LANSING- Hoping to stop a trend that has Michigan in the top 10 for home foreclosure rates, both the House and Senate rolled out separate packages of bills aimed at stopping that trend in its tracks.
The House Democrats rolled out their package Tuesday, and the highlights include allowing homeowners who hold unstable adjustable-rate mortgages (ARMs), and those who have missed mortgage payments in the past to refinance that debt and secure a fixed-rate loan through the Michigan State Housing Development Authority (MSHDA).
"Federal policies have utterly failed to prevent the meltdown of the subprime mortgage market," said Rep. Marc Corriveau, D-Northville, one of the bills sponsors, in a press release "This refinancing legislation puts Michigan at the forefront of states efforts to protect hard-working men and women from losing something they have spent their lives working for."
In September, Michigan ranked fourth highest in the country in the number of foreclosures, with 14,242 filings. According to Pennsylvania-based Default Research, Wayne County had the fifth highest foreclosure rate among metro areas with 7,410 filings, or one foreclosure for every 113 households.
This House plan is in addition to the package of bills known as Michigan Home Loan Protection Act that House Democrats introduced in late August. The bills are primarily aimed at predatory lending, and it addresses such practices as 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, require vulnerable borrowers to receive independent counseling from a certified third-party counselor and simply give homeowners who have been victims of predatory lending some legal recourse so they can independently enforce these consumer protections.
On Thursday the Senate Republicans rolled out a 13-bill package also aimed at predatory lending. Perhaps the most important feature of the bipartisan legislation will be to require loan officers to be licensed. Many unscrupulous loan officers simply move from state-to-state to stay in business. The package would also create a seven-member Mortgage Industry Advisory Board, require criminal background checks of loan officers and it would urge the Office of Insurance and Financial Services to participate in the development of the Nationwide Mortgage Licensing System database.
“The state has the dubious distinction of being in the top six of states that have a high foreclosure rate,” said Sen. Tupac Hunter, D-Detroit, who introduced one of the bills in the bipartisan Senate Republican package. “What we are doing is on a bipartisan, bicameral basis is to try and put some solutions in place.”
On Friday Senate Democrats offered their plan aimed at slowing the foreclosure rate. The package is similar to the House Democrats' plan, and it establishes through MSHDA the Adjustable Rate Mortgage (ARM) Refinance Program and the Rescue Refinance Program that will assist delinquent homeowners who are at risk of losing their homes.
“For far too many Michigan citizens, it is a daunting and challenging task just to get their family into a home,” said Sen. Hansen Clarke in a press release. “Legislators from both sides of the aisle should be able to agree on the importance of protecting the homes of our citizens, and this package is a step in the right direction.”
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