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Mich. housing assistance plan aims to help jobless

06-07-2011

LANSING, Mich. (AP) — Michigan's plan to spend nearly $155 million in federal housing assistance could help an estimated 17,000 homeowners avoid foreclosure, state officials said Wednesday.

Michigan was one of five states selected for extra federal assistance earlier this year because they have been hardest-hit by the housing crisis. Michigan officials turned in their plan for spending the money to the Obama administration on Wednesday.

State officials expect Michigan residents could start applying for the help by mid-June if the proposal is approved by the federal government. Homeowners would apply through their lenders, but the applications will be submitted to state housing officials for approval.

A list of participating lenders is not yet available. State officials say they are hopeful all lenders will participate rather than risk losing money through foreclosures.

The Michigan plan would offer assistance to homeowners receiving unemployment benefits. Those who qualify could get half of their monthly mortgage paid for through the program — up to $750 a month for up to a year.

The plan also would help homeowners who have fallen behind on payments because of a temporary layoff or a medical condition. Homeowners could get up to $5,000 in assistance under this portion of the program.

A third piece of the program could provide up to $10,000 from the state — plus a match from a lender — to reduce the amount of principal owed on a home. That feature is designed for homeowners who have jobs but have lost income.

"It's a very large amount of funding, but it is not enough to help every family in Michigan," said Mary Townley, director of the Michigan State Housing Development Authority's homeownership division. "It's a great start. ... It's one more tool in the tool box to help families in need."

There are no specific household income limits for the program, but state officials say the amount and type of assistance will be limited to the hardest-hit families.

Michigan was selected as one of the states eligible for the program in February. States have been given some flexibility to determine how the money will be spent, but the Obama administration must approve the plan before it can begin. That process could take several weeks.

State housing officials estimate about 5.5 percent of Michigan's money will be eaten up by administrative costs.

The program overall will provide about $1.5 billion to housing finance agencies in California, Arizona, Florida, Nevada and Michigan.

 

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