Pushing for judicial foreclosure

Thursday, June 6 — State Rep. Andy Schor, D-Lansing, introduced legislation today that would allow people who are facing mortgage foreclosure to take their case before a judge if their lender has been shady with its practices.

“This is exactly the direction we need to go in,” said Ingham County Register of Deeds Curtis Hertel Jr., who has been actively fighting mortgage foreclosure fraud over the past two years. “Holding the banks responsible for their illegal actions is a good thing and due process for citizens facing foreclosure is a good thing. I look forward to working with him to get bills passed.”

Michigan is a foreclosure by advertisement state, which means banks and lenders don’t need to take homeowners to court to evict them if they are behind on their mortgage payments; the bank/lender simply has to post a notice on the homeowner’s door. Because of this, Hertel said there is no due process for people facing foreclosure, unless they decide to sue.

House Bill 4800 would amend the Revised Judicature Act to allow for judicial foreclosure hearings before a judge if the lender purposely fails to record mortgages or assignments on mortgages, advises borrowers to not make payments on mortgages or places false signatures on mortgage foreclosure documents.

“If a lender is engaging in these practices, a person can take a judicial action and get the court to intervene in, delay or stop the foreclosure,” Schor said. “And we’ve seen plenty of cases like these before.”

There are situations where lenders will advise borrowers to go into default so they can qualify for a mortgage modification, Hertel said. But when the borrower goes into default, the lender could then refuse to negotiate, putting the borrower in a precarious position.

There is legislation awaiting a vote in the Senate that would shorten the foreclosure redemption period — when people can challenge the legality of a foreclosure, negotiate with their bank, or sell their home in a short sale — from six months to 60 days. The legislation comes as federal regulations starting next year will extend the negotiation period between banks and property owners before foreclosure from 90 to 120 days.

Banks support the legislation, saying that the longer redemption period leads to abandoned properties, which contribute to blight, and that new federal regulations would help people avoid foreclosure. But Hertel, who has proved foreclosure fraud in court, says the shortened redemption period gives citizens less of a chance to keep their home. Schor said he introduced the legislation because of other foreclosure bills floating around the Capitol.

“For me, as we’re talking about foreclosure and how long the process should be, I wanted to get this into the conversation,” Schor said. “This will take care of bad actors without affecting the good ones.”