A foreclosed house sits for sale in Southfield. / 2011 photo by Carlos/Osorio/Associated Press
By Ken Gross
Detroit Free Press guest writer
I’m not sure why this applies — but the adage “all good things must come to an end” rang true last week, a key afforded to homeowners expired.
In July 2009, the Legislature passed a statute to help homeowners facing foreclosure to save their home. The law mandated that before a lender could foreclose by advertisement (the common way in Michigan), a homeowner had to receive written notice of a right to request a mediation. If this request was submitted in a timely fashion, a bona fide effort to modify the mortgage was available. I can tell you the law worked — and worked well — and similar laws were then passed in other states. This law helped thousands of Michiganders save their homes from foreclosure and was recognized by mortgage industry experts as a good law to avoid foreclosure and assist in curtailing Michigan’s foreclosure crisis.
Unfortunately, the law, which had been modified over the last couple of years, was extended through only Jan. 9 of this year. In its place, the Legislature has passed a new law, which irrationally helps only certain people. If the servicing agent for your mortgage is one of the five lenders subject to the National Mortgage Settlement (Chase, Wells Fargo, Bank of America, Citi or GMAC/Ally), the servicer must provide you a letter offering you 30 days to elect to have a meeting to attempt to work out a modification. If that is your choice, the lender cannot commence foreclosure proceedings until the meeting has occurred.
But here’s the rub. If one of the five lenders transfers your loan to another servicer, the new servicer is not bound by the law. If you happen to have a mortgage held by someone other than these five lenders, you receive no protection. It makes you scratch your head and ask: “Why does my neighbor, whose mortgage is with Chase, get the benefit of help, and I don’t because my mortgage is held by HSBC, Comerica, Fifth Third, Huntington or any one of the hundreds of other lenders?” This makes no sense, whatsoever. On top of that, a “meeting” under the new rule has no standards or mandates such as existed under the previous law.
The Michigan Legislature has succeeded in unraveling the one good thing it did to help a Michigan homeowner in mortgage trouble.
Ken Gross is an attorney with Thav Gross and host of “Financial Crisis Talk Center,” which airs 8:30-10 a.m. on WDFN-AM (1130) and on MyTV20 at 11 a.m. Sundays.