance boom five years ago,'' he said. "We will survive the mortgage crisis of 2008.''

Amundson followed Dr. Jeanne Boeh, chair of the Augsburg College Economics Department who provided the national perspective.

In an interview, Boeh said Minnesota did not enter recession as soon as other parts of the country.

"At this point, we've lost jobs over the year. Eventually you will go into recession. Our job loss now looks more like the nation. The nation is going into recession. We will be going into recession,'' said Boeh.

Although the nation's unemployment rate is between 6 percent and 7 percent, Boeh said the statistic means that 93 percent of the people who want to be working are working.

"I think that as we see more people who stay unemployed for longer periods of time, that's when you need special programs for that group. But so far that group is relatively small,'' said Boeh.

"When you drive down the street, people are still shopping. They may not be quite as extravagant, but most people still have jobs, most people still have positive equity in their homes and most people are still working,'' she said. "We don't need to head to the hills and start living like survivalists.''

Boeh said the country should really be worried about what she said were $57 trillion in unfunded Medicare liabilities.

By contrast, the $700 billion borrowed by Congress for the Wall Street bailout is a much smaller percentage of the gross domestic product.

"And what people have to understand is that we don't know how much of that really is going to be needed because it's like a credit limit: how much are those underlying assets worth? I don't know, nobody knows,'' said Boeh. "But it's not likely that it's really $700 billion.''