Michigan bill cuts redemption period for portfolio mortgages
[Update 1: Adds comment from state bankers association]
A Michigan bill would cut in half the redemption period allowed after a foreclosure sale to 90 days for certain loans.
The bill would change the time allotted to buy back foreclosed homes under portfolio loans, defined in the bill as mortgages that have not been securitized or assigned a different servicer by the original lender. House Bill 5176 was referred Thursday for a second reading.
Other portions of Michigan's foreclosure law would remain unchanged.
Loans on residential property not exceeding four units, but with more than two-thirds of the original mortgage left, have a six-month buyback period. If abandoned, those same properties have a 30-day window.
For properties below that two-thirds mark, the redemption period is a year from the foreclosure sale, or three months if abandoned.
David Adams, CEO of the Michigan Credit Union League, told The Grand Rapids Press that a currently "unduly protracted foreclosure process can result in unoccupied and unmanaged properties that pull everyone's property values down."
Gail Madziar, spokeswoman for the Michigan Bankers Association, said the group is taking a neutral stance on HB 5176. She said the new law would add confusion to the process as many homeowners don't know who holds or services their mortgage.
The proposed law would also give agricultural properties that are not portfolio loans a one-year buyback period after a foreclosure sale.
Rep. Rick Olson, R-Saline, the sponsor of the bill, could not immediately be reached for comment.
Write to Andrew Scoggin.
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