As of July 5th, 2009, PA 29, PA 30, and PA 31 are new Michigan laws enacted to slow the rate of foreclosures in our state.  These laws force lenders to implement extra steps prior to foreclosing on a property.  As of now, the law applies only to a primary residence, and is on the books for 2-years.

In-short, the lenders must make themselves accessible to the borrowers by providing more than just a toll-free recording.  The defaulting borrower must be provided with the name and number of an actual person who can be reached to discuss the loan, modification, etc.

In addition, borrowers now are to be sent a list of state-approved housing counselors and have the right to require an authoritative individual from the lender to meet with borrower and counselor to modify the loan.  Once this meeting is requested by the borrower, the foreclosure is then on-hold for 90 days.

Much like President Obama's plan, a borrower's housing related debt is not to exceed 38% of their gross monthly income, with plans that may allow for an interest rate reduction of approximately 3% for at least 5 years, and/or extending loan life to 40 years and/or deferring up to 20% of the principal until the end of the loan's life.

In-short, if the buyer qualifies, yet the lender does not approve the modification, they must then go through a judicial foreclosure process potentially incurring a lengthy and costly court case.  This doesn't seem to be in the best interest of the bank, at all.

At this point, the new laws do not apply to any of the following loans:  FNMA (Fannie Mae), FHLMC (Freddie Mac), FHA and VA mortgages.  These loan types are all to follow President Obama's voluntary modification program.

Obviously there is a shortage of counselors necessary to assure compliance with the law at this time, but hopefully that will buy homeowners some time.  Time will tell how this all shakes out, but a solid move by state government in my opinion.

Click here for more information on mortgage modification and to read the new law:

http://doortodreams.com/index.php?option=com_phocadownload&view=category&id=9&Itemid=162

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Derek Bauer is an Associate Broker and Realtor® with Real Estate One, Michigan's Largest Real Estate company.  Derek is also the lead of the Derek Bauer's, "Door to Dreams Team."  As a Certified Distressed Property Expert, Derek is helping homeowners avoid, and even reverse, foreclosure.  Learn more at http://DoorToDreams.com.  Derek Bauer is licensed in Real Estate in the State of Michigan, is not an attorney, and can not and does not provide legal advice and/or counsel.