Feds OK Michigan's funds for foreclosure help

LANSING, Mich. (6/30/10)--The U.S. Treasury Department and the Department of Housing and Urban Development have approved Michigan Gov. Jennifer Granholm's plan to distribute $154.5 million beginning July 12 to help more than 17,000 Michigan households avoid foreclosure.

Credit unions should begin preparations to use the funds, which are designed to help members facing mortgage problems from job loss or other financial struggles, said the Michigan Credit Union League (MCUL) (Michigan Monitor June 28).

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 other four participating states are Arizona, California, Florida and Nevada.

Michigan will be the first of the U.S.'s five state HFAs to implement the plan. MSHDA will use the time between now and the July 12 launch to hire and train staff, provide information to potential applicants statewide about the program and educate participating credit unions about the application process, said MSHDA Executive Director Keith Molin.

"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 option," Molin said. "The smartest advice we can give potential applicants is to contact their mortgage servicers to ensure they make an informed decision."

The program is on a first come, first-served basis; when the money is gone the program will close. Credit unions that want to be proactive in securing assistance for their members should quickly sign on to the program, MCUL said.

Michigan's Hardest-Hit Fund plan is designed to help homeowners who are currently receiving unemployment compensation, who have fallen behind in their mortgage payments or taxes due to a temporary layoff or medical emergency, and who can no longer afford their mortgage payments due to lower income. The plan was developed in partnership with the MCUL and other state organizations.

Nationally, more than 57% of mortgage delinquencies can be attributed to job loss, MCUL said. MSHDA's decision to focus most of its efforts on the problems facing Michigan's unemployed is the proper strategy to pursue, according MCUL President/CEO 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."

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