The New Year Brings Changes to Both Federal and Michigan Foreclosure Law - Will they be Effective in Preventing Foreclosure?
Beginning in January 2014, both Michigan and Federal foreclosures laws will change to add stronger protections for consumers facing foreclosure with aims to bring stronger lines of communication between borrowers and mortgage servicers. We recently posted a page outlining the details of the new federal law (Dodd-Frank Act effective January 2014). Changes will take place with Michigan Foreclosure law as well. Read on to see how these new laws may affect your mortgage loan and tips for getting back on track with your mortgage if you have fallen behind.
Michigan Foreclosure Law Changes:
Beginning January 9, 2014, new State of Michigan foreclosure laws prohibit a party from foreclosing on a mortgage for a principal residence unless that party has complied with the new law. The foreclosing party will have to meet the new loss mitigation requirements if all of the following apply:
- Mortgaged property was claimed as a principal residence;
- The first notice of foreclosure sale was published after 1/9/14 and;
- The servicing agent was a defendant (or a successor in interest) that entered into a consent judgment in U.S. vs. Bank of America.
Under the new law, the party foreclosing would be required to:
- Designate an agent to serve as a contact;
- Provide authorization for the contact to facilitate negotiations and attend meetings with the borrower;
- Provide the designated agent's contact information and let the borrower know they could request a meeting or attempt to work out a modification in the servicer's written notice of late payment.
If the borrower requests a meeting, foreclosure proceedings can not begin unless the meeting has been held. This provision is void if 1.) The borrower does not cooperate by scheduling a meeting convenient for all parties, or in the county where the property is located; or 2.) the borrower fails to attend a scheduled meeting.
Will these new state and federal laws help prevent foreclosures?
We believe that these new requirements and protections will prevent unnecessary foreclosures based on poor communication issues with the servicing agents. Many times we talk clients who were working on a loan modification with their mortgage company only to find out they lost their house to foreclosure proceedings during that same time period. During the foreclosure crisis, many lenders and servicers were ill-equipped to handle the flood of delinquent loans. In many cases, borrowers did not have proper communication or assistance to attempt loss mitigation prior to a foreclosure sale occurring. There is little doubt that homes were unnecessarily lost by borrowers interested in keeping their homes. This scenario likely widened and lengthened the foreclosure crisis. We feel that better communication and information will allow some candidates to successfully complete a loan modification to make their loan more affordable and stop a foreclosure proceeding. However there are no provisions in either the new State or Federal laws that force the mortgage companies to accept loan modifications or other alternatives to foreclosure. This is still at the lenders discretion. The primary affect of the law is to require servicers to provide a greater amount of transparency throughout the foreclosure process. So the process may be less fraught with frustration, but the outcome may be the same: a lost home to foreclosure. So what steps can homeowners take to protect themselves? Here are some of the pointers we give our clients:
- Work with a professional: If help is there, take it! Whether it is a state approved HUD counselor or an attorney, choose a local advocate to that has had success and experience in this area. For instance we are a Michigan-based law firm that only focuses on debt resolution law and foreclosure prevention. We have an A+ rating with the Better Business Bureau and share our client's feedback on our website.
- Look at your "big picture" budget: What caused you to get behind on your mortgage in the first place? Maybe other debts started to overtake your budget making it impossible to remain current on your mortgage½..maybe you had a loss of income that means you need to consider other debt reduction methods besides just a loan modification? Whatever the case, don't ignore factors that may have contributed to your mortgage situation. Focusing on only one area of a budget problem may mean you have a lessor chance of success in a loan modification because you have only addressed one area of your total budget.
- Seek Resolution: Be proactive with seeking solutions for your mortgage and other debt concerns. Money troubles are likely to compound over time versus resolving on their own. Research your options and consider your long-term financial goals.
We are here to help! We offer free legal advice and same day legal protection for foreclosure and other creditor actions. Call us today at 866-261-8282. Footnote: Information sourced from "A Summary of Senate Bills 380 & 383 as Reported from House Committee," prepared by Legislative analyst Chris Couch.