Kara McGuire
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For many families, a foreclosure ends their mortgage woes, but plenty of financial troubles remain. Unemployment. Other debts. And the critical question of where to live after the sheriff's sale. As the foreclosure crisis continues to wind its way through communities nationwide, nonprofit groups are focusing on how to help former homeowners pick up the pieces.

With $125,000 in funds from the St. Paul Foundation, the Minnesota Home Ownership Center introduced grants for families in the east metro struggling to pay for moving costs, security deposits and other housing costs. The program was expanded metro-wide in March with a $90,000 grant from the Target Foundation. The maximum grant available is $3,500 and the money is available on a first-come, first-served basis until it runs out.

But so far, only 20 or so families have used the program to help secure stable housing.

Why so few, when data out this week show there were 23,019 foreclosures in Minnesota last year, and 6,716 in the first quarter of 2010?

It's likely that many who could benefit from the program don't know this money is out there. Displaced homeowners tend to be hard to reach. "People like to keep things private, so it's been hard for them to find out about us," Nicola Viana, a homeownership specialist with the Washington County Housing and Redevelopment Authority, said.

Then there's the pride factor. Many don't want to ask for handouts. No one who has received a grant would speak to me for this column.

Foreclosure prevention counselors paint a picture of a program that serves households -- many with children -- dealing with job losses, death or illnesses, or relationship breakups that make once-affordable housing payments unmanageable. The grant helps them move away and move on. If they don't know someone with a truck, they use the grant to rent one. They take the money to help with three months of rent payments. The funds become a security deposit.

The latter use is very common. Because a foreclosure damages a homeowner's credit -- with scores dropping by as much as 140 points, according to a study by VantageScore -- landlords often require hefty security deposits from the new renters. Viana has seen landlords requiring $5,000 down before handing over the keys.

Could there be a silver lining to the unused funds? Ryan Allen, assistant professor at the Humphrey Institute of Public Affairs at the University of Minnesota, has been studying where people land after foreclosure. He emphasizes that his sample size is very small and concentrated on Spanish-speaking families in Minneapolis. But he was surprised to find that many of the families were better prepared for life post-foreclosure than he'd predicted. He credits the fact that in Minnesota, families can typically stay in their house for six months after the sheriff's sale takes place for giving them "time to plan and to save money and to pay down debt." If families were able to save every penny they would have spent on a mortgage, they could be ready to stand on their own once it's time to leave their property.

Sadly, counselors say that there are those families who can't afford food, medicine and other bills -- even without a mortgage. Rent is out of the question. These are the people who can't qualify for these housing funds because they're still too poor. Grantees must prove they have a workable budget. When they don't, that's when families have to double up -- moving in with parents or siblings or friends. If they have nobody to turn to, a shelter may be their only option.

For some, only a recovering job market, or time to pay off outstanding debts, or bankruptcy will get them out of their fix.

While demand has been slow at first, Julie Gugin, executive director of the Minnesota Home Ownership Center, expects funding to run out this year, as the foreclosure crisis lumbers on and word about the money spreads. For a list of qualifications and information on how to apply, visit www.hocmn.org or call 651-659-9336. Information with a national scope about stabilizing families after foreclosure can be found at www.foreclosure-response.org -- a site run by the Center for Housing Policy.

Kara McGuire • 612-673-7293