Michigan Launches Mortgage Aid Program, Despite Gaps
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- Kirk Haverkamp | July 12, 2010
The state of Michigan is rolling out a new anti-foreclosure program today, but many, if not most, at-risk homeowners will still have to wait to take advantage of it.
Borrowers can begin applying today for assistance under the state’s Hardest Hit Fund, an initiative designed to help homeowners who are difficulty paying their mortgages. However, only a few mortgage servicers have signed up so far to participate in the program.
That creates a problem for borrowers, as they must apply for assistance through their lenders.
So far, a number of in-state banks have signed up for the program, according to Mary Lou Keenan, a spokeswoman for the Michigan State Housing Development Authority (MSHDA). However, Keenan confirmed that none of the “Big Four” U.S. banks – Bank of America, Wells Fargo, Chase and Citibank – have committed to the program as yet, though the state remains in discussions with them.
Together, those four lenders service the vast majority of U.S. mortgages.
As of 10:30 this morning, the MSHDA web site did not list any mortgage servicers participating in the program, although Keenan said they expected to get a list up later today. She said that banks that have agreed to participate so far include Fifth Third Bank, which is one of the largest regional banks in the Midwest.
A representative of Chase contacted on Friday said that the bank is reviewing Michigan’s proposal; Wells Fargo declined to comment. Representatives of Bank of America and Citibank did not respond to queries.
First state to offer Hardest Hit assistance
Michigan is the first state to begin accepting applications for homeowner assistance under the Hardest Hit Fund, a federal anti-foreclosure initiative targeting those states that have been most affected by the downturn in the housing market and the economy in general.
Of the other four states receiving initial funding under the program, Nevada and Florida expect to begin accepting applications in mid-August, Arizona in September and California will launch its program on Nov. 1.
Michigan’s program will provide three types of assistance: mortgage subsidies for homeowners receiving unemployment compensation, assistance for those who have fallen behind on their mortgages due to a temporary layoff or medical emergency, and principal reductions for those whose homes have lost value and who have seen a reduction in income.
Eligibility guidelines not yet available
The state has not yet released specific criteria for the program; additional information, as well as a list of participating servicers, is to be posted here on the MSHDA web site.
The five states received a total of $1.5 billion in federal funding under the program, with each state designing its own programs for using the funds. Michigan received $154.5 million; California received the largest share at $699.5 million; Florida received $418 million, Arizona received $121.8 million and Nevada received $102.1 million.
Another $600 million will be distributed among five other states with high unemployment levels - North Carolina, Ohio, Oregon, Rhode Island, and South Carolina. Those states are presently developing proposals for using their share of those funds, which will be distributed once their proposals are approved.
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