On 21st May 2009 the Governor of Michigan Jennifer Granholm inked a law that will allow foreclosure victims another chance to work out solutions with the lenders. The new legislation will become effective within 45 days. It has made it mandatory for lenders to open communications with the borrowers and inform them about the status of their loans. On top of this the legislation will put on hold foreclosures for 90 days for those borrowers who agree to work with lenders for modification of the loan.
Brain Calley the State Rep. (Republican) was part of the conference committee that drew up the final edition of the bill. Calley said, “This has been quite a long process in coming to an arrangement that all sides could agree on. The basic idea behind the bill is to make time for everyone to catch their breath with the influx of home foreclosures.”
Darren Elliot a realtor of Greenridge is hopeful that by this law many people will be helped. He said, “I just listed a property that will be in foreclosure if I can’t sell it. The owners couldn’t get their lender to negotiate with them, so they’re trying to sell.”
There are some lenders who are cooperating. Russ Daniel of Independent Banks said that for the past one year they have been discussing with their clients about avoiding these foreclosures. He said, “(The legislation) has a few technicalities that will affect the way we handle these things. But in reality we’ve already been operating in the spirit of this legislation.” He argued that that the new law will make it more costly for banks to pursue the path of foreclosure.
Calley explained that generally people did not know that for banks it is not advantageous to proceed with foreclosures. He explained, “When a bank forecloses on a property, there is a misconception that they come out ahead by selling the property. They almost always lose money. This legislation provides some incentives for borrowers to come to the table (to renegotiate) and a framework for lenders to move forward with.”
Mike Huckleberry (Democrat) State Rep. opined that the legislation has been the right thing to do. He commented, “Everybody in Michigan knows that we’re having a problem with home foreclosure. There is nothing more cruel than a family losing their home.”
Coldwell Banker Cathy Hoppough said that this move will very soon put back life into the real estate market. She added, “I think that it will slow down the foreclosures for a time. But I think that it’s imperative that we get more jobs.”