Community Development Advocates of Detroit
Mortgage Service Foreclosure Settlement Talking Points
CDAD strongly supports Michigan Attorney General Bill Schuette’s recommendation to allocate $20 million
of Michigan’s $97 million settlement to support foreclosure counseling and legal services.
1. The Foreclosure Settlement Dollars were intended to be used to respond to the foreclosure crisis that
continues to devastate our state. To date, our state has suffered:
A. $63 billion loss in property value between 2006 and 2010
B. 416,000 foreclosure filings between 2005 and 2010
C. Increase of 211,000 vacant homes between 2000 and 2010 Censuses
The only responsible and legally acceptable use of the settlement funds is for purposes directly combatting
foreclosure.
2. A single foreclosure is estimated to cost an average of $78,000 while preventing that same foreclosure is
estimated to cost $3,300. (Joint Economic Committee of the U.S. Congress)
3. Free Certified foreclosure mitigation counseling and legal services have proven to be the most cost-effective
means we have of preventing foreclosures. Specifically:
A. A nationwide study of the foreclosure mitigation counseling program found that borrowers who had
missed a payment on their mortgage were 45 to 50 percent more likely to get up-to-date on payments
if they received counseling.
B. Homeowners in default who received counseling were twice as likely to avoid foreclosure as those
who did not in a study of the Mortgage Foreclosure Prevention Program in Minneapolis.
4. Funding to support Michigan’s free foreclosure mitigation counseling and legal services has never been
adequate to meet the need. Despite this, funding—even at the minimum levels—has dried up as the crisis
has persisted. The proposed $20 million appropriation from the Mortgage Servicer Foreclosure Settlement
spread across the next four years is absolutely necessary to maintain the current levels of these costeffective and critical services.
CDAD also strongly supports the recommendation to allocate $16 million of Michigan’s $97 million
settlement to support mortgage fraud and foreclosure rescue scam efforts as follows:


$10 million for foreclosure rescue scam victim restitution
$6 million for AG Home Protection Unit for investigators, prosecutors, and super counselor to assist
homeowners.
For the past four years Michigan has ranked in the top five states in the country for these fraudulent activities,
costing thousands of homeowners their last few dollars and their homes. Allocating $16 million of the settlement
will provide some restitution for these victims and sorely need person power to investigate and prosecute the
perpetrators.
CDAD supports the recommendation to allocate 10 percent ($9.7 million) of Michigan’s $97 million settlement
to support the Michigan Housing and Community Development Fund.
1. The key areas targeted by the program are financing downtown and neighborhood improvements to make
them attractive places to live and do business, and financing affordable and market-rate housing for young
people, immigrants, early retirees and people with low and moderate incomes. Settlement funds would help
local real estate markets that have been devastated by the foreclosure crisis.
2. In its year of funding (FY08), projects awarded leveraged $1 of MHCDF to $11 of public/private sources
($2,163,400 appropriated; $24,041,009 investment leveraged).
3. Thousands of jobs were created generating millions of dollars in state and local taxes.
4. The fund was endorsed by more than 25 statewide trade organizations representing more than 5,000
members.
5. The mortgage servicer settlement directs that the joint state-federal foreclosure settlement funds paid to the
states be used for issues relating to foreclosure and housing including “housing remediation and anti-blight
projects” and the MHCDF would fall within that categorization.