In the latest unwinding of the mortgage crisis, Michigan Attorney General Bill Schuette and other participating state Attorneys General entered into a settlement with the five leading bank mortgage servicers. The National Mortgage Settlement (NMS) provides monetary sanctions and relief as well as mandating comprehensive reforms in mortgage loan servicing. Michigan received $97.2 million for the purpose of creating the Homeowner Protection Fund. A portion of these funds were appropriated by the Legislature to Michigan State Housing Development Agency (MSHDA) for the new Homebuyer Assistance Grant Program and the HARP Refinance Program.
Fifteen million dollars has been allocated for the Homebuyer Assistance Grant Program. This program will assist first-time homebuyers purchasing a single-family/one-unit, owner-occupied, principal residence located in Michigan. Eligible first-time homebuyers are defined as a person who has not owned a home as their principal residence for three years prior to the date of purchase.
Homebuyers are eligible for grants up to $3,000. Active military and veterans are eligible for grants up to $5,000. An active military member defined as a member of the U.S. Armed Forces or National Guard and Reserves. Grant funds may be used with any first lien mortgage transaction and can be combined with MSHDA's Down Payment Assistance. Neither grant can exceed 25 percent of the purchase price. There are no income, asset or purchase price limits. The grant does not have to be repaid. Michigan residents who wish to apply for these grant funds should notify their lender that they wish to apply for National Mortgage Settlement grant monies.
Additionally, $5 million has been allocated for the Home Affordable Refinance Program (HARP). Borrowers applying for HARP may be eligible to receive $500 toward closing costs. These grant fund support the refinancing of single-family/one-unit, owner-occupied and principal residences. Residents interested applying for these funds should notify their lender.
First time home buyers may also wish to consider taking a home ownership class in order to prepare for this major purchase. While this is not a requirement for these new programs the information covered in the Michigan State University Extension Home Ownership Seminar will assist you in navigating the home buying process. This class is six hours long over three evenings and covers topics including: shopping for a home, obtaining a mortgage loan, understanding your credit report, managing your money as a home owner and the importance of a home inspection.
Too busy to attend a class in person? Consider our on line session with Michigan State University Extension eHome America. This low-cost fee based class can be taken anywhere at any time via your computer.
Michigan State University Extension is a MSHDA and HUD certified Housing Counseling Agency, dedicated to serving the financial and homeownership needs of the residents of Michigan.
(Article written by: Jean Lakin, Michigan State University Extension)