Michigan Foreclosure Bills Get Mixed Reviews
A package of bills extending homeowners' rights to buy back property after a foreclosure has been reintroduced to the state House.
HB 4542, 4543 and 4544 are new versions of bills introduced this summer that sparked outrage from housing advocates for decreasing the redemption period of homes from six months to three months, the Grand Rapids Press reports.
Redemption periods allow former property owners a certain amount of time to work out new payment plans with lenders after a home repossession.
State Rep. Marty Knollenberg (R-Troy) worked to renegotiate the earlier House bills. He's also supporting a new bill that shrinks the redemption time to 30 days for certain kinds of loans, the Grand Rapids Press reports.
HB 1576 would apply to portfolio loans, which are loans made with an investor's own money that are not sold to a secondary housing market lender, like Fannie Mae and Freddie Mac. They are typically owned by community banks and credit unions.
"They are our community bankers, homegrown, and when they're holding these loans, they have a vested interest in those loans," Rep. Knollenberg said. "They're going to do whatever they can to make good on those loans. They can't afford to have a bad loan on their books."
The Michigan Credit Union League says the 30-day redemption bill "strikes a proper balance" between consumer responsibility and lender communication.
"An unduly protracted foreclosure process can result in unoccupied and unmanaged properties that pull everyone's property values down," David Adams, CEO of the league, said in a statement.
Brandon Jessup, a researcher for Detroit-based progressive policy think tank Michigan Forward, disagrees with that assessment of HB 5176.
"This bill will further delay the loan modification process Michigan homeowners rely on to preserve their homes," Jessup said in an article on the group's website. "HB 5176 creates a paper log jam for the big lending institutions that hold approximately 90 percent of Michigan mortgages."
Jessup also called the bill unfair, arguing that many homeowners do not know whether or not their mortgages fall under the portfolio criteria.
The bills remain up for discussion in the state legislature.