Independent Bank halts foreclosures

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Independent Bank decided this month to provide temporary relief for customers on the brink of losing their homes.

On Feb. 13, the Ionia-based community bank suspended all foreclosures of owner-occupied loans for three weeks, awaiting details on President Barack Obama’s $75 billion plan to help homeowners in danger of foreclosure.

“There are a lot of people in difficult times right now and we have been trying to help them any way we can,” said Independent Bank Senior Vice President Russ Daniel.

Daniel said foreclosure is one of the last things the bank wants to do in a situation where a homeowner cannot make payments on their loan.

“It’s not in the bank’s interest to take someone’s home back,” Daniel said. “What we hope to do is keep more people in their homes, but also keep more people from foreclosure.”

Obama’s plan is $25 billion more than what the administration had previously projected. The plan seeks to help more than nine million people from losing their homes, putting a safety valve on the ever-weakening U.S. housing market.

Independent Bank’s foreclosure moratorium applies to all first mortgage, owner-occupied loans held in the bank’s portfolio.

The bank holds mortgages backed by Fannie Mae and Freddie Mac and said it cannot make changes to those loans without their consent.

Both Fannie Mae and Freddie Mac recently announced they have halted evictions from foreclosed properties until March.

Independent is the only bank headquartered in West Michigan to receive U.S. Treasury Capital Purchase Program money to assist banks. It received $72 million in the fourth quarter of 2008.

“We’re doing a lot of things with the money,” Daniel said. “It allows more flexibility working with borrowers.”

Mount Pleasant branch managers declined to comment, deferring questions on local foreclosures to the corporate office. Independent operates several branches in Mount Pleasant, including one in the Bovee University Center at Central Michigan University.

Michigan has the nation’s sixth highest foreclosure rate. More than 145,000 Michigan properties were in foreclosure in 2008 – a 21 percent increase from 2007 and a 108 percent increase from 2006. More than 11,400 foreclosures were reported in Michigan in January.

Daniel said it is unclear what the future holds for the moratorium, but one common problem is customers who are afraid to let the bank know they are in financial trouble.

“One of the biggest challenges is trying to contact people who are not paying on their loans,” Daniel said. “If you are having a difficult time, get in touch with the bank and we will help you.”

- The Associated Press contributed to this report.

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