Michigan's Hardest Hit Fund Program

Michigan’s Hardest Hit Fund program, called Step Forward Michigan, has four different programs to help struggling homeowners.

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In 2010, the U.S. Department of the Treasury created the Hardest Hit Fund to provide targeted aid to homeowners in those states most affected by the housing market crash. As part of this program, Michigan received over $498 million to provide assistance to homeowners who are struggling to make their mortgage payments. Read on to learn about the different types of help available through Michigan’s Hardest Hit Fund program, called Step Forward Michigan, and find out if you may be eligible for assistance.

(To learn more about the Hardest Hit Fund and the various state programs funded by it, visit our Hardest Hit Fund topic page.)

Step Forward Michigan

Step Forward Michigan has four programs designed to assist homeowners who have endured a financial hardship. The programs are:

  • The Unemployment Mortgage Subsidy Program, which provides mortgage payment assistance to unemployed homeowners.
  • The Loan Rescue Program, which helps homeowners catch up on missed loan payments and/or property tax payments.
  • The Modification Plan Program, which helps underwater homeowners that may have fallen behind on their mortgage who are struggling to sustain their monthly payment.
  • The Principal Curtailment Program, which provides funds to underwater homeowners to pay down the principal balance of their loan.

Homeowners can participate in only one of the programs.

How Step Forward Michigan Works

Assistance is provided in the form of a 0% interest, forgivable loan secured by a junior lien that is recorded against the property. No payments are required from the homeowner and the loan is forgiven at 20% per year so long as the property remains your primary residence for five years. At the end of five years, the lien is released.

Borrower Eligibility

To be eligible for Step Forward Michigan assistance, you must meet all of the below criteria.

  • You are a Michigan resident and a legal U.S. citizen or a legal alien.
  • You occupy the property as your primary residence.
  • You have experienced a qualifying involuntary hardship (such as job loss, reduction of income, medical condition, death, divorce, disability, one-time critical expense, etc.)
  • For mortgage assistance, you do not have more than six months of mortgage payments cash reserves.
  • For property tax assistance, you have no more then 1.5 times the annual property tax amount available in cash reserves.

Home Eligibility Criteria

Additionally, your existing mortgage and the property securing the mortgage must meet the below criteria.

  • The property is a single-family home, condominium, or a one-to four unit dwelling (if you occupy one unit as your primary residence).
  • The property is not abandoned, vacant, or condemned.
  • The property is not currently listed for sale.
  • The unpaid principal balance is not more than $729,750.

Mobile or manufactured homes are eligible if on a foundation, permanently affixed and taxed as real estate. Mobile homes located in a mobile/manufactured home park are not eligible. Learn more about what happens if you are struggling to pay your mobile home loan.

Program Exclusions

You are not eligible for the Step Forward Michigan program if one of the below conditions applies to you.

  • You filed bankruptcy and the bankruptcy is active, unless you obtain permission from the bankruptcy court and your lender agrees to accept the funds during the bankruptcy. (If you previously filed bankruptcy and it was dismissed or discharged, then you are eligible to apply for the program.)
  • You have been convicted of a mortgage-related felony such as larceny, theft, fraud, forgery, money laundering, or tax evasion, within the last ten years.
  • A foreclosure sale has been completed.

Servicer Participation

Servicer participation in the program is voluntary. (A mortgage servicer is the company that collects monthly mortgage payments from borrowers on behalf of the owner of the loan, as well as tracks account balances, manages the escrow account, handles loss mitigation applications, and pursues foreclosure in the case of defaulted loans.) All assistance funds are sent directly to the servicer on behalf of the homeowner so the servicer must agree to accept the funds.

To find out if your servicer is part of the Step Forward Michigan program, go to www.stepforwardmichigan.org and click on “Participating Partners.”

Program Details: The Unemployment Mortgage Subsidy Program

This program provides monthly mortgage payment assistance for an unemployed homeowner up to the lesser of:

  • $1,000 or
  • 50% of your monthly mortgage payment.

The homeowner must pay the remaining portion of the monthly payment. If you are delinquent on your mortgage, you can also receive funds to pay the past-due amount and reinstate the loan.

Additional criteria. The homeowner or their spouse must actively be receiving State of Michigan unemployment benefits at the time of application and be able to sustain their portion of the monthly payment.

The maximum duration of assistance is 12 months and the maximum amount allowed per household is $30,000.

Program Details: Loan Rescue Program

This program helps homeowners who are delinquent on their mortgage payments and/or property taxes due to an involuntary hardship that caused them to fall behind.

Program funds can be used to:

  • fully reinstate a first mortgage delinquency
  • reinstate the first mortgage delinquency and make a contribution toward past due property taxes, or
  • reinstate a second mortgage lien delinquency only or contribute toward past due property taxes only, if the first lien mortgage is current.

Additional criteria. You must be able to show that you can now sustain your mortgage and/or property tax payments.

The maximum amount of assistance available per household is $30,000.

Program Details: Modification Plan Program

This program is designed for underwater homeowners who have fallen behind on their mortgage and are having difficulty making their monthly payments.

Program funds can be used to:

  • pay the past-due amount, and/or
  • make a contribution toward the unpaid principal balance to reduce the negative equity.

Additional criteria. The lender must agree to provide the homeowner with a loan modification that has a more affordable, sustainable payment.

The maximum amount of assistance available per household is $30,000.

Program Details: Principal Curtailment Program

This program is also geared towards underwater homeowners. Program funds are used to make a contribution toward the unpaid principal balance to reduce the outstanding balance of the first mortgage. These funds can also be used to reduce the balance of a second mortgage lien if the first mortgage account is current.

Additional criteria. The lender must agree to modify the existing mortgage terms to provide the homeowner with a more affordable, sustainable payment.

The maximum amount of assistance available per household is $10,000 and requires a one-to-one match from the lender, so the total amount of assistance available is $20,000.

How to Apply

Go to www.StepForwardMichigan.org and hit the “Apply Now” button to begin your online application. You will need to complete the seven-step online application, which consists of:

  • homeowner information
  • contact information
  • property information
  • lender information
  • a financial worksheet
  • a hardship letter, and
  • printing the application.

Have the following documentation handy:

  • recent pay stubs or other documentation of income (such as unemployment compensation)
  • monthly mortgage statement
  • second mortgage or home equity line of credit statement (if applicable)
  • most recent income tax returns, and
  • checking and saving account statements.

After you have printed out the completed application and submitted it, an advisor will contact you to go over the application and let you know what will happen next. The approval process typically takes approximately 30-60 days.

For More Information

As of the end of November 2013, Michigan has distributed only 29% of its designated funds. If you would like more information about Step Forward Michigan, you can call 866-946-7432 or fill out the contact form at www.stepforwardmichigan.org/contactus.

Updated by: , Contributing Editor

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