The MCUL has been aggressively looking for ways to address Michigan’s foreclosure crisis. Early in 2008, an MCUL Foreclosure Response Team was formed to look at ways that the MCUL and Michigan credit unions might address the challenges created by the rising number of foreclosures. Given the complexity of the problem, easy solutions are hard to find — and at times it seems like we keep running into brick walls rather than finding meaningful solutions.
On April 29, Realtytrac, a leading authority on nationwide foreclosure data, reported that U.S. foreclosure activity was up 23 percent from the previous quarter and more than 112 percent from the first quarter of 2007. This equates to one in every 127 households being in some stage of foreclosure during the first quarter of 2008. Michigan ranked 7th overall with one in 153 households and more than 29,000 homes in foreclosure during the first quarter of this year, up 24 percent from 2007. However, Detroit continues to rank as one of the hardest hit metropolitan areas, ranking sixth worst with one in every 68 households in some stage of foreclosure.
The MCUL has identified several ways to assist credit unions in addressing the foreclosure crisis. While we had hoped to form some kind of “cooperative risk fund” to help address the lack of affordable private mortgage insurance, it doesn’t look like that type of solution is anywhere close on the horizon. We have just found it too difficult to find appropriate risk mechanisms to help form this fund. Some of the challenges have included a lack of interest by the banking community, the lack of public funds at the state and federal levels and the growing financial stress on credit union balance sheets. As a result, we have decided to focus our efforts in the following areas:
Economic Solutions Council — We will ask the MCUL CRI Economic Solutions Council to be the collaborative body that will help us identify appropriate areas of focus for credit unions’ individual and collective foreclosure responses. This group will identify further activities in areas of adult education, counseling, support for MSHDA programs and possible new loan products that might help address higher-risk borrowers’ needs.
MCUF Foreclosure Research — The Michigan Credit Union Foundation (MCUF) has already commissioned Grand Valley State University to conduct comprehensive research that will be helpful for understanding the seriousness of the foreclosure crisis; the profile of those facing foreclosure; and possible remedies for financial institutions as well as other public/private groups.
Financial Education Council — Another group that reports to the CRI Committee is the Financial Education Council. This Council will work with MCUL staff to develop and expand specific adult education and counseling programs that will prove helpful as a preventative strategy.
MSHDA “Save the Dream” Programs — The MCUL has already been actively involved in the creation and rollout of MSHDA’s “Save the Dream” programs as a foreclosure response tool. We remain concerned about the heavy reliance on PMI and the limitations of this program, but we will continue to work with MSHDA and the State of Michigan to see if we can improve upon these programs so that they can reach more troubled homeowners.
Continuing Mortgage Lending Summits — During 2008, the MCUL has already held two separate Mortgage Lending Summit meetings. These Summit meetings have brought together the leaders of Mortgage CUSOs and credit union leaders active in mortgage lending. We hope that through regular follow-up meetings, we can identify new tools and strategies to help credit unions address the foreclosure crisis.
Active Support for Meaningful Legislation — The MCUL has been active in its support for federal and state legislative remedies that might help alleviate the mortgage and foreclosure crisis. We will continue to do this. The FHA Modernization and Housing Stabilization legislation sponsored by U.S. Rep. Barney Frank, D-Mass., is just one example. We will continue to actively lobby for good solutions for credit union mortgage lending and foreclosure response activities.
We have known all along that this growing foreclosure problem would not have a simple and easy solution. There may well be many different fronts from which we can work to meet this challenge. I would encourage every credit union that is involved in mortgage lending to share ideas and actively participate in some of these forums.
Improving Michigan’s economy, which includes addressing the foreclosure crisis, is something that credit unions must be a part of. It is good for members, good for the communities we serve and good for the future of our state and its people.
Keywords: credit union, economic, economy, foreclosure, mortgage