LANSING – Stepping in where the federal government has failed to act, State Representative Mike Lahti (D-Hancock) voted for an aggressive plan to fight the epidemic of foreclosures by establishing programs to allow homeowners saddled with risky adjustable-rate mortgages (ARMs), and those who have missed mortgage payments, to refinance and secure a fixed-rate loan. The plan, which will allow more Michigan residents to avoid losing their homes, is part of a comprehensive approach to help jumpstart the state's economy.
"No one should have to go through the devastation of losing a home to foreclosure," said Lahti, a lead sponsor of the package. "During these difficult financial times, we must support our hardworking men and women as they struggle to make ends meet and pay their bills."
The plan allows at-risk low- and moderate-income borrowers – homeowners facing a spike in housing expenses due to their adjustable-rate mortgage, or residents who have already missed payments due to financial constraints – to secure a fixed-rated loan through the Michigan State Housing Development Authority (MSHDA). The agency provides loans financed through the sale of tax-exempt and taxable bonds and notes to private investors – not from state tax revenues.
"When a foreclosure notice is issued, it affects the entire neighborhood," Lahti said. "When homes are abandoned, property values plummet and crime goes up. By passing this plan, we are keeping our communities and neighborhoods safe and strong."
This plan builds on the Michigan Home Loan Protection Act, a legislative package announced this summer. The Michigan Home Loan Protection Act will:
- Ban predatory lending practices, such as encouraging borrowers to default.
- Protect consumers from being steered toward high-cost loans when they would otherwise qualify for a traditional loan.
- Give aggrieved homeowners legal recourse so they can independently enforce these consumer protections against unscrupulous lenders.