Granholm Announces $128 Million in Additional Federal Support to Prevent Foreclosures in Michigan

Additional Funding Will Help Another 13,000 Michigan Homeowners

LANSING, MI – August 12, 2010 – (RealEstateRama) — Gov. Jennifer M. Granholm today announced the Michigan State Housing Development Authority (MSHDA) will receive $128.4 million in additional support from the Obama Administration to help homeowners struggling to make their mortgage payments due to unemployment.

Michigan is among 17 states and the District of Columbia that will receive $2 billion of additional assistance from the U.S. Department of Treasury through the existing Housing Finance Agency (“HFA”) Innovation Fund for the Hardest Hit Housing Markets (the “Hardest Hit Fund”). In June, the U.S. Departments of Treasury and Housing and Urban Development (HUD) approved MSHDA’s plan to distribute $154.5 million in federal funds to help homeowners who are at risk of foreclosure and have experienced a substantial reduction in income due to involuntary unemployment, underemployment, or a medical condition.

MSHDA has scheduled a conference call for the news media at 3:00 p.m. today, Aug. 11, to discuss how the additional funding will be utilized. The MSHDA toll-free call-in number is: 877-402-9753, pass code 2611325#. The host will be Mary Townley, Director of MSHDA’s Homeownership Division.

“We’re eager to use these federal funds to help at-risk families in Michigan avoid foreclosure,” Granholm said. “Helping families stay in their homes benefits all Michigan homeowners by stabilizing neighborhoods and property values.”

Michigan’s $154.5 million Hardest Hit Fund 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. MSHDA had estimated the plan would help 17,000 at-risk homeowners, including 11,000 residents who are unemployed.

With the additional $128.4 million in federal funds announced today, MSHDA should be able to assist another 13,000 homeowners who are unemployed, according to Mary Townley, Director of MSHDA’s Homeownership Division. MSHDA may plan to change the eligibility requirements of its existing Hardest Hit Fund Unemployment Mortgage Subsidy Program, which currently offers assistance of up to half of the required monthly mortgage payment (up to $750) for a maximum of 12 months, or $9,000 total, while borrowers are seeking new employment. A decision on whether changes will be made to the Unemployment Mortgage Subsidy could take several weeks, Townley said.

MSHDA has approved nearly 70 requests for mortgage assistance since the Hardest Hit Fund program launched July 12. The state housing agency anticipates it could take 12-18 months before the Hardest Hit Fund is entirely distributed. MSHDA’s Hardest Hit Fund 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.

President Obama first announced the Hardest Hit Fund in February 2010 to allow states hit hard by the economic downturn flexibility in determining how to design and implement programs to meet the local challenges homeowners in their state are facing.

Under the additional assistance announced today, states eligible to receive support have all experienced an unemployment rate at or above the national average over the past 12 months. Each state will use the funds for targeted unemployment programs that provide temporary assistance to eligible homeowners to help them pay their mortgage while they seek re-employment, additional employment or undertake job training.

States such as Michigan that have already benefited from previously announced assistance under the Hardest Hit Fund may use these additional resources to support the unemployment programs previously approved by Treasury or they may opt to implement a new unemployment program.

The states eligible to receive funds through this additional assistance, along with allocations based on their population sizes, are as follows:

About MSHDA
The Michigan State Housing Development Authority is dedicated to building a thriving and vibrant future for Michigan. MSHDA provides tools and resources to improve people’s lives through programs across the state. These programs assist with housing, build strong neighborhoods, and help create places where people want to live and work. MSHDA’s programs work in four areas: affordable rental housing; supporting homeownership; ending homelessness; and creating vibrant cites and neighborhoods.*

*MSHDA’s loan and operating expenses are financed through the sale of tax-exempt and taxable bonds as well as notes to private investors, not from state tax revenues. Proceeds are loaned at below-market interest rates to developers of rental housing, and help fund mortgages and home improvement loans. MSHDA also administers several federal housing programs. For further information go to www.michigan.gov/mshda.

*MSHDA’s loan and operating expenses are financed through the sale of tax-exempt and taxable bonds as well as notes to private investors, not from state tax revenues. Proceeds are loaned at below-market interest rates to developers of rental housing, and help fund mortgages and home improvement loans. MSHDA also administers several federal housing programs.

Mary Lou Keenon
MSHDA Communications Office
Telephone: 517/373-0011