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MCUL CEO testifies on foreclosures in state House
LANSING, Mich. (2/1/11)--Michigan Credit Union League (MCUL) CEO David Adams last week called on the state legislature to reform foreclosure laws, improve Michigan's economic development programs and develop policies to encourage state residents to spend more responsibly.
Michigan Credit Union League CEO David Adams testified Wednesday about foreclosures before the Michigan House Banking and Financial Services Committee. (Photo provided by the Michigan Credit Union League)
Speaking before the House Banking and Financial Services Committee Wednesday, Adams suggested extending the 90-day foreclosure workout period and shortening the redemption period on the back end of the process. Currently, the redemption period ranges from six months to a year for occupied property (Michigan Monitor Jan. 31). "Michigan's overly burdensome foreclosure law is in need of reform," Adams said, urging committee members "to consider striking a balance between homeowners' interests and the financial risks borne by depository institutions in this very challenging economic climate." Legislature needs to strengthen the Michigan Economic Development Corp's Capital Access Program (CAP) by providing more funding, he said. CAP uses small amounts of public resources to generate financing and provide small businesses access to capital that might not otherwise be available. "State-endorsed risk mitigation programs can help stimulate increased lending by financial institutions," he added. State and local governments could also "work with the financial industry to use tax policy in a manner that develops incentives for smart financial behavior and penalizes reckless/immoral behavior," Adams told the committee. He cited homeowners who decide on a strategic default. "These homeowners can afford to pay, but walk away from their mortgage obligation, leaving lenders holding the debt," he said. Improving the economic climate begins with helping people learn more about finances, he said, noting that consumers in the nation have "become under-educated on basic finance" and have "borrowed recklessly and saved too little." He suggested moving toward a culture that encourages and rewards increased financial responsibility.
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