Michigan legislators approved using the $97.2 million received through the robo-signing settlement to help a still struggling housing market — as opposed to earmarking the money for other, unrelated initiatives.
The $25 billion settlement struck in March required the five largest mortgage servicers to pay the states $3 billion in fines with the rest going to modifications, refinancing and other relief.
Many states used the fines to fill budget gaps, despite urging from federal law enforcement officials to do otherwise. Other states, like Pennsylvania, used the settlement to expand or develop new programs for homeowners.
Michigan approved legislation to create a homeowner protection fund. Gov. Rick Snyder is expected to sign the bill.
The state will spend $25 million of the $97.2 million to eliminate blight. Almost all of the money will be put toward rehabilitating or demolishing vacant and abandoned homes in Detroit.
The Michigan state housing department will spend another $20 million from the settlement on free foreclosure counseling to borrowers falling behind on their payments.
Another $15 million will be granted to borrowers to put toward the purchase of a home. Military service members could get up to $5,000 in grants, with civilians getting up to $3,000.
Roughly $10 million will be used to improve the state’s lowest performing schools.
The bill also provides $7.5 million to pay restitution for victims of foreclosure rescue scams. Each person swindled by the scams could get up to $3,000.
Michigan Attorney General Bill Schuette will use $6 million to expand investigations into foreclosure-related crimes, according to his office. Schuette brought 28 such cases since 2009 and has 69 currently pending.
The state will use another $5 million to pay closing costs for Fannie Mae and Freddie Mac borrowers looking to refinance through the Home Affordable Refinance Program.
And $3.7 million will go toward developing affordable housing for low-income families.
“I am very pleased that Michigan citizens affected by the foreclosure crisis will finally begin to see some relief,” Schuette said. “Part of my job is to fight for and help people scammed and victimized by this crisis. This fund is part of a team effort to assist citizens throughout Michigan.”
jprior@housingwire.com
