Federal Funds Coming for Struggling Michigan Homeowners (Monitor: April 19, 2010)
Governor Jennifer Granholm and the Michigan State Housing Development Authority (MSHDA) announced at an April 14 press conference that $154.5 million in federal funding is on the way for struggling homeowners in Michigan. The money is part of $1.5 billion in Troubled Asset Relief Program (TARP) funds allocated by the Obama Administration for five states with high unemployment and low home prices in order to help struggling families pay their mortgage.
A program proposal for distributing the money was given to the U.S. Department of Treasury by MSHDA, and funds should be available by early June. MCUL President/CEO David Adams represented Michigan credit unions at the press conference (click here for video from WLNS), and the MCUL is working with MSHDA in further development of the plan.
"Michigan is in the midst of an historic remaking of our economy," Adams said. "Our state¹s biggest challenge is sustaining homeownership for unemployed and underemployed borrowers. This plan provides a blueprint for how Michigan credit unions, banks and policymakers can work together to help those who need assistance while transitioning to the 21st century economy."
MSHDA's three avenues for using the TARP funds include:
- Unemployment Mortgage Subsidy Grant: A one-time fund to assist the borrower in retaining homeownership by subsidizing mortgage payments during their time of unemployment, not to exceed a total of 12 consecutive months.
- Principal Curtailment Grant: One time matching funds for homeowners with severe negative equity greater than or equal to 115 percent Combined Loan to Value (CLTV) to assist a borrower and lender/servicer in reaching an amicable Loan Modification Agreement. Fund amount may include a principal curtailment of up to $10,000. Lender/servicer must match with a minimum dollar for dollar curtailment; re-amortizing the lower outstanding loan balance. CLTV must not be lowered below 115 percent and 1st mortgage LTV may not be reduced below 100 percent.
- Loan Rescue Grant: One-time assistance to borrower and lender/servicer to reach an amicable Loan Rescue Plan which may include, but not require, a Loan Modification Agreement. Fund amount may include delinquent PITI payments, escrow shortage and delinquent property taxes. Funds will not include accrued lender servicing fees, i.e. late fees, inspection fees and legal fees. Lender/servicer must waive these fees and is prohibited from charging them to the borrower or adding as forbearance. Funds may be used toward 2nd lien if 1st lien is current.
Visit MSHDA's Web site for information about the fund proposal and a questions and answers link. Additional materials will be housed on the MCUL Web site soon. A write-up is also available from the Detroit Free Press.