Stemming Foreclosures and Keeping Families in Their Homes

WASHINGTON, DC – May 29, 2009 – (RealEstateRama) — Foreclosures continue to drag down our economy, and Michigan has one of the worst foreclosure situations in the nation. To address this issue, Congress passed and President Obama recently signed into law the Helping Families Save Their Homes Act of 2009.

The act expands and improves the Help for Homeowners program, the Federal Housing Administration’s tools to protect homeowners, and various counseling and foreclosure prevention programs to provide access and assistance to more people. It will bring much-needed help to many homeowners who are trying desperately to save their homes.

Five years ago, homeownership rates hit an all-time high of 69.2 percent. America enjoyed an almost constant 20-year-long increase in home affordability; more people than ever before could realize the American dream of homeownership. But too much of this growth in homeownership was built on highly questionable adjustable rate mortgages, and too many home buyers agreed to mortgages that they could not afford.

According to data released by RealtyTrac, even though there are fewer foreclosure filings than this time last year, there were still nearly 11,000 Michigan foreclosure filings in April 2009 alone. That’s one foreclosure filing for every 418 households in just one month, which puts Michigan’s foreclosure rate at the 11th highest in the nation. Nationwide, foreclosure filings set another record high in April and are up 32 percent compared to this time last year.

Unfortunately, homeowners facing foreclosure are not the only ones being impacted by this crisis. Property values have dropped significantly in many areas, due in large part to the increased number of abandoned and foreclosed homes. These losses in property values also decrease state and local revenue from property taxes, creating shortfalls in revenues and reducing funding for important state and local programs and services. That makes action to stem foreclosures all the more critical.

The act provides incentives for servicers and lenders to expand access to the Hope for Homeowners program. In addition, it allows the government, through the Federal Housing Authority and Rural Housing Service, to modify loan terms in order to help a homeowner avoid foreclosure. More funding is also provided for foreclosure prevention activities and counseling.

In addition to helping good, hardworking people in Michigan and across the United States, the act also strengthens the ability of the Department of Housing and Urban Development to go after those who would misuse the system or break the rules. These programs are meant to protect the thousands of innocent Americans who were taken advantage of by people who broke the rules and who, despite their best, most honest efforts, find themselves facing foreclosure.

Michigan has been among the states hardest hit by the recession and my hope is that this new law will give support to the scores of Michigan citizens who are desperately trying to hold on to their homes.

The Helping Families Save Their Homes Act is just the latest of a number of steps Congress has taken over the past year to help reduce the effects of this recession on American homeowners. Last year, Congress passed the Housing and Economic Recovery Act to insure $300 billion in mortgages and help move homeowners into more affordable mortgages. That law also made available $170 million to help local Michigan communities rehabilitate blighted neighborhoods.

In addition, the President has unrolled a new plan that should help as many as seven to nine million homeowners avoid foreclosure by creating incentives for mortgage lenders, servicers and borrowers to modify loans in a responsible way. This program, administered by the Treasury Department, offers assistance to many homeowners who are making a good-faith effort to make their mortgage payments, and encourages lenders and servicers to work with these borrowers to modify their loans.

As this economic storm continues to take a toll on people across Michigan, Congress and the President must do everything in our power to stabilize the economy and create jobs. Keeping people in their homes is a critical part of that effort, and recent action should help stem the wave of foreclosures that threatens so many Michigan families.

For help if facing foreclosure, one can call 1-888-995-HOPE. For more resources, see the Homeownership page on Senator Levin’s website.

Contact: Senator Levin’s Office
Phone: 202.224.6221