Foreclosure by Advertisement Amendments

In 2011 PA 301, effective 12/22/11,  The Michigan Legislature has made some revisions to the Foreclosure By Advertisement Act that was initially effective July 1, 2009. Originally, the "loan modification law" was enacted as a response to homeowners' complaints that their requests for loan modifications were not being heard or processed. The homeowners stated that their attempts to apply for a loan modification were frustrated by not having one point of contact within their servicer's company to talk with or to hold accountable for the process not being completed properly. 

 

The Michigan Legislature passed the original law to create a point of contact for the homeowner and a definite meeting time to discuss their specific loan and possible modification. 2 1/2 years in, there are still some problems with connections being made due to a misunderstanding of the meaning of terms within the law. Just who should contact the servicer, is it only a HUD counselor or attorney or could it be the homeowner? Is the servicer, as an entity, a "person" that should be contacted or should a particular natural person at the servicer be named as the "person" with whom the borrow could contact?        

      

The recently amended act now provides that the foreclosure by advertisement procedure to (1) allow a borrower to contact a mortgage holder or servicer directly or through a housing counselor, rather than only through a counselor; (2) require the contact to be made within 30 days, rather than 14, after a notice of foreclosure is mailed to the borrower; (3) require the mortgage holder or servicer to designate a contact person who will attend meetings and facilitate negotiations with the borrower; and (4) provide that a borrower is liable for property damage that he or she causes during the redemption period following a foreclosure sale 
 

The clarifications were needed as some servicers and their agents were still making the loan modification request process difficult and frustrating for homeowners by not making a clear and concise avenue of communications to complete a loan modification. It appears from the amendments that in order to allow the clarification the terms, lenders and servicers were offered a gift in Sec. 3278. (1), whereby the foreclosing entity has a right to hold the homeowner liable for damage caused by the homeowner during the redemption period. While I do not agree that a homeowner should destroy property once the sheriff's sale is complete, I also do not agree that a separate law need be created to place liability on the homeowner.