LANSING - With home foreclosures skyrocketing to Depression-era levels, State Representative Lee Gonzales (D-Flint Township) today voted for the Michigan Home Loan Protection Act, a comprehensive legislative package that cracks down on predatory mortgage-lending practices and strengthens consumer protections in the face of the collapsing subprime mortgage market.
"Predatory lending has a devastating effect on families, neighborhoods and communities and has gone unchecked for far too long," Gonzales said "It is time for Michigan to join the more than two dozen states to clamp down on predatory lending and adopt basic guidelines that protect comsumers."
The Michigan Home Loan Protection Act will:
Ban predatory lending practices, such as making loans without requiring a borrower to prove their ability to repay the loan, encouraging a borrower to default, charging excessive late fees and charging fees for a payoff statement.
Protect homeowners' equity by 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.
Require vulnerable borrowers to receive independent counseling from a certified third-party, non-profit counselor.
Give injured and aggrieved homeowners legal recourse so they can independently enforce these consumer protections against unscrupulous lenders.
According to the latest figures from RealtyTrac, an Irvine, Calif.-based online foreclosure firm, Michigan ranks fifth in the nation in foreclosures, with 12,792 foreclosure filings in May 2008. More than half of the country's foreclosure activity last month took place in just four states: California, Florida, Arizona and Michigan, according to RealtyTrac.
"By holding lenders accountable, this plan will help reverse the rate of foreclosures in our state and allow us to move our economy forward and create jobs," said Gonzales. "We need to ensure our homeowners are protected and not taken advantage of by these misleading and unscrupulous lenders."
The Michigan Home Loan Protection Act is a key component of a comprehensive strategy touted by House Democrats to combat the rising tide of foreclosures currently devastating Michigan. Other pieces of this strategy include Save the Dream, mortgage loan officer regulation, combating appraisal fraud, and streamlining tax foreclosure law.