July 30, 2008
LANSING - Governor Jennifer M. Granholm today said that the Housing and Economic Recovery Act of 2008 signed into law this morning by the president will help Michigan families facing foreclosure, stabilize credit markets, and prevent further decline of property values. Granholm joined with her fellow governors, housing advocates, and many members of Michigan's congressional delegation in advocating for this bill that will help hundreds of thousands of Americans keep their homes while providing additional support for the struggling national economy.
"This bill will help Michigan homeowners and communities avoid further foreclosures, eliminate blight, and create jobs," Granholm said. "These new tools will help protect our families from losing their homes in this tough economy."
The centerpiece of the landmark housing bill is a new federal insurance program to help borrowers with troubled subprime and adjustable rate mortgages refinance into fixed-rate mortgages.
The bill also establishes a new neighborhood stabilization program that designates $3.9 billion in grants to states and local governments. Michigan's share of those grants could total as much as $168 million. The grants may be used to rehabilitate or demolish already foreclosed properties and establish land banks and new financial mechanisms for the purchase of foreclosed homes. In Michigan, this funding could be used to rehabilitate up to 6,000 properties and create 3,400 jobs. Earlier this month, Granholm and 15 other governors sent a letter urging Congress to include this funding in the final legislation.
Additionally, the legislation contains tax incentives, including a one-time $7,500 tax credit for first-time home buyers, grants to states and cities to manage foreclosed properties, and $180 million for pre-foreclosure counseling programs.
According to a recent Pew Center Study, more than 91,000 Michigan homeowners had loans in foreclosure or at least 90 days past due at the end of 2007. Experts predict that up to 1.4 million Michigan homes that neighbor a foreclosed home could experience a decrease in property value in 2008-09.
The new federal insurance program parallels the Save the Dream program in Michigan, which Governor Granholm signed into law in April this year to help troubled borrowers refinance into stable, fixed-rate loans through the Michigan State Housing Development Authority.
The new neighborhood stabilization funds compliment Governor Granholm's Cities of Promise initiative, which targets poverty and blight in eight Michigan cities. The legislation authorizes the federal government to provide temporary financial assistance to Freddie Mac and Fannie Mae, which hold approximately $5 trillion in mortgages in their portfolios and have suffered significant financial turmoil in recent weeks. The bill also increases oversight of these entities.
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