The Detroit News: Mich. among states to benefit from $1.5B federal plan

Mich. among states to benefit from $1.5B federal plan

Help set for ailing housing markets

DEB PRICE
Detroit News Washington Bureau

Washington -- Financially strapped homeowners in Michigan and four other states with hard-hit housing markets could get help under a $1.5 billion federal plan announced Friday.

The program is targeted for states where the average price of homes has fallen by more that 20 percent from their peak.

The White House wants states to use the funds to help unemployed borrowers, those who owe more on their mortgages than their home is worth, and homeowners who have problems keeping current with either a second mortgage or a home equity credit line.

"Michigan is ecstatic about this," said Mary Townley, director of the homeownership division of the Michigan State Housing Development Authority. "We are anxiously awaiting how much will be allocated to Michigan. This is another tool we can use."

Michigan's average home prices have declined about 30 percent since early 2008, Townley said.

In two weeks, the Treasury Department will announce how much will be allotted to each state. State officials then will design individual plans on how to best help struggling homeowners.

Townley said until the state knows how much it will receive and develops its plan, she can't estimate how many Michigan families will be helped.

"Our plan of action is to look at what the needs are in Michigan, and then step back, and figure out how many households we can help. What's the most positive way to help Michigan residents," she said.

Townley said about 177,000 Michigan households are at least one month behind in their mortgage payments, meaning they face possible foreclosure.

Townley said the state will look at stabilizing prices in certain neighborhoods, for example, or challenged lenders.

"We're going to look at all angles," she said. "We are going to be creative."

In addition to Michigan, California, Florida, Nevada and Arizona are in the program.

"The goal is to target communities at the center of the crisis, and to empower local agencies who know these communities best to structure and tailor their programs in ways that are most responsive," President Barack Obama said Friday in Las Vegas, where he said home values are half of what their high mark was.

Obama officials told reporters that while the program is modest, it follows a series of steps by the administration to try to help people so they won't lose their homes during the recession.

The money will come out of $50 billion set aside for housing in the Troubled Asset Relief Program that's used to shore up financial institutions.

Gov. Jennifer Granholm welcomed the announcement.

"We're sure grateful that the Obama administration continues to recognize the many challenges facing Michigan," she said. "It is going to be very beneficial to families who are really struggling with potentially losing their homes."