June is National Homeownership Month: Part 2

Today’s housing market is in recovery, but many Michigan homeowners are still struggling.

June is National Homeownership Month. The U. S. Department of Housing and Urban Development (HUD) is celebrating by recognizing the critical role owning a home plays in communities across America and the success of several government programs. Today’s housing market is in recovery, but many Michigan first-time homebuyers and homeowners are still struggling. Read June is National Homeownership: Part 1 to read about the situation of home buyers, and in this article, let’s take a closer look at what is happening with homeowners.

The nation’s most affordable homes sought by first-time homebuyers are also the most likely to be underwater, according to a recent report by Zillow. This means about one-third of homeowners with a mortgage are unable to sell their homes for enough profit to afford down payments on new ones and comfortably pay selling expenses. The negative equity situation is causing a drag on the housing market recovery because it constrains inventory of available homes, especially those most affordable at the lower end of the market.

Foreclosure starts have eased off and are at lower levels compared to 2005. Unemployment rates have also gone down in recent years, according to the Bureau of Labor Statistics, which makes homeownership attainable and sustainable to make mortgage payments.

In Michigan, however, homeowners continue to struggle with underwater mortgages. Realty Trac reports today that 38 percent of Michigan homeowners owe at least 25 percent more on their mortgages than their homes are actually worth. Michigan trails only Nevada, Illinois and Florida for the percentage of home mortgages that are deeply underwater. The good news according to Realty Trac’s Daren Bloomquist is that more homeowners in those states may be underwater on their mortgages, but home values are also rising faster than in Michigan.

Since 2010, Step Forward Michigan has provided assistance to eligible struggling homeowners who are behind on their mortgage and/or property tax payments. This assistance can be up to $30,000. This program has already helped thousands of Michigan homeowners statewide who have had qualifying involuntary hardships to be able to keep their homes. More funds are still available and are expected to run out in about a year. Qualifying involuntary hardships include unemployment, underemployment, medical conditions, and a few other exceptions. If approved, up to $30,000 is paid directly to the participating mortgage servicer or county treasurer to be applied directly to the household’s mortgage loan or property taxes.

“This is a wonderful program. Most of our housing clients are receiving Step Forward funds in recent months and several have received $30,000”, said Jim Buxton, Housing Counselor with Michigan State University Extension. “It enables them to keep their homes instead of going through foreclosure. We help them fill out the application, submit all the required documents, and follow-up until a decision is made. Once they get their payments caught up, they can also apply for a loan modification through their lender.” See my June 3 article for a description of each Step Forward Michigan program.

Go to StepForwardMichigan.org to start an application or contact your local MSU Extension office with a housing counselor. In other areas, find a housing counselor through the MSHDA Counseling Search.

If you are wondering about your financial health, take a financial health survey from MI Money Health to get your financial health score! It is confidential and your answers never connect back to your name. This survey can help you evaluate your current financial situation, provide ideas on how you may improve your financial health and connect you to resources in your local community.

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