Hertel, Ananich want judicial foreclosure system

Local and state officials are calling on the Michigan legislature to change the system for foreclosing on a property from its current foreclosure by advertisement system to one in which judges oversee the foreclosure process.

Ingham County Register of Deeds Curtis Hertel, Jr. sees the impact of the ongoing foreclosure crisis everyday, which has cost his county $2 billion in lost property value. At a press conference Wednesday, Hertel said that a fundamental change in the system is necessary to protect homeowners against unethical foreclosure practices.

“We used to tell people they could save their homes. We no longer say that because [mortgage companies] go to extreme steps to foreclose,” Hertel said. “We can do better.”

Hertel and state Rep. Jim Ananich (D-Flint) said the key reform is shifting the state’s foreclosure process from its current foreclosure by advertisement process to judicial foreclosure. Ananich introduced legislation to do this in May.

A document provided by Ananich’s office from the website RealtyTrac.com shows that about half of the states currently have judicial foreclosures. Calling the current system “outdated,” Ananich said moving to judicial foreclosure would “protect homeowners and make sure the home won’t be stolen out from under them.”

To underscore the importance of the change in the law, Ananich and Hertel hosted homeowner Bill Donahue. Donahue first contacted Hertel in 2011 after battling with Bank of America and Fannie Mae. While Bank of America had approved a loan modification for Donahue and his wife on the home they had lived in for 25 years, Fannie Mae was proceeding with foreclosure action against Donahue. Donahue says he found out about the foreclosure when a representative of the company posted a foreclosure notice on his door.

When Donahue provided the Fannie Mae representative with proof of his loan modification, he said the man congratulated him, told him most homeowners didn’t get their loans modified to prevent foreclosure, and asked him to send the documents to him. Donahue did that and the Fannie Mae rep emailed him and said he’d take care of it.

Then Donahue got an eviction notice from Fannie Mae. The packet gave Donahue and his wife two business days and a weekend to find an attorney to help them challenge the foreclosure and eviction. They did so. Fannie Mae dropped the case, but Donahue says the only thing he got was a weak apology from Bank of America and Fannie Mae.

“Our home was packed up in boxes, and we were living out of a suitcase in the car — because we never knew if we would come home to find the front door padlocked and our belongings on the front yard,” Donahue said of the ordeal.

While lawmakers and anti-foreclosure advocates are bracing for negotiations in the fall over extending the Home Foreclosure Prevention Act, Ananich said the move is misguided.

“Tweaking a system that is broken only gets you a system that is more broken,” said Ananich.

Ananich is under no illusions that his plan will have an easy time making it through the Republican-controlled legislature. Asked about the chances the legislation would make it through, Ananich said he had spoken with Rep. Marty Knollenberg, chair of the House Banking Committee, and “he seemed interested.” But there’s no guarantee that it would even get a vote.

Many in the Republican caucus have taken money from the Michigan Banking Association and the Realtors PAC as well as foreclosure law firms Orlans and Trott and Trott. The Michigan Messenger has reported that in 2009, Trott and Trott successfully blocked foreclosure relief legislation. Days later, former Senate Majority Leader Mike Bishop, Republican from Rochester, confirmed that Trott and Trott had written the draft legislation, but they opposed the final draft after it was amended by Democrats.

Ananich said he still had hope that the bill would be taken seriously. “I’m trying to be optimistic here,” he said.