Michigan leaders are calling on credit unions and banks to help troubled homeowners in a new program that would funnel $154 million of Troubled Asset Relief Program funds to local lenders in an effort to keep troubled borrowers in their homes.
"Our state's biggest challenge is sustaining homeownership for unemployed and underemployed borrowers," said David Adams, the president of the Michigan Credit Union League, regarding the so-called Hardest-Hit Tarp funds, which also are being disbursed in the four "Sand States" (California, Nevada, Arizona and Florida).
"Michigan is in the midst of an historic remaking of our economy," Adams said. "Our state's biggest challenge is sustaining homeownership for unemployed and underemployed borrowers. This plan provides a blueprint for how Michigan credit unions, banks and policymakers can work together to help those who need assistance while transitioning to the 21st century economy."
Michigan's Hardest-Hit plan, announced last week, is aimed at homeowners who are getting unemployment benefits, have fallen behind in their mortgage payments or no longer can afford their mortgage payments.
It was developed in partnership with the credit union group, the Michigan Bankers Association, Michigan Association of Community Bankers, Michigan Association of Realtors and the Michigan Foreclosure Task Force.
Michigan had the highest unemployment rate in the nation in February, at 14.1%. It has had a 35% decrease in average home sale prices since 2005 and ranks fourth in underwater mortgages with 38% of properties having mortgage balances higher than their market value.
The state's program has three components: a grant to subsidize mortgage payments while the borrower is unemployed for up to 12 consecutive months, matching funds for lenders or servicers to forgive up to $10,000 of principal for underwater borrowers and a grant to help the borrower and lender or servicer craft a workout.
