LANSING, MI – Part of Michigan's response to the foreclosure crisis is a new law that gives homeowners the chance to freeze for 90 days any action to repossess houses or condominiums. The idea is to give borrowers who've hit a rough patch a chance to renegotiate the terms of their loans, and, hopefully, keep them in their homes.
The state's been trying to get the word out that homeowners can assert some control over the situation when they're facing foreclosure with T-V and radio ads featuring Governor Granholm.
Granholm says, "We know our economy is hurting. People are threatened with losing their homes. But there is help."
People can dial 211 to be connected with a state-approved credit counselor, who will contact the lender and put a hold on foreclosure proceedings, and help the homeowner negotiate in an effort to come up with a new, affordable payment plan.
Banks and mortgage companies also have to send homeowners facing foreclosure a packet outlining their rights under the new law, and a list of approved credit counselors.
"What we're saying is, if you're going to lend in Michigan, you need to work with our homeowners."
Mary Townley is with the Michigan State Housing Development Authority. She says it's up to borrowers facing foreclosure to take control of the situation, but, often, they're afraid to open the mail when they know there's bad news inside the envelope.
"Many homeowners will say, I'm only going to be delinquent this one month," Townley says. "I'm going to get over it next month. I'm going to do something different so this doesn't happen, and they almost put their head in the sand, and they don't face reality, and so they don't open the mail, and the mail stacks up."
Some banks are sending two packets - one by registered mail, and the other by regular mail in a plain envelope.
And the effort may be working, at least in some parts of the state. 211 operators in southeast Michigan and the Grand Rapids area are reporting an uptick in people seeking help with foreclosure.
And charitable organizations are waiting to see what happens in coming weeks as foreclosure packages start hitting homeowners' mailboxes.
Capital Area Community Services in Lansing has hired three new people to handle the expected surge in demand for help. But director Phil Thompson doesn't know if that will be enough.
"Now, with the new law, if we can just educate people that there is a good chance, a reasonable chance -as long as there's the ability to maintain once you get back on track, it's possible to have it work out," Thompson says.
But in a state where roughly one of out every five employable adults is either jobless or underemployed, there are plenty of people who simply won't be able to pay their mortgages. In other cases, refinancing will be complicated by the fact that homeowners owe more on their homes than the homes are worth. Thompson says despite the best efforts of state policymakers, counselors, and even lenders, many people will still be forced to walk away from their homes.
"Then we try to arrange other living rentals. Get them out of their mortgage, out of their home and moved into a rental unit."
And then, Thompson says, they go to work on a plan to fix former-homeowners' credit by making sure other debts are paid off, that rent and utilities are paid on time, in hopes that one day, after the economy improves, they will be homeowners again.