07/12/2010 Fed aid program aims to avoid Michigan foreclosures
Mortgage fund kicks off Monday 'Hardest-Hit' campaign to help most vulnerable
Michigan homeowners can apply starting Monday for up to $10,000 in federal assistance to avoid foreclosure.
Gov. Jennifer Granholm on Wednesday announced the kickoff of the state's $154.5 million "Helping Hardest-Hit Homeowners Fund."
The first-come, first-serve program is expected to help 17,000 households statewide. A more detailed forecast was not available.
State officials anticipate the money will run out in 12 to 18 months.
"The purpose of this fund is to keep the families who have been hardest hit by this economy in their homes," Granholm said. "Perhaps they are on unemployment and they're having trouble making their mortgage payments because of that. This fund will help them."
Funds are available in three different categories:
• Homeowners receiving unemployment benefits can get up to $9,000 ($750 a month, or half of the monthly payment, whichever is lower, for 12 months) toward their mortgage payments.
• Homeowners who are behind on their payments because of obstacles such as a temporary layoff, divorce or serious illness can receive up to $5,000.
• Homeowners who can't afford payments due to reduced income can receive up to $10,000 to pay down the mortgage principal. Funds are a one-to-one match of the lender's contribution.
Granholm said she's asked the Obama administration to extend the program to those whose jobless benefits expired because Congress hasn't approved a benefits extension.
Residents should contact their mortgage servicers to apply. Eligible applications should be approved within 48 hours.
Participation by mortgage servicers is not mandatory, though the Michigan Bankers Association, Michigan Credit Union League and Michigan Association of Community Bankers all support the program.
"This new program is a great opportunity to once again encourage homeowners to contact their lender at the first sign of a problem in paying their mortgage," said Robert Chapman, board chairman of the Michigan Bankers Association. "If the program is not suited for them, there may be another option available for them."
Though mortgage aid programs are helpful, they're not a catch-all solution to foreclosures, said Bob Hubbell, CEO of Coldwell Banker Hubbell Briar-Wood Real Estate Co. in Delta Township.
"It's an epidemic," he said.
Ingham, Eaton and Clinton counties had 723 foreclosure filings in May, up 11 percent from April and about 8 percent from May 2009, according to RealtyTrac. Foreclosure filings include things such as notices of default and sheriff sales, and it's possible for one property to receive more than one filing in a month.
Hubbell said mortgage aid programs just delay inevitable foreclosures in some cases because many homeowners remain unemployed.
"It's not the solution," he said. "It's definitely a remedy, it's a benefit and I'm glad to see them take steps to help these folks."
Source: M Domsic Lansing State Journal
P4P Comment
For investors, in the short and medium term, paying this subsidy will reduce foreclosures coming onto the market in Detroit, our Michigan target area. Shortage of supply will push up further prices that have been rebounding from lows of early 2009. Purchase your American foreclosure property as soon as possible and remember, all the bad news is more than reflected in the price of your property, protecting against possible future price slump.
To often investors in property think only of possible price increase, forgetting the downside. With our USA repossessed property the price is way below even build cost and below currently depressed local valuation, so there's high inbuilt protection against price falls. But large upside on price increase. The best of both worlds, In fact.
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