During this harsh economic period, it wouldn’t be surprising to know that some families have fallen on hard times. Every day, families are losing their homes to bank repossession.
To address the foreclosure crisis in Detroit, Sen. Hansen Clarke, D-Detroit, has proposed a bill that would allow homeowners facing foreclosure to petition a circuit court judge for a two-year reprieve.
If the homeowner is granted the time, they can make arrangements to begin paying back loans or taxes owed.
Similar bills have been introduced in other states. In May, New York’s State Assembly approved a proposal which will allow a one-year delay on foreclosures of subprime mortgages.
According to Clarke, foreclosures have ripple effects — hurting not only homeowners but lowering property values and decreasing the tax base which, in effect, means less money goes toward schools, police and fire services.
Although a two-year reprieve might cause some problems for banks — such as adding to debt owed to the bank, making it harder for them to lend money — there are some benefits to postponing foreclosures.
The most obvious benefit is that it allows families extra time to work out their financial problems. Though it might not be the case in every situation, there are some honest hardworking people who have just hit a rough patch in life and need time to work out their issues.
The housing market is already struggling and more foreclosures will just add to the problem. According to CNNMoney.com, 73,000 American families lost their homes to bank repossession in May. Two years might allow people to work out their financial problems, save their home from foreclosure and help improve the conditions of the housing market.
As Clarke informed, foreclosures also affect the tax base. If less bank repossessions would add to funding for city services and schools, then a two-year reprieve might not be such a bad idea.
The Detroit public school system is already millions of dollars in debt. Declining enrollment numbers, massive teacher layoffs and permanent school closings are just the beginning of their problems. If holding off on foreclosures will give the school system some much-needed funding, then so be it.
In any case, there should be guidelines a person has to follow to receive a two-year reprieve or else the mortgage crisis would get worse if this proposal becomes reality.
Homeowners should have to prove that they are making an effort to work out their financial problems — whether it’s evidence that they’re searching for another job or trying to better budget their money. People who might be granted a two-year reprieve would need to look at the opportunity as a second chance, not an easy way out of paying.
It’s nice to know some lawmakers are finding ways to help people in financial binds. Delaying foreclosure on a home might be the kind of boost some homeowners need to get back on their feet.
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