Congressman Sander Levin

Housing

I have talked with families who have lost their homes to foreclosure and seen the consequences throughout our neighborhoods. The statistics in our area are deeply troubling. In May Michigan had the 6th highest foreclosure rate in the country. In just one month, 13,891 Michigan families received foreclosure notices, including 1,444 in Macomb County and 1,842 in Oakland County.

If you or someone you know is facing foreclosure or worried about your ability to make your mortgage payments, you should always contact your loan servicer to discuss your situation. You can also contact a HUD-approved housing counselor by calling 1-888-995-HOPE. To see a list of HUD-approved housing counselors in Macomb and Oakland Counties, click here. Call my office at 586-498-7122 for assistance working through these channels. Please don’t wait.

Addressing the foreclosure crisis that is devastating our neighborhoods goes hand-in-hand with restoring stability to the financial system and jumpstarting our economy. The Obama Administration and Congress have taken a number of steps to prevent foreclosures and revive the housing market.

Making Home Affordable and Hope for Homeowners

The Making Home Affordable and Hope for Homeowners program’s are part of the federal government’s comprehensive strategy to get the housing market back on track.

Through the Making Home Affordable Program, up to 9 million American families may be eligible to refinance or modify their loans to a payment that is affordable now and into the future.

The Home Affordable Refinance program is designed to help homeowners with solid repayment histories but who are unable to refinance due to falling home values get into a mortgage with payments that are affordable today and sustainable for the life of the loan.

The Home Affordable Modification program is designed to help financially struggling homeowners, including those who have fallen behind on payments, avoid foreclosure by modifying loans to a level that is affordable now and sustainable over the long term. The program provides incentives to modify loans, as well as clear and consistent modification guidelines.

Visit www.makinghomeaffordable.gov for more information or click here for my office’s fact sheet on Making Home Affordable.

The Hope for Homeowners was designed to refinance mortgages for borrowers who are having difficulty making their payments, but can afford a new loan insured by the Federal Housing Administration (FHA). Unfortunately, this program has only been used refinance a very small number of mortgages since it was created last July. I voted for the Helping Families Save Their Homes Act, which was signed into law on May 20th. This new law makes important improvements to Hope for Homeowners, including incentives for lenders to modify loans similar to those in Making Home Affordable. These improvements are to be implemented in the coming weeks, and are widely expected to make the program much more useful. Please check back for additional information as it becomes available.

First Time Homebuyer’s Credit

The American Recovery and Reinvestment Act included an $8,000 tax credit to help eligible first-time homebuyers purchase a home. The tax credit is equal to 10% of the purchase price of the home (up to $8,000), fully refundable, and available through November 30th, 2009. In addition, Housing Secretary Shaun Donovan announced on May 29th, that the Federal Housing Administration would allow homebuyers to apply the tax credit against their down payment when buying a home with an FHA-insured mortgage.

Mortgage Reform

I believe that to avoid a repeat of this housing crisis, we must address the irresponsible, and in some cases predatory, lending practices that significantly contributed to the wave of foreclosures devastating our neighborhoods. On May 7th, the House of Representatives overwhelmingly approved the Mortgage Reform and Anti-Predatory Lending Act . Most basically, this bill says that you can’t write a mortgage that a consumer cannot reasonably afford to repay, and you can’t steer them from an affordable mortgage to an unaffordable one.

Neighborhood Stabilization Program

I believe it’s also critical that even as we work to prevent foreclosures, we help our communities cope with those that have already occurred. Foreclosed properties lower surrounding property values and are a drain on already stretched local budgets. The Housing bill enacted last summer provided $3.92 billion in “Neighborhood Stabilization Program” or “NSP” funds for state and local governments to purchase and redevelop abandoned and foreclosed homes and residential properties. The Department of Housing and Urban Development (HUD) allocated a total of $263.6 million to Michigan, the third largest total nationwide behind Florida and California. Local communities are beginning implementation of the program now.

In our area, each community is deciding how best to address foreclosed homes in its neighborhoods. For instance, the City of Southfield is emphasizing acquiring and rehabilitating foreclosed homes for resale. Clinton Township has emphasized down payment assistance. I recently had the opportunity as part of my local cable show to discuss the foreclosure crisis and the Neighborhood Stabilization Program with the officials in these two communities responsible for implementing the program.

The American Recovery and Reinvestment Act provided an additional $2 billion to be distributed to state and local governments on a competitive basis. These additional grants will be awarded based on communities’ capacity to execute projects, potential to leverage grant dollars, and concentration of investment to achieve neighborhood stabilization.

(Updated June 21, 2009)