May 14--WASHINGTON -- A new federal effort to help respond to foreclosures in Detroit was announced Tuesday even as U.S. Rep. John Conyers asked a former colleague and Obama administration official to impose a six-month moratorium on foreclosures on certain properties in the city.
No response to the Detroit Democrat's plea immediately came from Mel Watt, the new director of the Federal Housing Finance Agency (FHFA) and a former member of the U.S. House. In a speech Tuesday, Watt, who was confirmed in December, announced a pilot program to begin in Detroit to respond to foreclosures.
The Neighborhood Stabilization Initiative would include two ways to stem foreclosures inside the city limits: one allowing homeowners to be evaluated for loan modifications and another allowing severely delinquent loans to be transferred to nonprofit organizations, which could "work with seriously delinquent owners to determine the most feasible outcome," the agency said.
For properties already foreclosed on, the initiative includes other strategies, including giving nonprofit organizations an opportunity to acquire certain properties through purchase -- and then helping to determine whether they should be repaired, demolished or donated to another owner -- or putting some properties up for auction.
Sometime after the program begins in Detroit in the coming weeks, the agency hopes to take the program to other cities with lessons learned there.
FHFA -- which regulates Fannie Mae and Freddie Mac, government-sponsored enterprises that help provide home financing -- did not immediately answer questions about how many properties in Detroit could be impacted or about funding for the program.
Conyers, in a letter to Watt, asked him to consider directing Fannie Mae and Freddie Mac to "impose a 6-month moratorium on foreclosures of" their guaranteed mortgages for any homeowner who was current on his or her payments prior to Detroit's filing for bankruptcy last year.
He pointed out that the government has enacted moratoriums on foreclosures in the past, including after Superstorm Sandy. While Detroit "has not suffered a physical disaster, it has been forced into its current fiscal situation ... by factors well-beyond city residents' control," Conyers said.
Contact Todd Spangler: 703-854-8947
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