LANSING, Mich. (12/6/11)--The Michigan Credit Union League (MCUL) is advocating for reforms to the state's foreclosure process. A package of Michigan bills that would extend the 90-day foreclosure law for an additional three years is moving on to the full state House after being voted out of the state's House Banking and Financial Services Committee.
The changes to the framework for the 90-day delay include clearer timelines on which actions must occur at certain points during the process for lenders and borrowers. That will allow a lender to proceed immediately to foreclosure if a borrower is unresponsive to requests for certain documents, MCUL said (Michigan Monitor Dec. 5)
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 to six months from one year, if the property is not for agricultural use. MCUL supports those changes in three House bills.
MCUL also is advocating in the package a shortened redemption period for loans held in portfolio. HB 5176, introduced by State Rep. Rick Olson (R-Saline), will help offset the burden of adding 90 days to the foreclosure process by reducing the redemption period on portfolio loans by 90 days. It's part of the four-bill package approved by the House committee Wednesday.
The Michigan Foreclosure Taskforce, representing housing counselors and consumers in the foreclosure process, is opposed to HB 5176. The taskforce claims the bill is unfair to homeowners because it will create two different redemption periods for homeowners based on whether they have a portfolio or non-portfolio loan, MCUL said.
The redemption periods differ for portfolio loans versus non-portfolio loans, but MCUL said that lenders who hold the loan in portfolio will engage in more communication early in the pre-foreclosure process to avoid foreclosure. Additional time is not necessary when a modification cannot be made and all avenues have been exhausted to try to keep a borrower in the home, MCUL said.
Also, the current foreclosure process has several different redemption periods depending on if a property is abandoned, and is or more or less than three acres. Having different timelines for people to redeem their property is not a new concept, MCUL said.