Legal Aid attorney talks to Foreclosure Response team about recent legislation

By Cynthia Price
Legal News

Note: Foreclosure Response of Kent County is a strong coalition of stakeholder partners, from Black Hills Citizens for a Better Community to Chemical Bank to the Fair Housing Center of West Michigan to Home Repair Services, which “connects residents with community resources and advocates to stop foreclosures in Kent County.” For more information, visit www.foreclosureresponsekent.org

The following are from its August 2013 newsletter, and are used by permission.

Foreclosure Response sat down with Karen Tjapkes, attorney with Legal Aid of Western Michigan, specializing in foreclosure related cases. [Tjapkes] represents homeowners and renters going through foreclosure or land contracts. She has been intricately involved with both local and state level foreclosure advocacy – gaining some pretty big wins under her belt.

FR: What's new in the foreclosure legislation recently passed in July? How does it affect residents of Kent County?

KT: There are two key changes that our residents need to be aware of: (1) Elimination of most of the negotiation protections that were added to the law in 2009 and (2) changes to homeowner’s redemption rights. In 2009, there were requirements added to the law that required lenders to work with homeowners, offer the chance to meet to discuss a loan modification and required consideration of a loan modification. Lenders that failed to comply or did not want to comply had to foreclose through a court process that is longer and more burdensome for the lender so there was a real incentive to work with homeowners. The July legislation phases out this requirement so that foreclosures initiated after January 2014 will no longer be bound by this requirement; there are some minimal requirements placed on the five mortgage banks who are bound by an agreement with the states’Attorneys General - Bank of America, Chase, CitiBank, GMAC and Wells Fargo - but these  requirements do not have the same protections for homeowners. As for the redemption rights, under the new legislation the purchaser at the foreclosure (sheriff’s) sale, usually the mortgage company, will have a legal right to inspect both the outside and the inside of the home during the homeowner’s redemption period, which is six months for most homeowners. If the inspection is “unreasonably refused” or if the inspection finds that repairs are needed or an “imminent” need for repairs, the purchaser can request that the redemption period be cut off and the homeowner immediately evicted. We are concerned that raises a number of privacy and safety issues, for example, many of the inspectors will not work directly for the mortgage companies but instead will be third party contractors and it will be quite hard to check their legitimacy. We are concerned because there is no notice required prior to the inspections so homeowners will not be prepared for these situations. Additionally, there is no limit to

the number of inspections so this could be used to harass homeowners.

FR: What kind of foreclosure cases are you seeing come across your desk at Legal Aid?

KT: Some of the issues we are working on involve mortgage companies' failure to honor a completed loan modification agreement, problems with mortgage companies refusing to work with widows or individuals who have gone through a divorce because their name is on the deed to the property but not some of the loan paperwork creating a situation where the home may be lost even though there is sufficient money to make payments, and making sure that mortgage companies comply with the procedural requirements of the law. Additionally, we continue to have tenants contacting us because the mortgage companies are refusing to honor their tenant rights under the federal Protecting Tenants at Foreclosure Act.

FR: What is the next upcoming foreclosure related issue advocates need to be prepared to work on?

KT: Unfortunately, between the changes to the foreclosure law and judge’s decisions restricting homeowners ability to enforce legal protections, it is going to be increasingly hard to protect homeowners’ rights. I think there are two emerging issues that advocates will need to be prepared to address. First, many now former homeowners still owe money on their mortgage loan (or perhaps a second mortgage loan) and don’t realize that the debt is still out there. As debt collectors step forward to collect these debts, these individuals are going to find themselves being hauled into court and potentially subject to wage garnishment orders seeking to collect money from them, jeopardizing their ability to pay their rent and expenses where they are now. Second, many of the foreclosed homes are being purchased by investors who are then selling them on land contracts. Many of these land contracts contain problematic terms that don’t always comport with Michigan law and many purchasers don’t understand how land contracts really work or how they differ from a traditional mortgage loan or traditional lease agreement. Unfortunately, this leaves a lot of room for abusive business practices.

An additional article referring to the new foreclosure laws states:

On July 3, 2013 Governor Snyder signed into law amendments to the exist mortgage foreclosure statutes. Even with the strong advocacy work done by the Michigan Foreclosure Task Force [MFTF] and its members, significant changes were made to current laws that arguably restrict the rights of homeowners. Effective January 10, 2014, most lenders will not be required to go through a negotiation period within the  first 90 days and will have the right to inspect the interior and exterior of a home redemption at any time without notice requirements. Many are concerned that the new laws will severely limit the rights of homeowners. “Clean-up” bills are currently being discussed, of which MFTF is part of the development committee. For a complete analysis and the latest information, please visit http://foreclosure. cedam.info/blog.

The newsletter further reports that foreclosures are down in Kent County and Grand Rapids:

Data recently released by the Community Research Institutes shows continued reductions in foreclosures during the first half of 2013. Kent County and Grand Rapids are down 36% and 33% respectively from the same period in 2012. Municipalities Cedar Springs (75%), Oakfield Township (66%), and Solon Township (64%) and Grand Rapids’ neighborhoods Oakdale (80%), Eastown (78%), and Fulton Heights (75%) saw the biggest percentage declines in foreclosures.

 

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