Posted by: Brian Powers | February 10, 2009

St.Clair County Sheriff: Foreclosure sales will not stop

Wayne County Sheriff Warren Evans announced last week that he was taking it upon himself to stop mortgage foreclosure sales (“Sheriff sales”) in Wayne County.  Other county Sheriff’s have indicated they will not follow suit, in spite of a plea from Evans for outher counties to join him. St.Clair county Sheriff Tim Donnellon has indicated he will not follow the lead of Evans, as have Macomb County Sheriff Mark Hackle and Oakland County Sheriff Michael Bouchard – all citing the fact they they are required to uphold the law, a point apparently lost on Evans.

Governor Granholm as also rejected a request from Evans to issue a statewide moratorium on foreclosures, stating that the State has no legal authority to do so. Again, Evans, a county Sheriff, seems to feel it is incumbent upon a county’s chief law enforcement officer to create ambiguity in the laws.

So what’s really behind all of this?  Well it would be pretty naive not to acknowledge that Evans is a mayoral candidate for the city of Detroit (where the bulk of the county’s foreclosure’s emanate from).  The unfortunate reality of the foreclosure process is that it’s extremely rare that a homeowner has the financial means necessary to halt the foreclosure once it get to Sheriff’s sale.  By then, the borrower is at least 4 months behind in payments, plus late fees and legal costs.  If the homeowner did not have the money available to make monthly payments 1 month at a time, how are they to come up with all this money needed to halt the Sheriff’s sale?  Furthermore, the homeowner has 6 months of redemption rights after the Sheriff’s sale to live in the house for free and try to come up with the necessary funds to stop the foreclosure.

This appears to be political posturing at its grandest by Wayne County Sheriff Warren Evans.  Chances are a court will soon decide that he hasn’t the legal authority to do this.  However, we should keep a close eye on how this all plays out.  If he is allowed the legal precedent to unilaterally strip lenders of their foreclosure rights it would most certainly have an effect on all of us.  Lenders would then have to take into account not only the risk of of borrowers defaulting on their mortgage loans, but also take into account the risk of not being able to redeem the properties as collateral for the defaulted loans.  Investors who provide the capital for banks to loan to consumers for mortgage loans would most certainly want to be compensated for this additional risk in the form of higher interest rates on the their investments.  And guess who that additional cost would get passed down to?

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