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

Financial Reservations

The Westin Book Cadillac Detroit hotel downtown has been outperforming most of its national peers, but behind the scenes, the city and pension funds used for its redevelopment nearly 10 years ago may now take a huge loss.

Foreign Correspondent

From Bloomfield Village to Tiananmen Square, ABC News’ Bob Woodruff covers the world.

From the Middle East to the Motor City

More than 500,000 people of Middle Eastern descent live in metro Detroit, and, combined, they generated $36.4 billion in economic activity in 2015. While the road to self-reliance can take years due to language and cultural barriers, the influx of refugees has been a boon to the regional economy.

Open Our Arms and Trust, But Verify

From an economist’s perspective, each legal immigrant holds the potential for augmenting “human capital,” the ultimate source of growth and prosperity for a region or nation.

2016 Champions of the New Economy

For the seventh straight year, Junior Achievement of Southeastern Michigan, in partnership with DBusiness magazine and News/Talk 760 WJR, selected six regional executives who are driving growth in highly competitive industries.
Edit ModuleShow Tags

Most Popular

  1. Down Syndrome Achievement Center to Open Facility in Metro Detroit
    GiGi’s Playhouse, an internationally recognized achievement center focused on individuals with...
  2. Wayne State University to Break Ground on Anthony Wayne Drive Apartments
    As housing demand continues to increase, a groundbreaking ceremony will be held tomorrow, April...
  3. Singh on Pace to Open Mixed-use Development at I-696/Woodward in 2019
    Singh Development in West Bloomfield Township has received approval from the Royal Oak Planning...
  4. Former St. Charles School on Detroit’s West Village to be Converted to Condos
    The former St. Charles School will undergo a historic renovation into the St. Charles Residencies...
  5. Rivals Professional Football League Partners with Detroit’s Xenith on Helmets
    Rivals Professional Football League (RPFL), an adult professional development football league for...
  6. Detroit’s Adient Unveils Updated Luxury Seating Concepts for Autonomous Vehicles
    Detroit-based global automotive seating supplier Adient today unveiled its updated Al17 concept...