Feds Approve MSHDA Plan to Help Struggling Homeowners (Monitor: June 28, 2010)
The U.S. Departments of Treasury and Housing and Urban Development (HUD) have approved the Granholm Administration’s plan to distribute $154.5 million beginning July 12 that should help more than 17,000 Michigan households avoid foreclosure. Now that the program is in motion, credit unions should begin preparations to utilize the funds, which are designed to help members that are facing mortgage problems due to job loss or other financial struggles.
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 nation’s five state HFAs to implement its plan. MSHDA will use the time between the June 23 approval and the launch of the program on July 12 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.
“We are eager to invest the resources provided by the Obama Administration to help Michigan homeowners prevent foreclosure as quickly and efficiently as possible,” Molin said. “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. 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 facing mortgage problems should quickly sign on to the program. Important documents and details are available at the MCUL’s MSHDA Hardest Hit Fund webpage. Credit unions will need to sign a participation agreement with MSHDA and receive training before submitting applications for assistance. MSHDA is in the process of adding information to their website,http://www.michigan.gov/mshda.
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 the MCUL and other state organizations.
Applications completed by homeowners and their loan service provider will be submitted for approval to MSHDA, with final approval of applications expected to occur within 48 hours of receipt of a complete application package. MSHDA is adding additional staff to review and process the applications, and anticipates it could take 12-18 months before the state’s Hardest-Hit Fund is entirely distributed.
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 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.”
Questions from credit unions may be directed to MCUL Director of Cooperative Initiatives Martha Ninichuk at ext. 445 or MCUL Compliance Helpdesk Consultant Jody Dabrowski at ext. 486.