The administration of Michigan Gov. Jennifer Granholm has unveiled the state's proposed plan to distribute $154.5 million in federal funds beginning this summer that should help more than 17,000 Michigan households avoid foreclosure, including 11,000 homeowners who are currently drawing unemployment benefits and are struggling to make monthly mortgage payments.
"Protecting families during these tough economic times is one of our top priorities," said Gov. Granholm. "These funds will help unemployed Michigan homeowners and those who have fallen behind due to unforeseen circumstances such as a medical emergency, avoid the devastation of foreclosure, allow families to remain together in their homes and prevent neighborhood blight that can result from additional vacant homes."
In February President Obama announced $1.5 billion in funding for innovative measures to help families in the states that have been hit the hardest by the aftermath of the housing bubble. The Michigan State Housing Development Authority (MSHDA) was selected as one of the five state Housing Finance Agencies (HFAs) to share in the Hardest-Hit Fund investment with an award of $154.5 million. The amount was determined through a formula by the U.S. Department of Housing & Urban Development (HUD) and the U.S. Dept. of Treasury that measured state unemployment and home value depreciation in 2009. Michigan's plan must be submitted to the U.S. Department of Treasury for review by April 16. Federal approval of the plan is expected by late June.
"We do not take pleasure in the economic realities that led to Michigan's selection for funding," said MSHDA Executive Director Keith Molin. "At the same time, we are eager to invest the resources provided by the Obama Administration as part of a broader, ongoing effort across state government to build the foundation for renewed and sustainable economic growth, creating the vibrant future that Michigan citizens deserve."
Since 2008, MSHDA has received nearly $1 billion in combined federal funds for new programs that are improving the state's housing stock, making housing costs more affordable, preventing foreclosure, rebuilding cities and creating jobs. MSHDA has helped Michigan's effort to overcome historic economic challenges by becoming one of the nation's most innovative housing development agencies.
Under Gov. Granholm's leadership, Michigan is heralded as a model for the nation in the development of policies and partnerships to help both those who are at risk of becoming homeless and those who reside in shelters or on the street and need longer-term assistance in order to obtain and sustain housing. MSHDA has spearheaded the Michigan Campaign to End Homelessness, the nation's only statewide strategic initiative tailored to the diverse needs and challenges of each of Michigan's 83 counties.
Michigan's Hardest-Hit Fund plan is designed to help homeowners who are currently receiving unemployment compensation, homeowners who have fallen behind in their mortgage payments or taxes due to a temporary layoff or medical emergency, and those homeowners who can no longer afford their mortgage payments due to lower income. It was developed in partnership with representatives from the Michigan Bankers Association, the Michigan Credit Union League, the Michigan Association of Community Bankers, the Michigan Association of Realtors, the Michigan Foreclosure Task Force and MSHDA's statewide homeownership counseling network.
Banks and credit unions will play an integral role in the success of the new program because they will work with homeowners to determine eligibility criteria and best available options.
Applications completed by homeowners and their loan service provider will be submitted for approval to MSHDA. MSHDA is adding additional staff to review and process the applications, which will be processed on a first-come, first-served basis as soon as U.S. Treasury gives approval of the proposal. MSHDA anticipates final approval of applications will occur within 48 hours of receipt of a complete application package.
"We credit Governor Granholm and her team for producing a plan that offers win-win-win solutions," said Alessandro P. DiNello, president of Flagstar Bank and a member of the Michigan Bankers Association Board of Directors. "Families will be able to keep their homes, lenders will be able to receive prompt cash dispositions on troubled loans and community property values of surrounding neighbors and local businesses will be preserved."
Nationally, more than 57 percent of mortgage delinquencies can be attributed to job loss. MSHDA's decision to focus the majority of its efforts on the problems facing Michigan's unemployed is the proper strategy to pursue, according to Michigan Credit Union League President and Chief Executive Officer David Adams.
"Michigan is in the midst of an historic remaking of our economy," Adams said. "Our state's biggest challenge is sustaining homeownership for unemployed and underemployed borrowers. This plan provides a blueprint on how Michigan credit unions, banks and policymakers can work together to help those who need assistance while transitioning to the 21st century economy."
For more information, visit www.michigan.gov/mshda.