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Monday, April 22,2013

Fighting foreclosures

Recent court rulings may help clarify foreclosure practices by Fannie Mae and Freddie Mac

by Sam Inglot
Ingham County Register of Deeds Curtis Hertel Jr.

Monday, April 22 — Ingham County Register of Deeds Curtis Hertel Jr. hopes that recent court rulings will help stem the tide of what he says are illegal foreclosures in the county.

Over the past year, Hertel has been in court arguing that Fannie Mae and Freddie Mac are illegally foreclosing on people’s homes. Fannie Mae and Freddie Mac are mortgage agencies that are both government-sponsored as well as publicly traded companies. Because the companies are both a public entity and a private company, there has been some debate over which laws need to be followed when executing a foreclosure.

In court, Hertel argued that because of the company’s ties to the federal government, Fannie Mae must follow the due process clause of the U.S. Constitution and take people to court before foreclosing and evicting them.

Two recent, separate rulings — one in 55th District Court and the other in 30th Circuit Court — ruled in Hertel’s favor by saying that Fannie Mae is a “federal actor” and therefore cannot foreclose on someone through “advertisement,” which is basically a notice posted on the homeowner’s front door.

Hertel said the ruling is “a really good step in the right direction,” but said the Circuit Court decision is headed for the state Court of Appeals. He expects the District Court ruling also will be appealed.

Hertel says Fannie Mae and Freddie Mac like to switch back and forth between being a private company and a government agency to best suit its needs.

“When they go to court to defend an eviction, they say they are a private company,” he said. “But when they come to my office to file foreclosure documents, they say they are part of the federal government and don’t have to pay transfer taxes. They’ve got to pick a side.”

Hertel hopes the recent court rulings will not only help prevent illegal foreclosures, but will hopefully push elected officials to clarify the role of Fannie Mae and Freddie Mac.

“I don’t know what they are because the courts, the federal government, nor Congress has clarified that,” Hertel said. “They can’t be a private corporation and part of the government, right? That doesn't make sense to anybody.”

“Michigan is one of easiest states to foreclose in,” Hertel said, because mortgage companies can just “post a notice on the door.” He said in many states, foreclosure notices have to be taken before a judge. In Michigan, a family would have to sue before they could get a hearing in court.

Both of the court rulings overturned evictions in Ingham County. Hertel said the cases were able to go to court because the families reached out to Hertel’s Foreclosure Fraud Hotline. To give families a legal outlet to fight foreclosures, Hertel started the hotline two years ago to give people legal aid to tackle foreclosure in court. Hertel said it has helped over 250 people in the last two years.

Tonight and Wednesday, Hertel will be holding a community meeting about foreclosure at the Capital Area District Library in downtown Lansing at 7 p.m. As part of the national “Money Smart Week,” Hertel will broadly discuss illegal banking and foreclosure practices that have put people out on the streets.

“In about 45 minutes, we’re going to go through exactly how the fraud works, why it’s happening and what’s going on in the community,” Hertel said. “We have countless examples of the banks breaking the laws in the process.”

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