Help for Hardest Hit Programs (H4HH)

Federal Help for

Homeowners • February 19, 2010, President Obama announced $1.5 billion in funding for innovative

measures to assist families in states hardest hit by the aftermath of the housing crisis

• Michigan was selected as one of the first five states to share in this fund; our initial allocation was $154.5 million

• Since then we have received additional funding for a total of $498.3 million

• Funding must be within guidelines set forth in the Emergency Economic Stabilization Act (EESA); TARP funds

• Distributed directly to an eligible financial institution, Michigan Homeowner Assistance Non-Profit Housing Corporation (MHA)

Federal Help for Homeowners

• MHA acting through MSHDA began accepting homeowner’s applications from the Participating Lenders/Servicers on July 12, 2010.

• MSHDA continues to work closely with US Treasury and our lender servicers to revise programs that will provide assistance to hardest hit Michigan residents.

Help for Hardest Hit

Programs Michigan’s three programs offered are:

- Unemployment Mortgage Subsidy- Loan Rescue - Principal Curtailment

Programs were designed to help Michigan’s residents maintain homeownership during periods of job loss or other involuntary hardships

H4HH Targeted Homeowners

• Homeowners currently receiving unemployment compensation

• Homeowners who have fallen behind in their mortgage payments or taxes due to a one-time, involuntary crisis such as a temporary layoff, medical emergency, or divorce

• Homeowners who can no longer afford their mortgage payments due to lower income and need a principal curtailment due to a severe negative equity position

H4HH Eligible Properties• Located in the State of Michigan

• Existing one family, single unit homes; includes condominiums (attached or detached)

• Existing manufactured homes on permanent foundation affixed to real estate (single & doublewide)

• No second homes or investment properties

• Multi-unit properties are not eligible even if owner-occupied

H4HH Program Eligibility Requirements

• Borrower eligible for only one of the three H4HH programs

• Borrower must occupy property as their primary residence

• Borrower must be obligated on the original mortgage note

• Maximum existing unpaid principal balance of $729,750 • Liquid cash assets cannot exceed 3 months total PITI

(includes all subordinate liens) based on their 60 day average balance

General H4HH Eligibility Requirements

• Servicer H4HH Participation Agreement required• Servicers participating in HAMP must follow HAMP

existing guidelines• Servicer should follow their existing loss mitigation

policies and incorporate H4HH assistance as needed to reach a sustainable housing payment (PITI)

• Generally, a sustainable PITI should range between 25% to 43%, after assistance, using all income disclosed within the intake/loss mitigation packet

H4HH Loan Terms• A secured subordinate lien (mortgage and note)• 0% non-amortizing loan, forgivable over a 5 year term,

20% per year• Original mortgage & note sent to MSHDA for recording

and retention• MSHDA will pay recording fees

• New title policy is not required

• MSHDA is not required to be added as a loss payee on insurance policies

Unemployment Mortgage Subsidy

• Eligible borrower must be receiving Michigan unemployment benefits at time of application; borrower does not have to be currently delinquent to be eligible

• Maximum payment subsidy is lesser of $750/month or 50% of the required PITI (first lien position); maximum benefit per household is $9,000

• Borrower’s remaining portion of housing payment should be sustainable; within 25% to 43% range

• Subsidy amount cannot be used to pay down borrower’s housing ratio below 25%

• Approved subsidy amount will not be increased or decreased after commitment is issued and funded (i.e. change in escrow payments)

H4HH Loan Terms

• Due on sale or refinance of existing mortgage, or when the property is no longer the borrower’s primary residence

• If existing 1st mortgage is refinanced, MSHDA will not subordinate H4HH lien

• Servicer may not charge the borrower any fees to participate in H4HH programs

• Servicer will not be compensated by MSHDA for participation

Unemployment Mortgage Subsidy• Borrower must continue to remit their portion of the monthly payment

as due. MHA subsidy will cease if borrower’s portion of payment is delinquent over 30 days

• Borrower responsible for notifying MSHDA when unemployment status changes

• Once borrower returns to work, assistance provided for an additional two months, not to exceed 12 month maximum

• If loan is presently delinquent, servicer may request up to $3,000 in additional assistance to correct the delinquency

• If assistance is not sufficient to bring loan current, servicer must choose a plan to correct the delinquency balance: forbearance, forgiveness, or repayment

Loan Rescue Program• Homeowners must document a one-time, involuntary crisis that

resulted in mortgage delinquency (i.e. loss of wages, illness, divorce)

• Homeowners must document a “recovery” from the crisis and ability to sustain the mortgage payment going forward

• Up to $5,000 in assistance; used to pay delinquent payments or escrow shortages

• Assistance cannot be used to pay servicing fees (i.e. late fees, NSF fees)

• Assistance is allowed on 2nd lien as long as1st lien is documented as presently current

Principal Curtailment Program

• Homeowner must have severe negative equity; greater than 115% CLTV of current market value

• Homeowner must have had a decrease in income and needs a principal curtailment to reach a sustainable payment

• Provides a one-time assistance of up to $10,000, which the servicer must match (not a forbearance) at a minimum of 1:1 ratio

• Loan modification is required to re-amortize the lower outstanding loan balance

• If loan is presently delinquent, servicer must provide stabilization or workout plan to remedy delinquency within a reasonable time period not to exceed 12 months

Principal Curtailment Program

• Assistance on 2nd lien is eligible if the 1st mortgage is current and at 100% or higher LTV of current market value

• After funds are applied, CLTV cannot be less than 115% and 1st lien cannot be reduced below 100%

• H4HH lien is not to be used in CLTV calculations on this program

H4HH Process Flow

• Borrowers may only apply for assistance through their existing servicer; they may not apply directly to MSHDA

• MSHDA’s website will maintain a list of participating servicers; servicers will be added once the executed Participation agreement is received & approved

• Program product specifications and all required submission documents are available at www.michigan.gov/mshda under the Lender tab, Tools and Resources

H4HH Process Flow• Servicer reviews homeowner’s request for H4HH funds

and follows their normal loss mitigation process

• If you are participating in HAMP, you must follow their guidelines

• Servicer determines eligibility for H4HH and will submit applications to MSHDA either by mailing to 735 E Michigan Ave., Lansing, Michigan 48912 or via email savethedream@michigan.gov

H4HH Process FlowAfter Receipt of application package, MSHDA acting on

behalf of the MHA, will follow this process:

• Date stamp application package upon receipt; FUNDS AVAILABLE ON A FIRST COME, FIRST SERVE BASIS

• Review borrower eligibility and contact servicer with status via email: - Requesting clarification and/or additional documents - Approve request & issue Commitment - Notice of Action Taken

H4HH Process Flow

• Funds will be sent directly to servicer at time of commitment on both the Loan Rescue and Principal Curtailment programs

• On the Unemployment Subsidy program, the subsidized mortgage payment will be sent directly to servicer on the next due date and scheduled subsequently for the duration of the assistance; reinstatement assistance will be sent within 24-48 hours

• Servicer has 30 days from commitment date to return executed mortgage note, mortgage and any other required trailing documents including evidence that funds were applied as approved

• MSHDA will send mortgage for recording and absorb recording fees

Sign Participation Agreement

Submit application for time stamped reservation

Assign to technician for review within 24-48 hours

Application Approved Application Incomplete Application Declined

Commitment Letter Issued

Application Funded

Trailing Docs to be submitted within 30 days

Quarterly reporting for LR and PC programs, monthly reporting for UMS

program

Technician contact requesting additional items (email). 5 days to

respond

Notice of Action Letter Issued

Submitting the Request Documentation Package (all programs)

• Mortgage Loan Profile (print screens)• Borrowers intake/loss mitigation application (

HAMP form or similar form)• Evidence obligated on Note• Mortgage history (12 month)• Hardship Affidavit (HAMP or internal form acceptable)

• H4HH 003 Borrower’s Authorization• H4HH 001 Request for H4HH Commitment• H4HH 002 Loan Work Out Plan

Submitting the Request

Additional Submission Documents (per program)

Unemployment Mortgage Subsidy:

• Evidence of unemployment

• Breakdown of reinstatement request, if applicable

Submitting the Request

Additional Submission Documents (per program)Loan Rescue:

• Breakdown of amount of rescue assistance requested

• Terms of Modification Agreement (unexecuted copy), if applicable

• Evidence 1st mortgage is current if requesting assistance for 2nd lien (credit report or current 1st mortgage statement is acceptable documentation)

Submitting the RequestAdditional Submission Documents (per program)Principal Curtailment:• Appraisal or BPO documenting current market value

(paid by lender or borrower)• Title search to document all current liens• Provide current outstanding balances for all liens (recent

credit report acceptable documentation)• Terms of Modification Agreement (unexecuted copy)• Proof 1st mortgage is current if requesting assistance on

2nd lien (recent credit report or mortgage statement acceptable documentation)

Trailing DocumentsServicer must submit within 30 days of commitment the following documentation:

• Copy of H4HH Commitment letter• Original fully executed and notarized Mortgage (MSHDA

will record)• Original fully executed Note• Evidence funds have been applied as approved;

including servicer’s match (Principal Curtailment only)• Copy of executed Modification Agreement, if applicable

Post Closing/Continual Reporting

Post Closing/Continual Reporting:

• Servicer provides continued monthly loan status reporting on each loan as required by the US Department of Treasury (12 months from date of last assistance received)

Audit:• MSHDA has contracted a third party vendor to randomly select 10%

of servicer’s closed files for post closing audit

• MSHDA will provide selected files to vendor for review

• Servicers will be provided a copy of auditor’s finding if necessary

H4HH Contacts

Katy Twining: 517-241-0722; twiningm@michigan.govChris Blank: 517-373-0517; blankc@michigan.gov

Help for Hardest Hit TechniciansValerie Dikeman: 517-373-8120; dikemanv@michigan.govJamie Guardiola: 517-241-2935;  guardiolaj@michigan.gov Ryan Koenigsknecht: 517-241-7455; koenigsknechtr@michigan.gov Carolyn Kundrat: 517-335-2028; kundratc@michigan.gov Stacey Place: 517-241-1604; places1@michigan.gov

Questions

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