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Michigan Should Leave Foreclosures to Lenders

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By : Leticia Carvalho    99 or more times read
Michigan Governor Jennifer Granholmís plan to suspend the foreclosure process through legislation would have unintended consequences. It would lull homeowners into false security about their homes, making them postpone plans to find help. It would also force lenders to reject most potential homeowners.

Granholmís legislation would order the Finance and Insurance Commissioner to impose a moratorium of 90 days on foreclosures and require mortgage banks and borrowers to negotiate through mediation.

As of July this year, there were more than 120,000 foreclosed homes in Michigan, according to online foreclosure researcher and marketer RealtyTrac. In September, over 4,300 new foreclosed homes were added to the state foreclosure inventory. More than 2,000 units were in Oakland County while the rest were in Macomb County and other counties.

These foreclosure figures could have alarmed the governor to do something. But Michigan banking analysts such as Justin Moran say that Granholmís legislation would not achieve much because most mortgage loans are quickly traded to secondary markets and international securities markets. He also says that loan servicing activities are mostly done by entities outside Michiganís jurisdiction.

Moran also related that Michigan banks have already started doing their share in solving the foreclosure problem. They have already employed professionals to focus on mortgage collections and on loan restructuring processes aimed at making mortgage loans more affordable for troubled homeowners.

The national government and major national lenders have also already launched their loan restructuring initiatives. But if homeowners have lost their jobs and have no access to other income, no restructuring schemes will be able to save them from foreclosures.

It is a noble thing for the state to act to help the homeowners, but it must also see to it that the welfare of all parties is considered, specially the health of the housing market and the state economy.
Leticia Carvalho has been educated in the finer points of the foreclosure market over 5 years.

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