LANSING – Stepping in where the federal government has failed to act, State Representative Mary Valentine (D-Norton Shores) and her colleagues in the House today passed an aggressive plan to fight the epidemic of foreclosures by establishing programs to allow homeowners saddled with risky adjustable-rate mortgages (ARMs), and those who have missed mortgage payments, to refinance and secure a fixed-rate loan. The plan, which will allow more Michigan residents to avoid losing their homes, is part of a comprehensive approach to help jumpstart the state's economy.
"The meltdown of the subprime mortgage market has had devastating effects for homeowners across Michigan, threatening our communities and the future of our great state," Valentine said. "Our new legislation will help protect our hardworking citizens and help keep families in their homes."
The plan allows at-risk low- and moderate-income borrowers – homeowners facing a spike in housing expenses due to their adjustable-rate mortgage, or residents who have already missed payments due to financial constraints – to secure a fixed-rated loan through the Michigan State Housing Development Authority (MSHDA). The agency provides loans financed through the sale of tax-exempt and taxable bonds and notes to private investors – not from state tax revenues.
The MSHDA program allows borrowers who meet income and credit score requirements to avoid dramatic increases in their housing expenses by securing a fixed-rated loan. It would allow homeowners who have missed payments on their adjustable-rate mortgages, and who are unable to work out an agreement with their lender to avoid a foreclosure, to apply for a fixed-rated loan.
Michigan ranks fourth in the nation in foreclosures, with 13,415 foreclosure filings in October, according to the latest figures from RealtyTrac, an Irvine, Calif.-based online foreclosure firm. That represents a 63 percent increase from October 2006.
"The devastating epidemic of home foreclosures hurts everyone – not just our residents who are about to lose their most valuable possession," Valentine said. "The key to building stronger neighborhoods, which in turn builds a stronger state, is to keep our residents in their homes."