HOUSE BILL No. 5566

 

December 13, 2007, Introduced by Reps. Johnson, Young and Miller and referred to the Committee on Banking and Financial Services.

 

     A bill to provide assistance to owners of distressed housing;

 

to provide a vehicle for purchase and redemption of residential

 

property faced with foreclosure; to provide for the raising of

 

capital and the issuance of bonds; and to provide for certain

 

duties of certain state agencies.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 1. This act shall be known and may be cited as the

 

"neighborhood equity protection and foreclosure prevention act".

 

     Sec. 2. The community stabilization authority is created in

 

the department of labor and economic growth.

 

     Sec. 3. The authority shall determine geographic areas in this

 

state where property values and other factors, including, but not

 

limited to, a high rate of foreclosures on residential housing,

 

demonstrate the need for community stabilization. The authority

 


shall define the areas served so that participating eligible

 

financial associations qualify for credit under the community

 

reinvestment act of 1977, 12 USC 2901 to 2905.

 

     Sec. 4. The authority shall develop a program to accept

 

proposals to reduce the high foreclosure rate in geographic areas

 

that demonstrate a need for housing stock price and market

 

stabilization. The authority may do any of the following:

 

     (a) Do whatever is necessary to become an entity capable of

 

acquiring and holding title to property.

 

     (b) Raise capital necessary to facilitate operations.

 

     (c) Coordinate and work with financial and investment

 

businesses and organizations to acquire troubled properties in

 

geographic areas that demonstrate a need for stabilization.

 

     (d) Evaluate proposals to acquire properties after any

 

necessary clear title actions have been brought and after

 

renovations required by the authority have been completed.

 

     (e) Offer acquired and renovated properties for sale through

 

land contract.

 

     (f) Provide proceeds for renovation and develop working

 

relationships with the businesses that provide renovation services.

 

     (g) Develop and distribute a list of approved contractors that

 

will provide renovations to properties.

 

     (h) Borrow money and issue bonds or notes for refunding all or

 

part of existing bonded or note indebtedness.

 

     (i) Make loans to owners of property who are otherwise facing

 

foreclosure and provide information to those property owners on how

 

to avoid foreclosure.

 


     Sec. 5. Before the authority acquires property, it shall

 

initiate a clear title action in a court of competent jurisdiction.

 

     Sec. 6. The authority shall conduct sales of all renovated

 

property that it has acquired. The authority shall not dispose of

 

property for less than full appraised market value. The authority

 

shall secure itself through land contract. If the purchaser

 

acquires financing to purchase the property, the authority shall

 

take a second position to the purchaser's lender.

 

     Sec. 7. The authority shall forgive up to 75% of the debt owed

 

to it by the purchaser over a period of no less than 5 years, if

 

the property is retained by parties that occupy it and hold title

 

subject to mortgages or other instruments of finance.

 

     Sec. 8. Owners of property who are facing foreclosure in

 

geographic areas that demonstrate a need for housing stock price

 

and market stabilization shall be eligible for low-interest loans

 

and other assistance as determined by the authority. The authority

 

may also award grants of no more than $3,000.00 per property in

 

certain cases. The authority shall develop eligibility criteria for

 

the loans and grants and shall distribute the criteria to

 

interested parties and make the availability of the loans and

 

grants known across this state.