Stop Foreclosure Help in Michigan From Democrats

[Moe Bedard]

As many of you know I am a homeowner advocate and my goal is to educate, inform and protect consumers in any way I can. One of my biggest issues besides the handling of loan workouts and loan modifications is predatory lending. There are so many victims out there that don't even realize they are a victim and they are losing their homes daily. It's as if homeowners have been robbed with a smile and these criminals just keep on robbing people because they know the government is not doing anything to protect them and to help them stop foreclosure.

UNTIL NOW!

Here are some excerpts from The Michigan House Democrats Blog.


Democratic Plan Will Prohibit Predatory Practices That Lead to Foreclosure


Home Loan Protection Act will protect Michigan homeowners

– August 31, 2007


The Michigan Home Loan Protection Act, a comprehensive legislative package that cracks down on predatory mortgage-lending practices and strengthens consumer protections in the face of the collapsing subprime mortgage market.

"You can’t go a day without hearing in the news about the demise of the subprime mortgage market and the negative effect it’s having on the economy both here in Michigan and across the nation and world," said State Representative Marc Corriveau (D-Northville), who is a lead sponsor of the package. "Michigan has one of the highest foreclosure rates in the country. Our legislation will protect consumers and homeowners from the subset of reckless lending practices that line mortgage lenders’ pockets and lead to foreclosures with no tangible benefits to homeowners."

Finally a congressman takes the ball and runs with it. These people should be protected and I feel that there should be a temporary nation wide moratorium on foreclosures until we get these bills passed and protect homeowners which will in turn protect our economy. Why keep letting victims lose their homes?

The Michigan Home Loan Protection Act will:

Ban predatory lending practices, such as making loans without requiring borrowers to prove their ability to repay the loan, encouraging borrowers to default, charging excessive late fees and charging fees for a payoff statement.

• Protect homeowners’ equity by prohibiting home refinancing to generate fees for the lender unless there is a tangible net benefit to the borrower.
• Protect consumers from being steered toward high-cost loans when they would otherwise qualify for a traditional loan.
• Prohibit the financing of any points and fees that hide the true costs of the loan.
• Prohibit prepayment penalties.
• Require vulnerable borrowers to receive independent counseling from a certified third-party, non-profit counselor.
• Give injured and aggrieved homeowners legal recourse so they can independently enforce these consumer protections against unscrupulous lenders.

Those are some great measures. The only problem I see is that we had laws before and that didn't seem to deter unscrupulous lenders from feeding on their greed and preying on the ill informed. There needs to be an industry watch dog that maybe reviews every single loan that is originated in this country at the cost to lenders.

According to federal data, subprime borrowers are often steered by brokers into signing Adjustable Rate Mortgages (ARMs) and are not given the option of fixed-rate loans, nor informed of the inherent risks of ARMs. Some lenders and brokers write loans they know borrowers cannot afford just to collect the fees and commissions. Federal home-loan agencies Fannie Mae and Freddie Mac estimate that 30 to 50 percent of all borrowers with subprime loans could have qualified for more affordable mortgages.

I would say that the figures are 50% plus and that there is also fraud on 50% plus of the subprime loans. That means these are a lot of shady loans and people losing their homes because of predatory lending when they shouldn't. My guess is if they really went after these lawless mortgage professionals, then we would have more loan officers in jails then drug offenders. Bold statement, yes but most likely reality.

Being forcibly removed from one’s home is one of the most stressful and devastating events a family can experience," said State Representative Bert Johnson (D-Detroit). "Predatory home loans jeopardize entire communities and hamper Michigan’s economic recovery. Our legislation will hold lenders accountable and help reverse the skyrocketing rate of foreclosures in our state."

Yes, this is by far one of the biggest stresses that anyone can deal with on top of financial ruin. That's why I am here to advocate for homeowners when everyone else is saying let them foreclose!

"Foreclosures don’t just hurt individuals and families, they hurt entire neighborhoods and communities by leaving homes abandoned and lowering property values," Tobocman said. "In fact, reckless lending has devastated the stock market and threatened our entire economy. We have heard from consumers, and we are taking action to protect them."

I applaud Michigan Democrats for stepping up to the plate and protecting their citizens of that state. Hopefully you will lead the cause and other states will quickly follow in their foot steps to help stop foreclosure nation wide.

[Moe Bedard]

I posted this on another blog I operate and here was a response from a reader.

Moe,
Coming from someone who has spent their whole life in Michigan, laws like that one have been in place for decades, but NO ONE ENFORCES THEM! I had a client who had a 7% pre-payment penalty and the Michigan limit is 4%. Thank God the penalty didn't apply to selling the home... only to re-finance.
While I was sorting this out for them, I called the Michigan Attorney General's Office, and got the Assistant Attorney General. I told him the situation, the law, and asked what he was going to do about it. He said "nothing." This happens to be the assistant to Michigan's Democrat Governor. It is quite sad but i have no faith in this law what-so-ever. Predatory lenders will walk all over it anyway.