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In addition to real estate lending, consulting and investing, Drew Sygit writes & speaks about the mortgage & real estate industries. He holds mortgage industry designations CMPS, CMC, CRMS, CMLO, CALO, has an MBA and is an approved industry instructor. He’s presented, spoken and/or... More
My company:
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Drews Mortgage News
  • Michigan tries to Slow Foreclosures with New Laws 4 comments
    Jun 18, 2009 11:38 PM

    Three new laws make foreclosures tougher on lenders to force them to do more loan modifications.

     
     
    June 18, 2009 -- DETROIT, MI – On May 20th, Governor Granholm signed new laws into effect that will put more pressure on lenders to work out loan modifications as opposed to just foreclosing. 
     
    The new laws, PA 29, PA30 & PA 31, go into effect July 5th and force lenders to perform several addition steps before foreclosing. Interesting that the effective date falls right after Independence Day.
     
    The new laws only apply to foreclosures started after July 5th and only on real estate that is the primary residence of a mortgage borrower. The laws also expire in two years. The state legislators appear to be pretty optimistic the housing crisis will be over by then. More likely, there won’t be anyone with a mortgage that hasn’t been foreclosed on or had their mortgage modified by then.
     
    Lenders will be required to give written notice to a defaulting borrower, providing the name and phone number for a real person the borrower can speak with. What’s more, this person has to have the authority to negotiate and approve a loan modification. Anyone that’s had to deal with the customer service department at a lender can tell you how frustrating it is to get someone on the phone that can make a decision. So, this is great news.
     
    Lenders will also be required to send a defaulting borrower a list of state approved housing counselors and gives borrower the right to require a lender’s authority person to meet with the borrower and the counselor to work out a loan modification. Once a borrower asks for this meeting, the foreclosure is put on hold for 90 days.
     
    The laws basically mimic Obama’s “Making Home Affordable” program by requiring a borrower’s housing related debt be no more than 38% of their gross monthly income. Also outlined is how to get to the 38% figure – lowering the interest rate to as low as 3% for at least 5 years, and/or extending the loan term to up to 40 years, and/or deferring up to 20% of the principal balance until the end of the loan term, sale or future refinance.
     
    If the borrower qualifies under this outline, but the lender refuses to approve the loan modification, then the lender must go through a judicial foreclosure. This means they have to take the borrower to court, a lengthy and costly endeavor. In other states where judicial foreclosure is required, it can easily take 18 months for this to happen. This is a huge penalty to lenders and should force most of them to approve a loan modification.
     
    The new laws were written so that federally chartered lenders cannot claim “federal pre-emption” and ignore state laws. A great move by the state legislators.
     
    The only problem is that the laws don’t apply to FNMA, FHLMC, FHA and VA mortgages. These loans are expected to follow Obama’s loan modification plan, but that plan is voluntary. So, homeowners may still be in a pickle if they have one of these loans.
     
    Also, there aren’t enough counselors available to meet with borrowers and representatives from their lenders. This may work in a borrower’s favor though as lenders may prefer to wait until a counselor is available versus pursing the judicial foreclosure process.
     
    I’d like to see figures on how many mortgages fall under the requirements of these new laws. It’s estimated that FNMA/FHLMC currently control over two-thirds of the loans in this country. Adding in FHA and VA probably pushes this number close to 75% or more. That means that these new laws may help only 1 in 4 mortgage borrowers.
    Themes: mortgage, Michigan, Detroit, expert, foreclosure, housing, home, property, modification, government, short sale, purchase, refinance, FNMA, FHA, credit
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  •  
    I own a condo and have an outstanding balance of $140k, consisting of $104k primary and $36k secondary. I took the home equity to consolidate debts. At the time the property was valued at $163k but now it is valued at $134k. I'm looking to sell because i am engaged and will be moving into my fiancee's home. Check obamamortgage2009.blog... If I have a buyer who offers me within say $5-7k of the outstanding, can i agree to assume a loan on the residual and pay the bank the difference over time with interest? The same bank holds both mortgages.
    19 Jun 2009, 12:04 AM Reply Like
  •  
    U.S. Code Title 18 Chapter 47 Section 1005,1006,1010,and 1014 In short says, a broker , lender or employee of a financial institution will be charged for defrauding or falsifying docs. No where does it say the homeowner to be charged. More lies. Why? Because a homeowner doesn't have the employeed power to enforce a contract.
    www.law.cornell.edu/us...

    If a home owner lied about his debts then they risk their own finances. But the broker had my bank statements, taxes from my acountant, and my credit report, how was it possible to lie about my income.

    Title 12 Chap. 29 Section 2803 (6) loan application must be on file for 4 years. Where 's my loan app. Show me where I lied.

    Tittle 12 Chap.27. Sec. 2604 Special Information Booklet. Did you ever see one?
    A client signs the docs., just as they sign the docs. allowing a doctor or mechanic to perform their duties. Your not responsible if your doctor performs a sugery you didn't request. Your not responsible if your car breaks down pulling out of the shop. We have laws protecting the consumer. They're just largely being ignored.
    19 Jun 2009, 01:56 PM Reply Like
  •  
    Check out obamamortgage2009.blog... or obamamortgage2009.blog... There needs to be a program for the elderly but not quite to retirement age for mortgage modification when the have lost their job during this particular recession. I made a decent wage because I put my time into a company and now have no job. I am looking at $10 - to $12 hr jobs after working all my life. You can't make a mortgage payment on that kind of money. I will eventually lose my home.
    22 Jun 2009, 01:33 AM Reply Like
  •  
    If anyone has had any luck with any of these companies, could you please post it for the ones that cannot find one to work with you. We've almost lost once and just got a second chance that want last long so I need to get something done now, so if anyone knows the right number to call, i am sure a lot of people that hasn't found them would appreciate it but check out obamamortgage2009.blog... or obamamortgage2009.blog...
    2 Jul 2009, 05:27 AM Reply Like
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