Committee Reports Foreclosure Extension Bill to Full House (Misc News: December 1, 2011)
A package of bills that would extend the 90-day foreclosure law for an additional three years is moving on to the full state House after it was voted out of the House Banking and Financial Services Committee.
The MCUL & Affiliates is advocating for reforms to the process. The current changes to the framework for the 90-day delay include more clear timelines concerning which actions must occur at various points during the process for both lenders and borrowers. This allows a lender to proceed immediately to foreclosure if a borrower is unresponsive to requests for certain documents. Other changes include: holding borrowers responsible for damaging the property during the redemption period; and reducing the redemption period for properties larger than three acres from 1 year to 6 months, if the property is not deemed to be for agricultural use. The MCUL & Affiliates supports these changes in House Bills 4542, 4543, and 4544.
The final piece the MCUL is advocating for in this package is seeking a shortened redemption period for those loans held in portfolio with House Bill 5176. Credit union supporters are encouraged to visit the MCUL’s Grassroots Action Center to view the action alert and find out how you can contact your state representative to encourage his or her support for the shortened redemption period for these loans under HB 5176. The action alert can be accessed by clicking here.
HB 5176, introduced by state Rep. Rick Olson, R-Saline, will help offset the burden of adding an additional 90 days to the already lengthy foreclosure process by reducing the redemption period on portfolio loans by an equal 90-day period. It’s part of the four-bill package approved by the House committee on Wednesday, Nov. 30.
The Michigan Foreclosure Taskforce, representing housing counselors and consumers during the foreclosure process, is opposed to HB 5176. One reason they oppose it is they state the bill is unfair to homeowners because it will create two different redemption periods for homeowners based on if they have a portfolio or non-portfolio loan.
While the redemption periods may differ for portfolio loans versus non-portfolio loans, the MCUL believes that lenders who hold the loan in portfolio will generally do more communication on the front of the pre-foreclosure process in order to avoid foreclosure. Additional time on the back end of the process is not necessary when a modification cannot be made and all avenues have been exhausted to try to keep a borrower in the home.
Also, the current foreclosure process already has several different redemption periods depending on if a property is abandoned, more than three acres or less than three acres. Having different timelines for a person to redeem their property is not a new concept.