A federal lawsuit was filed in the Minneapolis federal court earlier this year that sought to block all home foreclosures in Minnesota. Court records state that a new federal program designed to assist struggling homeowners in refinancing their mortgages is failing. It does not provide proper notice of why refinancing is being rejected, nor does it enable homeowners the right to appeal.

The program referenced in the court filing is the Making Home Affordable (MAH) program, which reduces monthly home loan payments for homeowners at risk of foreclosure. Boosted by the Obama Administration, $75 billion was designed for the loan modification program in attempts at preventing an anticipated 3 to 4 million foreclosures.

Filed by a homeowners’ advocacy group, the lawsuit seeks to halt all foreclosures in Minnesota until the state establishes proper notice and appeal addendums into law.

Minnesota Housing Partnership (MHP) representative Chip Halbach stated that he did not believe the MAH program was working. As a non-profit group, MHP provides resources for building and retaining affordable housing. Halbach was encouraged, though, that possible grassroots efforts by housing advocates were starting to result in a drop in foreclosure numbers.

One such grassroots organization, the Northside Community Reinvestment Coalition (NCRC) began a door-to-door campaign, reaching out to homeowners at risk of foreclosure. Another group, Jewish Community Action (JCA) is doing the same thing in local neighborhoods. Not only are many being helped by the organizations, but some have even become volunteers.

Legal advocacy is another grassroots trend in battling foreclosure. Minnesota Housing Preservation Project (MHPP) associate Mark Ireland stated that the MHPP is all about maintaining accountability. A non-profit law firm advocacy for stopping foreclosures, the firm has represented cities and neighborhoods and won a number of important cases. Filed earlier this year in July, the firm’s most recent lawsuit alleges that the government’s MHA loan modification program contradicts Constitutional due process requirements.

The intent of the lawsuit, Ireland said, is for loan servicers partnering in the MHA program – primarily Fannie Mae and Freddie Mac – to enlist another foreclosure moratorium until such time that people are given proper notice of their rights to the program benefits. Based on current foreclosure proceedings, most homeowners qualified for the program do not have access to it.. Ireland believes that the MHA is an important program, but his concern is that very few homeowners have been able to benefit from it.

Should MHPP win the lawsuit against the MHA program, it could literally change the foreclosure landscape in setting a moratorium against foreclosure and making refinancing options viable for homeowners at risk for foreclosure.