Ally to reduce mortgage principal in Michigan
Ally Financial (GJM) will participate in a program designed by the Michigan State Housing Development Authority to provide modifications and principal reductions. The MSHDA received $154.5 million in June 2010 from the Treasury Department's Hardest Hit Fund. A total of $1.5 billion was given out to various states hit hard by the foreclosure crisis. "We are participating in the Michigan program and that state's modification program involves principal reduction. We will participate in the programs as allowed by investors," said Ally spokesman James Olecki. Ally does not own 95% of the mortgages in its servicing portfolio. According a report the MSHDA sent to the Bank of New York Mellon (BNY) as required by the Treasury, 232 borrowers have applied to the program as of January. Of those, 69% have been accepted into the program, though none have received principal forgiveness. In March, BofA introduced programs that would provide modifications, some including principal reduction, for 8,000 Arizona households. This program, too, used Hardest Hit dollars. Ally did not disclose how many loans it is targeting with its participation in the Michigan program. Write to Jon Prior. Follow him on Twitter @JonAPrior.