Consumer advocacy groups are calling on Michigan lawmakers to refrain from passing a new law that would strip certain homeowner protections during the foreclosure process and threaten the still fragile housing recovery.
According to Frank Woodruff, director of the National Alliance of Community Economic Development Associations, bills HB 4765, HB4766, SB 380 and SB383 would take away “homeowners' right to due process” and tempt lenders to abuse their power, reversing efforts to prevent foreclosures during the past few years and posing the risk of “dragging down the state's economy."
On June 18, the Michigan House of Representatives is expected to pass a package of bills that have already been passed by the state’s House Financial Services Committee on June 12.
"These bills put an inordinate amount of power in the hands of the lenders," said Neeta Delaney, director of the Michigan Foreclosure Task Force, a broad-based statewide coalition of housing counseling agencies, legal advisors, financial institutions, local units of government, and other entities.
In summary, these insiders agree there are several major issues with the new legislation.
The bills repeal the Michigan pre-foreclosure negotiation law which requires all lenders ensure someone with the authority to modify the loan meets with the homeowner to discuss foreclosure workout options.
In addition, the new regulation permits lender representatives “to show up unannounced as often as they want to inspect the interior and exterior of the home.”
Most importantly, following these revisions to the law lenders will have the authority to eliminate the existing 6-month redemption period “and immediately foreclose upon a home if the lender decides that the home or a secondary structure needs repairs.”
It means one boarded-up window could be enough for the lender to claim “the property is at risk of imminent damage,” Delaney said, and justify a lender’s decision to forego the 6-month redemption period and evict these homeowners right away, and leaving them no time “to challenge an illegal or fraudulent foreclosure, come up with the money to save the home, sell the home at a loss, or find an affordable place to live.” And in such cases homeowner risk immediately turns into neighborhood risk.
Michigan is just one of the states currently
"If the foreclosure crisis taught us anything,” stated Woodruffin a press release, it is that unregulated foreclosures can be disastrous for our economy and unfair to homeowners.
