Michigan's Hardest Hit Fund Program

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

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 three 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 and underemployed homeowners.
  • The Loan Rescue Program, which helps homeowners catch up on missed loan payments, condo association fees, and/or property tax payments.
  • The Modification Plan Program, which helps homeowners who are struggling to sustain their monthly payment.

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 own the property and occupy it as your primary residence.
  • You have limited cash reserves no greater than $10,000.
  • You have the ability to sustain ongoing mortgage and/or property tax payments.

Home Eligibility Criteria

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

  • 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 or underemployed 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. Homeowners must have received unemployment benefits from Michigan's Unemployment Insurance Agency (UIA) in the last 12 month, or be able to document a 20% or greater reduction in gross household income.

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, condo association fees, and/or property taxes due to an involuntary hardship that caused them to fall behind.

Program funds can be used to reinstate a delinquent mortgage, condo association fees, and/or property taxes.

Additional criteria. You must be able to show that you had an involuntary qualifying hardship that caused the delinquency and have income necessary to sustain future payments. Eligible hardships include (among others) job loss, a medical condition, a reduction of gross income, death, divorce, or a one time critical housing expense that led to the delinquency.

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

Program Details: Modification Plan Program

This program is designed for homeowners who are having difficulty making their monthly payments. The program contributes funds toward a mortgage delinquency (if any) and/or principal curtailment, if the lender agrees to establish a lower sustainable mortgage payment by modifying or re-amortizing the loan.

Additional criteria. Homeowners must have had an involuntary qualifying hardship that caused the first lien mortgage payment to become unsustainable or have a severe negative equity position of greater than 115% loan to value.

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

How to Apply

Go to www.StepForwardMichigan.org and hit the “Apply Now” button to begin your online application.

For More Information

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.

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