Senate approves Richardville legislation to help reduce foreclosures in Michigan
LANSING-The Senate today approved legislation that will help reduce foreclosures in Michigan by encouraging borrowers and lenders to work toward solutions prior to foreclosure, said Sen. Randy Richardville, chair of the Senate Banking and Financial Institutions Committee.
“The main goal of this legislation is to decrease the number of foreclosures in Michigan to help both homeowners and lenders,” said Richardville, R-Monroe. “Many residents are struggling to afford their monthly mortgage payments, and lenders are suffering from the rising foreclosure rate. We hope to provide relief to both parties by creating a process where they can negotiate and develop alternatives to foreclosure.”
Senate Bill 1666, sponsored by Richardville, is part of a three-bill bipartisan, bicameral legislative package that establishes a process for lenders and borrowers to negotiate possible changes to their mortgage loans. The Michigan State Housing Development Authority (MSHDA) would help oversee the negotiation process to encourage borrowers to talk to lenders before it’s too late.
“Too often there is a perceived relationship between borrowers and lenders,” Richardville said. “Some have suggested that borrowers may be more likely to respond to foreclosure information received from a state agency like MSHDA, rather than from a lender who may be viewed as threatening. MSHDA has a great reputation for helping homeowners, so it would be an excellent help in the negotiation process.”
Under the legislation, lenders would be required to notify MSHDA of an impending foreclosure. Within seven days, MSHDA would inform the borrower of his/her right to contact the lender and discuss alternatives to foreclosure. The agency would also provide the borrower with foreclosure prevention resources and lender contact information.
The borrower then has seven days to contact the lender and one month following for negotiations to occur. If a solution is not reached, the lender may foreclose at the end of the one-month period. If the borrower does not contact the lender after seven days, foreclosure may begin immediately.
“Ultimately, we are trying to provide homeowners with another tool to keep them in their homes,” said Richardville. “I will continue working on legislation to make necessary improvements so that more homes can be saved.”
The bill will now go to the House for consideration.
Posted: Thursday, December 11, 2008
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