May 20, 2009 – (RealEstateRama) — Long before the current national recession took hold, Michigan was dealing with a severe economic downturn. Still facing job losses and mounting debt in 2009, many state residents have been unable to continue making payments on their homes. As a result, Michigan has consistently had one of the highest foreclosure rates in the nation.
To help address this problem, the Legislature recently approved a package of foreclosure prevention measures. These new laws aim to help residents, who are financially able and willing to take the necessary steps, to stay in their homes.
The bipartisan, bicameral package revises Michigan’s “foreclosure by advertisement” process by encouraging greater communication between lenders and homeowners. Under the legislation, the lending institution that holds the home mortgage in question would be required to send a written notice to borrowers before foreclosing on a principal residence. If a homeowner decides to work with the lender, the two parties will have 90 days to participate in “pre-foreclosure” meetings and develop an agreeable solution for the mortgage.
The Senate and House worked closely on the proposal. A bipartisan conference committee made up of three state senators and three state representatives worked out the final details. As the Senate’s lead negotiator, my top priority was to develop a foreclosure prevention plan that would help residents stay in their homes as long as they are financially able to do so.
Ultimately, the committee worked through differences in the legislation until we reached an agreement that members of both the Senate and House could support. The compromise revises the legislation to exclude some personal information on the published foreclosure notice and restores the judicial foreclosure provisions with broader criteria. This gives lenders more options in seeking a solution instead of foreclosure.
Foreclosure is bad for homeowners and lenders, as well as the communities where the property lies. It’s important for both parties to work together to prevent it. This legislation will encourage members of the mortgage industry and homeowners to work through the difficult issues and keep residents in their homes whenever possible.
Various associations, including Michigan Legal Services, Michigan Mortgage Lenders Association, Michigan Association of Community Bankers, Michigan Advocacy Project, Michigan Bankers Association, Michigan Credit Union League, Michigan Municipal League, Michigan Foreclosure Task Force, Detroit Office of Foreclosure Prevention, and United Community Housing Counselors, participated in the development of the foreclosure legislation.
It is another step in a series of Senate reforms approved last session to address challenges within the housing market. Other measures included establishing registration requirements for mortgage loan officers, preventing appraiser coercion, and helping homeowners qualify for affordable loans.
As chair of the Senate Banking and Financial Institutions Committee, I will continue my commitment to providing Michigan families with more tools to address challenges in the housing market and the mortgage industry.
State Senator Randy Richardville
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