January 11, 2008
January 11, 2008
LANSING - In her weekly radio address, Governor Jennifer M. Granholm today announced that she has met with representatives of the nation's leading mortgage servicers and received assurances that they will take a number of steps to protect homeowners facing possible mortgage foreclosure. The assurances include their willingness to freeze interest rates on Adjustable Rate Mortgages (ARMs) for up to five years in some cases. A recent report indicates that in Michigan, at least 82,000 loans were in foreclosure or seriously delinquent in the fall, with nearly 41,000 subprime loans scheduled to reset at higher interest rates this year.
"Across Michigan there are homeowners caught up in a national mortgage crisis that threatens their piece of the American dream," Granholm said. "Not only are we taking steps to protect homeowners, we have secured a commitment from some of the nation's top mortgage servicers to join us in this fight to help people save their homes and in some cases, freeze interest rates for up to five years."
Among the servicers who met with Granholm this week are Flagstar, Countrywide, GMAC, and Option One. Under the protocols discussed, the companies will:
- provide Michigan homeowners with alternatives to foreclosure;
- proactively reach out to borrowers in advance of their mortgage rates being reset to work out alternatives to foreclosure;
- for people who are in their homes and making timely payments at their original interest rate on a subprime loan but who cannot make the payment after the interest rate resets, the servicers will attempt to keep them at an affordable interest rate for up to five years;
- streamline the process for determining what borrowers qualify for loan modifications because they cannot reasonably be expected to make the higher reset mortgage payment;
- work with the state and the federal HOPE NOW program to implement home preservation programs and assist distressed borrowers who are behind in their payments to work out a plan going forward, if possible;
- work with the state to conduct outreach efforts to inform borrowers with subprime adjustable rate mortgages that they should contact their servicers if they believe they are at risk of losing their home because they cannot afford the higher interest rate payments on their ARM;
- work with the state to proactively identify methods to address issues surrounding those vacant and/or abandoned properties over which the lender or servicer has assumed ownership or control, including but not limited to ensuring that such properties remain in compliance with relevant property maintenance codes and appropriately streamlining the foreclosure process where necessary to avoid neighborhood blight.
The servicers have also agreed to make regular reports to the Michigan Office of Financial and Insurance Services on their efforts to reach out to consumers and successfully modify home loans in Michigan so home ownership is preserved.
This announcement is just the latest action in Granholm's ongoing effort to protect Michigan homeowners from possible mortgage foreclosure.
In addition to the agreement with the mortgage servicers, Granholm announced that she will ask state lawmakers to approve a supplemental appropriation of $1.4 million funded by fees to add 34 mortgage industry regulators overseeing the industry, including 19 examiners and additional enforcement staff to ensure that consumers are being protected in the mortgage lending process.
In October, Granholm announced plans to assist Michigan homeowners facing mortgage foreclosure by offering new refinancing options to protect their home ownership. The programs will be administered by the Michigan State Housing Development Authority (MSHDA) in conjunction with its Save the Dream public awareness campaign to help citizens avoid foreclosure. Specifically, the MSHDA initiatives are an ARM refinance program that will assist homeowners who have an ARM in refinancing to a lower-interest, fixed-rate loan and a rescue refinance program that will assist individuals who have a delinquency on their mortgage and who are at risk of losing their home.
Legislation authorizing MSHDA to implement the programs has been approved by the Michigan House of Representatives, and Granholm is calling on the Michigan Senate to act quickly on this legislation. The governor is also asking the Michigan Legislature to approve legislation that would regulate mortgage loan officers and bills that would prohibit predatory lending practices in Michigan. For more information on Save the Dream call 1-866-946-7432 or visit www.michigan.gov/savethedream
The governor's weekly radio address is released each Friday morning and may be heard on broadcast stations across the state. The address is available on the governor's Web site at
(www.michigan.gov/gov) for download, together with a clip of the quote above. The radio address is also available as a podcast on the Web site, as well as on iTunes and via RSS feed for general distribution to personal MP3 players and home computers. Links to the audio files and text of today's address follow.
Governor Jennifer M. Granholm
Radio Address on Mortgage Foreclosure
Friday, January 11, 2008
Full: http://www.michigan.gov/documents/gov/Gov127Full_221369_7.mp3
Edited: http://www.michigan.gov/documents/gov/Gov127Edit_221370_7.mp3
This is Governor Jennifer Granholm. Home ownership is the American dream. It's the very foundation of our communities. It's having that special place where you can raise a family. Owning a house means owning a special place that belongs to you - a special place that's home.
But as you know, our nation is facing a severe housing crisis. It's throwing the stock market and the U.S. economy into turmoil. And few are feeling the pain more than we are.
Here in Michigan, we know when families are driven from their homes, communities are destroyed and ALL of us lose. And, that's why we're working to save the dream.
That's why this week, I met with representatives of the nation's leading mortgage servicers to find solutions that'll protect consumers and homeowners. In our meeting, the mortgage servicers agreed to take a number of actions to protect homeowners facing possible foreclosure. Among other things:
- they'll hold down interest rates for some homeowners with adjustable rate mortgages who are making their payments on time - in some cases freezing the loan rate for up to five years;
- they'll offer advance notice to homeowners with subprime mortgages before their rates are scheduled to increase, so they can help homeowners avoid foreclosure.
In addition, these mortgage servicers are committed to working with us to identify methods to help control neighborhood blight, which results from so many foreclosures.
There are also some steps we are working on in state government to deal with this housing crisis.
We're ready to add 34 new state regulators to keep watch over the mortgage industry and protect consumers, including 19 examiners and additional enforcement staff to ensure that consumers are being protected in the mortgage lending process.
Last fall, I proposed - and the state House approved - a plan to give people facing foreclosure new refinancing options through the Michigan State Housing Development Authority. As this crisis continues to take its toll on Michigan families, I urge the Senate to move quickly and finalize this vital legislation to give options for families facing foreclosure; we want them to save the dream.
We've put in place a special program devoted to providing information on helping families save the dream. You can access that information by calling toll-free: 1-866-946-7432, that's 866-946-7432, or by visiting: www.michigan.gov/savethedream
Finally, to help people from getting into financial trouble in the first place, I have renewed my call for a ban on predatory lending practices in Michigan - a ban that is, again, awaiting legislative approval.
We will act, and we will act now to protect our neighbors and communities. We know our future and our Michigan way of life depend on it.
This is Governor Jennifer Granholm. Thank you for listening.
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