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

30 in Their Thirties 2015

The 2015 class of 30 in Their Thirties offers products and services from Michigan that span the world, from the latest fashions to data enterprises to wholesale mortgage lending to luxury shopping malls.

Next Generation

General Motors and Ford Motor Co. are investing millions of dollars to upgrade their historic technical and research centers in a bid to better compete for talent with Google, Apple, Uber, and others.

Mad Dog

Following 40 years at Compuware Corp., Peter Karmanos Jr. — with a group of 25 technologists — is out to revolutionize the $700-billion commercial automations systems industry.

Robbing Peter to Pay Paul

During the last two years of Peter Karmanos Jr.’s tenure as chairman of Compuware Corp., a Shakespearian-type drama unfolded that led the board to fire him and cancel more than $4.1 million in vested stock options.

Hyper Speed

The inside story of how a trio of young entrepreneurs convinced billionaire Dan Gilbert to back high-speed Internet service in Detroit — and beyond.
Edit ModuleShow Tags

Most Popular

  1. Extreme Cold Therapy Center to Expand to Royal Oak, Detroit
    Cryospa Detroit, a Bloomfield Township-based company that offers a type of therapy treatment...
  2. Rochester Hills Unveils Plans for Ice-skating Pond, Canoe Launch at Riverbend Park
    After raising more than $1 million in private funds, the City of Rochester Hills today unveiled...
  3. Livonia’s ZF TRW to Open Electronics Division Headquarters in Farmington Hills
    Livonia-based ZF TRW, a supplier of safety electronics products, will open a new...
  4. Radisson Overhauls Shuttered Hotel Near Metro Detroit Airport
    The former Metropolitan Hotel in Romulus, closed for more than three years, will reopen this...
  5. Motor City Harley-Davidson Plans $8M Dealership with Restaurant, Drive-in Theater
    Motor City Harley-Davidson will build an $8 million dealership that will also offer a...
  6. Lawrence Tech Adds Manufacturing Engineering Degree at Focus: HOPE
    Southfield-based Lawrence Technological University will now offer its new associate of science...