Mortgage settlement legislation signed to help Michigan homeowners
Wednesday, August 1, 2012
LANSING, Mich. ‒ Michigan residents at risk of losing their homes due to faulty foreclosure processes and poor servicing of mortgages will get financial relief under legislation signed today by Gov. Rick Snyder.
House Bill 5015, sponsored by state Rep. Chuck Moss, provides $97.2 million in supplemental funds from a national mortgage settlement to the Fiscal Year 2012 budget. Michigan's share of the settlement will go to the Homeowner Protection Fund established in Senate Bill 1160, sponsored by state Sen. Tom Casperson, which Snyder also signed. The measures are now Public Acts 296 and 295 of 2012.
The fund will be used to help avoid preventable foreclosures, alleviate the effects of the foreclosure crisis, support law enforcement activities to prevent or prosecute financial fraud or deceptive practices, and to compensate the state for costs resulting from unlawful conduct of the defendants in the lawsuit.
"These funds will go a long way to help responsible homeowners who were defrauded by a few mortgage providers to mitigate the impact of the foreclosure crisis in Michigan," Snyder said.
State Attorney General Bill Schuette joined 48 other state attorneys general earlier this year in entering into a settlement with the five leading bank mortgage servicers. The settlement addresses allegations of faulty foreclosure processes and poor servicing of mortgages that harmed Michigan homeowners. The settlement also requires comprehensive reforms of mortgage loan servicing to improve customer service for Michigan borrowers.
"I am very pleased that Michigan citizens affected by the foreclosure crisis will finally begin to see some relief," said Schuette. "I value the leadership of Governor Snyder, Speaker Bolger, Majority Leader Richardville, Representatives Moss and Knollenberg, and Senators Kahn and Booher in fighting for Michigan families."
Residents who went through foreclosure with the participating banks from 2008-2011 may be eligible for cash payments. Current borrowers serviced by the banks may be eligible for loan modifications and other refinancing options.
The Homeowner Protection Fund will be used for the following eight initiatives:
- Foreclosure Rescue Scam Victim Restitution - $7.5 million. Many Michigan residents have fallen prey to foreclosure rescue scam artists who offered to help citizens save their homes. This fund will provide restitution payments of up to $3,000 per person for victims of foreclosure scams. Eligibility criteria to determine qualifying cases will be established at a later date.
- Assistance for Veterans - $5 million. The men and women who served our country also have been affected by poor mortgage servicing and foreclosure practices. These funds will provide targeted relief for military service members unable to qualify for existing programs.
- Michigan Attorney General Home Protection Unit - $6 million. These funds will allow the attorney general to ramp up investigation and prosecution of foreclosure-related crimes. This unit has brought charges in 28 cases since 2009 and there are approximately 69 cases currently under investigation. These funds will allow for additional investigators and prosecutors to combat foreclosure related crimes.
- Blight Elimination - $25 million. These funds will be dedicated to blight elimination efforts throughout Michigan. Detroit will receive $10 million for blight elimination in the city of Detroit and $15 million will be allocated for use throughout the rest of the state. Given that blighted property contributes to an environment conducive to crime, targeting blight elimination in these areas will further efforts to reduce crime. A pilot Neighborhood Revitalization project will kick off Aug. 2 in Detroit that taps these funds and centers on making schools the hub of the community.
- Foreclosure Counseling for Homeowners - $20 million. The Michigan State Housing and Development Authority (MSHDA) and Michigan State University Extension Offices will use these funds to expand their much-needed, free homeowner counseling services for citizens seeking to avoid foreclosure.
- Housing and Community Development Programs - $3.7 million. These funds will be allocated to the Michigan Housing and Community Development Fund which develops and coordinates public and private resources to meet the affordable housing needs of low- income households and to revitalize downtown areas and neighborhoods in Michigan.
- Grants to Help Homeowners Refinance - $5 million. These funds will allow MSHDA to provide grants to help pay the closing costs of citizens who use the Home Affordable Refinance Program. Eligible citizens will receive assistance paying closing costs associated with refinancing their home.
- Assistance to Homebuyers - $15 million. These funds will assist both service members and non-service members by providing grants to offset the purchase price of a home. Service members may be eligible for grants up to $5,000 and non-service members up to $3,000. Eligibility criteria to determine qualifying cases will be established at a later date.
HB 5015 also provides supplemental funding for various state programs. The Michigan State Police will receive $600,000 to support its Secondary Road Patrol program, and the state Department of Human Services will get $175,000 from the state General Fund and $702,100 in federal funding to reinstate specialized independent living rates to last year's levels.
More information on the 2012 Mortgage Settlement is available at www.michigan.gov/mortgagesettlement. Detailed information on the specific legislation is available at www.michiganlegislature.org.