Bipartisan legislation from state Representatives Brad Paquette and Joey Andrews has been introduced in the Michigan House to protect people facing foreclosure from getting scammed out of their properties.
We’ve reported on the scam that involves bad actors approaching someone after their notice of foreclosure has been published and offering to take the property off them for a low price while letting them stay there for another six months. Not only does such a property owner already have the right to remain in the home for six months, but Representative Andrews tells us the entire thing is intended to swindle the homeowner into giving up their right of redemption.
“People are basically going around and offering to pay small amounts of money in order to, quote unquote, ‘save their house’ and basically getting a house that’s worth multiple times what they’re paying for it for next to nothing because they’re getting it out of foreclosure,” Andrews said.
Andrews says the scammers are taking advantage of provisions in state law that were actually intended to protect people.
“When somebody’s house goes up for foreclosure, there’s an ability to transfer what’s called the right of redemption, and that basically means that once it’s sold at auction, any additional proceeds goes to the person who has the right of redemption. It also effectively transfers ownership. The reason is that there is, in principle, if, say, grandma can’t pay her taxes, her house is under foreclosure, she could transfer it to a family member who could then make good on it, that sort of thing.”
Andrews says the scam is all too common.
“It’s been especially bad in Berrien County, enough so that the county really put this on our radar, but it’s happening all over the state, so we’re trying to close some loopholes that have allowed some pretty unscrupulous actors to take advantage of seniors and people who are just struggling in general and effectively kind of steal their houses from them.”
The legislation seeks to close loopholes in the state’s current mortgage laws making this possible. Andrews says it will also ensure property owners facing foreclosure are notified of their rights, such as the right to remain in a foreclosed home for six months and to the profits from an auction of the property.
A hearing on the legislation could be coming soon.
