Michigan Fights Foreclosures

Oct 14th, 2007 @ 4:54 PM by Alden Smith

Michigan is taking aim at foreclosures and is fighting to help people stay in their homes.  The financial picture in Michigan is not good, with the nation’s highest unemployment rate. According to the real estate information company RealtyTrac Inc, Michigan is currently 4th in the US for number of foreclosures. Statistics show that Detroit and its suburbs are probably the hardest hit area of Michigan.  This does not bode well for Michigan’s economy.

What The Parties Are Doing

Democrats, including State Governor Jennifer Granholm (D, MI), are hoping that their plan will help homeowners facing foreclosure secure fixed rate home loans when they have been stuck with riskier adjustable rate loans or have missed mortgage payments. In a recent statement, Gov. Granholm said “In this tough economy, we need to assist hardworking Michigan families who are falling victim to mortgage foreclosures.” The Republicans are offering new plans to try and help homeowners battle the fast growing issue of foreclosure.

How House Democrats See It

Here is their plan.  The Democrats plan is for making loans available through the Michigan State Housing Development Authority (MSHDA). Borrowers who qualify would be allowed to refinance their mortgages through the agency at fixed rates.  The plan is to allow homeowners to refinance their current ARM’s at a lower fixed rate.  MSHDA accomplishes this by providing loans financed through the sale of taxable and tax-exempt bonds and notes to private investors, not from tax revenues according to Democrats.  Homeowners would have to meet MSHDA guidelines by proving that household income is under $72,250. The home’s purchase price can’t top $216,750.

The Republican Plan

Republicans of course have a different plan.  Their idea is to require registration of individual loan officers to help provide more accountability and responsibility in mortgage lending.  Any loan officer would have to register with the state’s Office of Financial and Insurance Services. Standards would be set for registrations and employers would have to do criminal background checks.  The Republican proposal would specify prohibited loan officer conduct, including false advertising or misrepresentation in any transactions.  Sen. Randy Richardville, a Republican from Monroe, said that “buying a home is one of the most important financial decisions an individual can make. It is important that homeowners be reassured that their mortgage loan officer has the proper qualifications.”

Michigan is obviously on the right track.  The economy in Michigan is such that putting these proposals in effect without a lot of bipartisan squabble will certainly help put the state on the road to better recovery.