LANSING –-Legislation to help Michigan homeowners avoid foreclosure and crack down on mortgage modification scams was approved Wednesday by the state Senate, said Sen. Darwin Booher.
“Foreclosures have a huge negative impact on the family and the entire community – depressing home values, reducing funding for schools and local governments and driving away job providers,” said Booher, R-Evart. “By assisting homeowners to keep their homes and avoid foreclosure, this reform will help struggling families and our struggling economy.”
In the aftermath of the 2008 banking and housing crisis, many lenders were unwilling to help stressed homeowners modify their mortgages to avoid foreclosure. In 2009, Michigan responded by passing a 90-day mortgage foreclosure moratorium in which the homeowner could work with lenders or petition the courts to find a solution. That law expires on Jan. 5, 2012.
House Bills 4542-4544 would extend the moratorium until Dec. 31, 2012. The package also adds detailed timelines for borrowers and lenders in the negotiation process, includes criminal and financial penalties for home loan modification scam artists, eliminates the newspaper printing requirement of default notices and allows lenders to directly contact owners of default via first-class mail.
“The measures make the process more efficient and effective and crack down on scam artists who prey on hardworking families by promising to modify the mortgage for an upfront fee – and then do nothing,” said Booher, chair of the Senate Banking and Financial Institutions Committee. “I believe homeownership is a cornerstone of the American dream. And this reform is another step to help preserve that dream. It follows our actions earlier this year to criminalize and severely punish mortgage fraud.”
Signed in October, Public Acts 201-208 created the crime for mortgage fraud and made that crime a felony punishable by up to 20 years in prison and a $500,000 fine.
HBs 4542-4544 have been returned to the House to be enrolled and sent to the governor.