Senate Banking & Financial Institutions Committee hears testimony on subprime lending in Michigan
LANSING - The Senate Banking and Financial Institutions Committee today heard testimony regarding subprime mortgage lending and its relationship to increasing foreclosures in Michigan, said Sen. Randy Richardville, chair of the committee.
"Michigan is experiencing a one-state recession with its struggling economy and increasing foreclosures," said Richardville, R-Monroe. "Families are leaving the state, and real estate values are decreasing because we have fewer people and less need for homes. This can be attributed to the economic difficulties as well as problems within the mortgage industry, such as subprime lending."
John E. Mogk, professor of law, at Wayne State University Law School testified before the committee about problems with subprime lending, the practice of making loans to borrowers who do not qualify for the best market interest rates because of their deficient credit history.
Mogk said the lack of owner equity in homes is the principal cause of increased housing foreclosures, especially in Detroit, which has the second highest foreclosure rate in the United States. He recommended that educational programs for borrowers could help avoid problems associated with subprime lending
This year in Michigan, the number of foreclosures jumped more than 44 percent from July to August compared to a 36 percent increase nationwide.
"The increasing number of foreclosures is a real problem for home owners across the nation," said Richardville. "It has even affected many local residents. I am currently working on legislation that will address some of the problems within the mortgage industry."
The rate of mortgage foreclosures in Washtenaw County slowed last month, while it has continued to increase in Monroe County. According to RealtyTrac, a firm that monitors foreclosures, the Monroe County now has 595 foreclosed properties. There were 498 foreclosures in 2006 and 303 in 2005.
Posted: Thursday, September 27, 2007
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