Fixing The Foreclosure Crisis

Although residential mortgage foreclosures have wreaked havoc on many communities in metro Detroit and Michigan, efforts to stem the damage and boost property values are under way. But do the relief programs go far enough?


Published:

(page 6 of 7)

Findings released through four independent research studies conducted by Harvard University, the Urban Land Institute, the Federal Reserve Board of Governors, and the National Council on Aging revealed, in part, that housing counseling consistently increases the likelihood that a homeowner will be granted a loan modification (200 percent higher probability), that counseled borrowers received more favorable terms on their loan modifications compared to uncounseled borrowers, and that counseling raises the probability of a homeowner receiving a loan modification that “cures” (restores the loan to good standing) a serious delinquency or foreclosure.

“From my perspective, a program that gets a borrower and a lender to sit down at the beginning stage of a foreclosure to determine whether a loan modification or other workout is feasible is a good policy,” says Jeffrey Weisserman, general counsel at Trott & Trott in Farmington Hills, among the largest law firms in Michigan specializing in residential mortgage foreclosures and default services for banks and lenders. “We have seen numerous meetings that resulted in loan modifications as a result of the statute,” he says.

In another attempt to keep homeowners in their homes, an overhaul of Michigan’s current foreclosure system may be on the horizon.

Earlier this year, State Rep. Jim Ananich, D-Flint, and State Sen. and Democratic Floor Leader Tupac Hunter, D-Detroit, introduced companion bills (HB 4651 and SB 0513) that would change Michigan’s foreclosure-by-advertisement system to one that would necessitate a lawsuit and judicial review.

“When homeowners see there is a fair system in place, when we can weed out the fraud, and when people are given due process, it brings more clarity and transparency to the system,” Ananich says. “It will help stabilize our housing market, protect our homeowners, and get our economy back on track.”

A study released by the National Bureau of Economic Research found that by using data on mortgage delinquencies, states with judicial foreclosure requirements had a much lower ratio of foreclosures to delinquent accounts.

“I think banks will object to the proposed legislation, but what we are doing isn’t working, and anything we can do to keep homeowners in their homes is better than what we have now,” says Hunter, who also introduced a bill addressing mortgage fraud that was recently passed in the Senate. “I think having a third-party mediator will be fairer.”

Edit Module
Edit Module Edit Module
Edit ModuleShow Tags

Related Articles

Exit Strategy

Detroit Emergency Manager Kevyn Orr on the city's historic Chapter 9 bankruptcy and what it means for the future of the municipality.

Exit Strategy: Anatomy of the Deal

Exit Strategy - Legal Point

Stay on Course: 2015 Michigan Economic Forecast

Metro Detroit and Michigan’s economic expansion will continue through much of 2015. However, headwinds remain.

30 in Their Thirties 2014

The 2014 class of 30 in Their Thirties manages global businesses, oversees major events, operates upscale restaurants, and forges ahead with the latest technological advances.
Edit ModuleShow Tags

Most Popular

  1. New Townhouse Restaurant to Open at One Detroit Center in June
    Jeremy Sasson, the restaurateur behind the Townhouse in downtown Birmingham, will open a new...
  2. World's Tallest Mural Planned for First National Building in Downtown Detroit
    New York-based street artists How & Nosm are planning to design and paint a mural measuring 354...
  3. Brooks Kushman Host Event to Help Girl Scouts Earn IP Patch
  4. TechTown to Host Hacking Health Windsor-Detroit Event in May
    A cross-border event in May will bring together information technology and health care...
  5. Erma's Opens Third Location in St. Clair Shores
  6. New Village Green Apartment Complex Coming to Downtown Detroit
    Village Green, a luxury apartment owner and operator founded in Detroit, received approval from...