The Michigan State Housing Development Authority made revisions at the beginning of this month to the state’s hardest hit funds programs to help underemployed homeowners who are having difficulty making their mortgage payments avoid foreclosure.
First, the nonprofit agency that provides financial assistance through public and private partnerships to create affordable housing for low-and moderate-income residents, created a new program for distressed borrowers who have fallen behind on their monthly mortgage payments.
Called the modification program, distressed borrowers can receive a maximum of $20,000 from the MSHDA. These funds are used to pay the delinquent amount so the lender can modify the existing mortgage terms in order to get the homeowner a more affordable mortgage payment.
Besides the new modification plan, three existing programs have also been enhanced in order to help qualified homeowners prevent foreclosure because of unemployment, underemployment, catastrophic medical costs, divorce and other life-changing events.
The first program augmented is the unemployment mortgage subsidy program. This program helps homeowners who are not working stay in their homes by paying monthly mortgage payments to the lenders on behalf of these individuals.
As part of the enhancement, this program now can provide up to $1,000 or 50% of a homeowners monthly mortgage payments each month for a maximum of a year. The homeowner is then responsible for the remaining portion of the monthly payment.
If a borrower is currently delinquent on this mortgage, the unemployment mortgage subsidy program may also contribute available funds that are not already reserved for the monthly payments towards the delinquent mortgage amount. The maximum program reservation has been increased from $10,000 to $20,000.
The second improvement was done to the mortgage loan rescue program, which provides assistance to homeowners who have fallen behind on their mortgage payments and need help catching up. The maximum program reservation was $10,000, but this has been increased to $20,000.
MSHDA said assistance is paid directly to the lender to be applied toward the delinquent amount. These funds can also be used toward second mortgage lien delinquency if the first mortgage account is documented as current and the borrower can continue to sustain both mortgage payments in the future.
Lastly, the principal curtailment program offers aid to those who are struggling to pay their mortgage payment and their current loan balance is higher than the value of their home. Maximum program reservation is $10,000 but require a one-to-one match from the lender to equal a total amount of assistance of $20,000.
These funds are used towards principal reduction so the lender can modify the reduced principal balance to get to a more affordable or sustainable payment, MSHDA said. The money can also be used toward second mortgage lien delinquency if the first mortgage account is documented as current and you can continue to sustain both mortgage payments in the future.
“Michigan has been doing an excellent job in getting relief to many of our residents who have saved their homes from foreclosure through MSHDA’s Step Forward Michigan programs,” said Gary Heidel, executive director of the Michigan State Housing Development Authority. “This newly approved program and existing program enhancements will allow us to take another step forward by providing the means for underemployed homeowners to stay in their homes.”
