Michigan State Officials Looking for Foreclosure Wrongdoings

by Peter Vernon on States

In Michigan, particularly Kalamazoo County, local officials have become concerned about suspiciously high foreclosure rate. But since there are no laws or regulations that discuss the investigation procedure regarding foreclosure irregularities, officials have decided to take an initiative.

Beginning this month, recently foreclosed homes in the said county rongdoings involved that lead to its foreclosure. In line with this, a group, which is comprised of housing industry representatives and county officials, will also develop a guideline that will serve as the protocol for reporting suspicious activities especially mortgage fraud.

Nationwide, the incidents of mortgage fraud have risen by almost 600 percent. From 2002 to 2006, there were reports of approximately 36,000 cases. Michigan, unfortunately, ranked as the third stated with the highest mortgage fraud incidence.

Although the most common mortgage fraud is committed by third parties such as foreclosure rescue companies, there are also some cases where a buyer or investor will buy out several properties. After borrowing heavily against these homes, the investor will simply leave them to be foreclosed.

Having many foreclosed properties in a neighborhood can actually cause home prices to decline. Since foreclosure homes are sold at a relatively lower price, the market values of neighboring homes decrease. It does not also help that these abandoned homes can make a neighborhood look bad.

Nationwide, state officials and non-profit organizations are lending their hands to distressed homeowners in order to keep them away from foreclosure. Lenders have been encouraged to work out mortgage terms with the borrowers as well. In addition, stricter lending guidelines have been implemented in most states to protect borrowers from predatory lending practices. These practices were believed to be one of the top reasons for the foreclosure crisis and subprime mortgage mess.