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Published: Thursday, 5/14/2009

Michigan bill would aid in foreclosures


LANSING - Michigan lawmakers struck a deal yesterday to give homeowners facing foreclosure a 90-day window to stay in their house and potentially work out something with their lender.

The legislation lets homeowners delay foreclosure proceedings for 90 days if, after getting a notice of foreclosure, they meet with a housing counselor and the bank. A list of counselors prepared by the Michigan State Housing Development Authority will have to be included in the foreclosure letter.

Only homeowners meeting certain financial standards could qualify for modified mortgage payments.

Lenders refusing to rework loans for those qualified homeowners would have to go to court to finish the foreclosure - which is more time-consuming and expensive than simply posting a notice in the local newspaper. Experts concede, however, that little can be done for people who have lost their job and no longer are making any money.

The Democratic-led House quickly passed the bills 93-15 after they won approval in a conference committee that had resolved differences. The Republican-controlled Senate will send them to Democratic Gov. Jennifer Granholm soon, perhaps as early as today.

Democrats kept in a provision requiring judicial foreclosures in certain circumstances, while Republicans gave banks more discretion to decide if someone meets financial requirements to modify their mortgage. The bills have protections that consumer groups wanted but also ensure foreclosures will not "clog up the court system," Sen. Randy Richardville (R., Monroe) said.

The legislation will not take effect until 45 days after it becomes law, so homeowners who already have gotten notice of foreclosure will not get a 90-day lifeline.

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