Lenders Team Up With State To Help Foreclosure Victims In Michigan

April 7th, 2008 | Tags: Foreclosure Victims

Jennifer M. Granholm gave her nod to a piece of legislation that would help Michigan families to keep their homes intact without succumbing to foreclosures. Joining hands with the governor were the lenders from Michigan Credit Union League, the Michigan Bankers Association and legislators from Grand Rapids, Jackson and Detroit who supported the bill. If the position of the house owners is stabilized the housing market will also get back on its rails. Granholm praised all those who had supported the measure.

The bills created two new modification options – the borrower could move from a floating rate agreement to a fixed rate one. There is also a rescue plan for those who have been lagging behind in payments but have now caught up. The operation has been named ‘Save the Dream’. It will make it possible for foreclosure victims to contact counselors easily and participate in awareness programmes about how to avoid foreclosures. The programmes are executed and financed entirely by Michigan State Housing Development Authority – MSHDA.

The director of MSHDA, Mary Townley is confident that these measures will control the unchecked advance of foreclosures. The real hope lies in changing over from a floating to a fixed rate of interest.

The main tools of use are the changing over of the ARM to an agreement that will stretch the loan period to 30 years, with low rate at a fixed rate – in other words a conventional loan. The rescue operation will help those who are in the delinquency stage. They will get an option to change to the conventional loan. Both the tools will help existing house owners. There are however some conditions. The house owners have to meet some income and sale price levels that are in agreement with other MSHDA loans. The income of the householder must be below $108,000 and the purchase price of the house is not to be more than $224,500. The funds will come from taxable bonds. The house owners will bear the full responsibility of the modified loans. There is no stipulation that the first mortgage has to be MSHDA loan. But the refinancing has to obey the rules of this body. The details are available from the qualifying lenders as well as from MSHDA itself that has its own website. There is also a round the clock running hot line. MSHDA is a semi state body that gives financial technical assistance.