subject: U.S. government sanctions $155 million to prevent foreclosures in Michigan [print this page] U.S. government sanctions $155 million to prevent foreclosures in Michigan
U.S. government sanctions $155 million to prevent foreclosures in Michigan
Michigan homes saw a decline in prices by 20% or more in 2009 due to the increased number of foreclosures and Metro Detroit was one of the hardest hit areas where home values dipped to as low as few hundred dollars. Many homeowners working at the three motor companies fled the state in search of new job opportunities and a number of cheap foreclosure properties were created because many homeowners could not pay back the mortgages as they lost jobs.
These foreclosure properties were offered at one-fourth the market price by the banks to investors and many overseas investors invested in bulk buying to own cheap properties. Foreclosure properties had been a drag on property prices and therefore, the government offered to invest $154.5 million in Michigan to prevent mortgage defaults. A total of 1.5 billion has been sanctioned by the U.S. government to prevent foreclosures in five states which includes Michigan, California, Nevada, Arizona and Florida. According to the new plan Arizona will receive $125.1 million, Florida $418 million, California $699.6 million and Nevada $102.8 million.
Home values in these five states has decreased by an average of twenty percent and after the allocation of initial round of funds the government will allocate $600 million to cure unemployment in these states. The plan was submitted to get approval from the Treasury Department in the month of April and to qualify to get the benefit from the new program, the home owner should live in the house and pay the mortgage amount for the next five years, otherwise, the homeowner will have to pay back the money.
About $99.8 million has been sanctioned for the Unemployment Mortgage Subsidy program in which the government will pay half of the mortgage amount for the unemployed workers and the upper limit for the amount is $750 per month.
$15.5 will be given for the Loan Rescue Program, in which, the government will pay $5,000 to the homeowners to pay back mortgages, and $30.4 million will be given for the Principle Curtailment Program, in which, the homeowners can refinance the mortgages and $10,000 will be provided to the homeowners through the program. The amount will be provided to the people who owe more in mortgages than their home's worth.
The steps will prevent further foreclosures in the state and will provide relief to unemployed as it is found that 57% of the mortgage delinquencies were caused by job loss and the latest plan will not only benefit unemployed but also underemployed borrowers. The funds will help more than 17,000 Michigan households by preventing foreclosures which includes 11,000 families that are even drawing the unemployment benefits.
