LANSING – House Democrats announced Tuesday they will push legislation creating a 90-day moratorium on home foreclosures.

In order to participate in the moratorium, a homeowner would have to work with his or her mortgage lender and a housing counselor. The moratorium would start when the homeowner receives a notice the lender is beginning the foreclosure process.

Rep. Andy Coulouris (D-Saginaw), chair of the House Banking and Financial Services Committee who is leading the legislation, said the 90 days would give homeowners some “breathing room” to negotiate a loan modification.

“As this economic downturn worsens, more hard working people all over Michigan are losing their piece of the American Dream. Keeping more working families in their homes is in the best interests of our residents, our communities and our economy,” House Speaker Andy Dillon (D-Redford Twp.) said.

Under the legislation, if a lender doesn’t end up giving the loan modification to a qualified homeowner, which would be dictated through a Federal Deposit Insurance Corporation guideline, then that lender would have to go through the judicial process to foreclose the home, as opposed to an advertising-based foreclosure.

The judicial process takes longer, Coulouris said, so the idea is to give an incentive to the lender to work something out with the homeowner. But Mr. Coulouris also emphasized the lender would have to be an active participant in the process and work through the issue with counselors either at the Michigan State Housing Development Authority or U.S. Department of Housing and Urban Development.

MSHDA received a $1.9 million federal grant to provide mortgage counseling this year, Mr. Coulouris said, which would cover additional staff time dedicated to the issue.

There was no estimate on how many Michigan homeowners would take advantage of such a counseling program, but last year, 145,000 properties in the state went through foreclosure. In January, about 11,000 Michigan properties were in foreclosure.

While it’s important to recognize that lenders don’t want properties to go through foreclosure and that all sides should find ways to come to the table to keep people in their homes, House Minority Leader Kevin Elsenheimer (R-Bellaire) said the moratorium may be “a bit strong at this point.”

He said lawmakers should be working to fix the poor economy, instead of focusing on its “symptoms” such as foreclosures.

The Democratic announcement comes after the news that three large banks, PNC Financial, Citigroup and JP Morgan Chase, have placed a moratorium on foreclosures, at least through mid-March.

President Barack Obama is also expected to announce his plans to help residents facing foreclosure during a Wednesday event.

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