Sunday, April 01, 2012
Michigan Legislature passes bill letting GOP Chairman’s company off the hook for a $2.4 Million Wells Fargo foreclosure judgment
Wells Fargo bank will file a court challenge to a new state law signed by Gov. Rick Snyder that overturned a $2.4-million judgment against the brother and business partner of Michigan Republican Party Chairman Bobby Schostak, the bank’s attorney said Friday.
The law Snyder signed Thursday, which says a lender can recover only the real estate offered as collateral when a certain type of commercial loan goes into default, is unusual because it is retroactive, to the benefit of Schostak’s brother.
It sailed through the Legislature with bipartisan support but left some unhappy lawmakers in its wake.
“It was one of the more disturbing bills that we’ve taken up this session,” said Rep. Tom McMillin, R-Rochester Hills, who chairs the House Oversight, Reform and Ethics Committee.
The law is intended to overturn a judgment related to an unpaid loan on a Traverse City mall that was controlled by the Livonia-based real estate firm Schostak Bros. That judgment was upheld by the Michigan Court of Appeals.
The new law also could impact at least one other case recently decided on similar grounds in federal court in Michigan, though attorneys and legal scholars say the new state law may violate the U.S. Constitution.
“We fully expect to challenge the constitutionality of this law on a number of grounds,” said Troy attorney James Allen of Miller Canfield, who represents Wells Fargo, the bank that says it is owed the money.
McMillin said he is disturbed that the new laws alters existing contracts and by the rush to get it approved. He said his initial concerns were elevated when he began investigating and discovered the Schostak connection and what he felt were inflated claims by backers of the bill.
“We were originally told … the sky is falling,” McMillin said. “But it didn’t appear there was going to be a calamity.”
Read more here