 On July 30, President Bush signed the Housing and Economic Recovery Act of 2008 (H.R. 3221). This new housing bill was created in response to the national foreclosure crisis that has had a particularly strong impact on a few key states, including Michigan.
The foreclosure numbers have continued to be poor in our state as the year has progressed. RealtyTrac recently released their newest set of foreclosure data, providing a look at what direction the housing and mortgage situation has taken in Michigan during recent months. According to their report, one in every 137 Michigan households received a foreclosure filing during the second quarter of 2008, the nation’s seventh-highest state foreclosure rate. With foreclosure filings reported on 32,868 properties during the second quarter, Michigan notched the fifth highest total among the states. One in every 66 households in the Detroit metro area received a foreclosure filing during the quarter, ranking No. 12 among metro areas.
Though Michigan has been hit especially hard, across the country some 2.2 million borrowers are expected to face the threat of foreclosure in the next few years. The Housing and Economic Recovery Act allows the Federal Housing Administration (FHA) to refinance $300 billion worth of subprime mortgages, and includes a number of other modernizations to the FHA.
Separately, it was also announced on September 7 that the Federal Housing Finance Agency (FHFA) had taken over mortgage industry giants Fannie Mae and Freddie Mac, both government-sponsored enterprises (GSEs). Serving as conservator, the FHFA will assume all power of the Board and management. Both the MCUL and CUNA see the federal action as a step toward lowering mortgage rates and providing strength to the U.S. housing market.
It bears repeating that credit unions’ history of responsible lending and personal service has kept the industry from contributing to the current housing crisis, but credit union members are not immune from the threat of foreclosure. Some provisions of the new Housing Act will provide benefits to credit unions and their members who have been affected by the nationwide slump.
The MCUL is working to determine what these new housing laws, along with the federal takeover of Fannie and Freddie, will mean specifically for Michigan credit unions and their members. Overall, both CUNA and the MCUL have supported the creation of the new Housing Act and the modernization of the FHA, but it is important for credit unions to be aware of any of the bill’s provisions that could have an impact on their lending or their members’ individual mortgage situations.
In the coming weeks and months as the new, national refinancing program becomes operational, the MCUL will remain in constant communication with member credit unions via our Web site, e-mail communication and publications regarding its effects and how credit union members could benefit. In the meantime, credit unions are welcome to contact the MCUL with any questions they may have.
Credit unions remain strong, secure and well-capitalized financial institutions in the midst of a number of economic issues facing Michigan and the rest of the country. While most credit unions have avoided the problems stemming from subprime lending, they may be able to benefit from the Housing and Economic Recovery Act, and the MCUL will remain a resource for information on this sweeping new legislation.
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Regulatory Affairs
