With foreclosure relief bill signed, concerns linger over loophole for scam artists

LANSING — Now that the Home Foreclosure Prevention Act has Gov. Jennifer Granholm’s signature, foreclosure industry insiders and activists are expressing new concerns about one particular provision in the legislation, which goes into effect in July, that could allow scam artists and others to target struggling homeowners.

Photo by The Toad via Flickr

While the legislation provides what lawmakers have called “a 90-day lifeline” for borrowers facing foreclosure, the new law requires that the mortgage company seeking a foreclosure publish the name and address of a person on the brink of losing their home. Under current law, such legal notices require only a legal description of the property.

Experts say this new provision will expose homeowners to fraudulent foreclosure services.

“That’s really going to invade the privacy of homeowners,” said Marshall Isaacs, an attorney with the Orleans foreclosure law firm, who spoke with Michigan Messenger as an individual expressing his concerns, not necessarily those of the company for which he works. “People who prey on these individuals now have a lot less work to do to prey on them.”

The provision “was something the Foreclosure Task Force was concerned about, but not to the point that it needed to be removed,” said Rep. Andy Coulouris, a Saginaw Democrat who chairs the House Banking and Financial Services Committee. Coulouris wrangled the bill through the House and chaired the conference committee that eventually reconciled versions of the legislation passed by the Michigan House and Senate.

“Oh my god,” said Carrie Guzman, the Lansing-based financial justice director of the Association of Community Organizations for Reform Now. Guzman, who has been advising struggling homeowners, said she thought the provision had been stricken from the final bill. “That’s a nightmare. I get people who come in with handfuls of mail from people who promise the moon. [The provision] is going to increase the access for scam artists.”

Asked for the governor’s response to these concerns, spokeswoman Meghan Brown would only say: “The provision is another means to notify homeowners of their rights.” Brown said the new law protected Michigan families, but would not elaborate.