As one of the states hardest hit by foreclosures, the State of Michigan has taken action. Listed below are several programs and initiatives meant to help those Michigan citizens facing possible foreclosure.
ARM Refinance Program and Rescue Refinance Program
Governor Granholm announced a Michigan State Housing Development Authority (MSHDA) program on October 12th, 2007 aimed at “saving the dream” of homeownership for low and moderate-income families. The six bills that amend the Michigan State Housing Development Act were signed by the Governor on April 2nd, 2008. For a three-year period, the legislation authorizes the MSHDA to refinance (assist/make/participate) mortgages in addition to initiating home-purchase loans. The legislation also opens income and home-price limitations and authorizes a Recapture Tax Fund that can be used to reimburse homeowners for recapture taxes.
Financed through bonds, the MSHDA will partner with banks and other lenders to offer fixed-rate refinancing options at below-market interest rates. The loan amount can be equal to 100% of a property’s appraised value. For the refinance programs listed below, the income and home-price levels were raised considerably above the MSHDA guidelines for purchase loans. To qualify, a homeowner's household income must be under $108,000 and the purchase price of their home no greater than $224,500. In addition, homeowners must live in the property, have a good credit history and only use the loan proceeds to pay off existing liens against the property.
- ARM Refinance Program: Will help homeowners refinance an ARM to a fixed, 30-year loan.
- Rescue Reliance Program: The program is aimed at helping homeowners who are struggling to make their mortgage payments. The program offers more affordable refinance options. While the homeowner can have delinquencies -- no more than three 30-day late payments in the preceding 12-month period -- they must be current with their mortgage to quality.
Registration of Loan Officers
This republican initiated legislation was signed by the Governor on April 2nd, 2008 and amends the Mortgage Brokers, Lenders, and Servicers Licensing Act. It requires loan officers to register with the state, specifically the Office of Financial and Insurance Services, for greater accountability and regulation. Registration requires loan officers to complete 24 hours of live-classroom instruction in residential mortgage lending and pass an examination. Loan officers who operate without registering will be subject to criminal penalties.
The newly created Mortgage Industry Advisory Board will oversee the Office of Financial and Insurance Services (OFIS) in regulating the loan officers and make recommendations regarding course and examination contents. The legislation also expands the list of activities prohibited by loan officers and includes the failure to disclose information as required by law, the making of fraudulent statements and the use of misleading advertising. It also changes sentencing guidelines regarding violations.
Other Michigan Proposals:
- Home Loan Protection Act -- The bill was introduced on August 31st, 2007 and is addressed at predatory lending practices. It will ban some practices, require counseling for vulnerable borrowers and give legal recourse to homeowners.
- Extend the time period for property tax foreclosures from two to three years.
- Create a Michigan Homeowner Protection Fund from civil fines.
- Create a property tax exemption for homeowners at poverty level.
