My answer on this one should be kind of obvious, but let’s look at some of the details. For starters, this measure is being tacked onto the provision to extend Michigan’s nearly worthless pre-foreclosure negotiation law by one year. So there is a trade off, right? Homeowners get this pre-foreclosure negotiation and banks get shorter redemptions.
Homeowners only get the benefit of pre-foreclosure negotiation if they respond exactly as they must within a ridiculously short time period -14 days from the date of the letter. Technically, that is the date the letter was written not the date it was sent. But, even counting from the date it was sent, the postal service might get it to the homeowner the next day or 10 days later.
Next, the letter is sent registered. If you are not there to sign for it, you don’t get it until you can go pick it up. If you are like most people and work Monday through Friday during the day, you cannot pick it up until the next Saturday at the earliest – unless you take time off work to pick up a letter that may or may not be important. So this could add another 5 days.
The letter almost always instructs you to contact the bank’s law firm. They are not open on weekends. 2 more days.
Now what happens if you are already talking to someone in the bank’s loss mitigation department before the letter is even sent? Does that count as contacting them? No, it doesn’t. So many homeowners let the deadline pass without contacting the right person to secure the 90 days to negotiate.
The bottom line is that this provision is woefully under used. To suggest that everyone should lose half of the time they have to figure out what, if anything, can be done to save their home and then find a new place to live if necessary, because a very small number of home owners will get the letter quickly enough to respond to the right person and enter into loan modification talks suggests that these legislators have no idea how this process actually works.
To make matters worse, the reduction in redemption period is permanent. The extension of the negotiation period is for one year.
Kind of makes you wonder if this bill’s sponsors are your representatives or the banks’, doesn’t it.