How Do I Obtain Assistance from the Obama Foreclosure Prevention Funding?

On June 23rd of this year, the Obama administration announced that
Michigan had been selected as one of the five (5) hardest hit states
chosen to participate in funding for foreclosure prevention. The U.S.
Department of Treasury approved the plan to distribute $154.5 million in
federal funds as of July 12, and announced an additional $128,000 to be
available in October. The initial distribution of funds was estimated
to help more than 17,000 Michigan households avoid foreclosure. As of
August 11th, 70 households have received assistance, and as of August
21st, 150 are being considered.

Many clients are asking, how do I obtain this assistance? It is at
the discretion of the mortgage Servicer as to whether any of these
options is available to you. There are huge limitations as to who will
qualify for assistance, what types of assistance are available, in
addition to whether or not your Servicer is participating.

The options for help are:

If you are unemployed, there is the Unemployment Mortgage Subsidy
Program, which offers a 50% subsidy to your current mortgage payment. If
you have a second mortgage, which many people do, this will not impact
that payment at all. The subsidy is available for up to 12 months, or
when one returns to work, whichever comes first.

If you are behind due to a temporary disruption, and just need to
“catch up” on payments that have been missed, there is the Loan Rescue
Program. There is up to $5,000 available to homeowner’s who can now
afford their mortgage payment and just need to get current in order to
avoid losing their homes to foreclosure.

For those homeowners that are now “underemployed” the Principal
Curtailment Program provides up to $10,000, which is to be matched by
the loan servicer, in order to reduce the principal balance of the loan.
This program is targeted towards those homeowners with severe negative
equity in order to help them to afford their home going forward.

In an article recently published in the Detroit Free Press (see link
#1 below), it appears that most of the servicer’s participating in the
“Help for Hardest Hit Program” are small lenders. In particular, credit
unions. Since I work with struggling homeowner’s everyday, I know that
most of the mortgages being serviced in the Detroit Metropolitan area
are not small lenders. In addition, since we all know that most of the
borrower’s that are severally upside down (mortgage balances well above
what their home is worth), in the Detroit Metropolitan area, are not
going to be helped much by the maximum $20,000 principal reduction which
the program provides.

This program is being administrated by the Michigan State Housing and
Development Authority (“MISHDA”). By visiting the MISHDA website (see
link below) you can determine whether or not your Servicer is
participating. If your Servicer is participating, you need to contact
them directly.

http://www.freep.com/article/20100821/BUSINESS04/8210327/1002/NLETTER01/Small-lenders-are-offering-help-via-Hardest-Hit-Fund?source=nletter-business

http://www.michigan.gov/mshda/0,1607,7-141–235359–,00.html

http://emahoney100.wordpress.com/2010/08/22/how-do-i-obtain-assistance-from-the-obama-foreclosure-prevention-funding/