Crash in Housing Relief Program

The Michigan housing relief program is battling technological failures to help homeowners. The first day unemployed homeowners could apply for relief to pay their home mortgages, the telephone lines and computer systems were so over-loaded they crashed.

Housing Finance Agencies in five states are getting $1.5-billion in relief from the Hardest Hit Fund program started by the White House to help unemployed mortgage holders pay monthly payments. Agencies in California, Florida, Nevada and Arizona are also targeted for aid.

bank owned home

The Hardest Hit Fund may help up to 17,000 Michigan unemployed and underwater mortgage borrowers stay in their homes with the $154.5-million in federal funding that has been targeted for the state. The aid is being handed out on a first come first serve basis.

The program was just launched in hard hit Michigan, one of the state’s with the highest unemployment rates in the country due to lay-offs in the auto business and new home construction. By 10 a.m. Tuesday telephone lines were so jammed with callers hoping to apply for relief that the phone system went down after more than 30,000 callers got through to ask about aid.

The Michigan State Housing Authority website, which lists banks that are participating in the program, also had intermittent problems staying online as homeowners hoping for relief bogged down the site. Neither Bank of America, which absorbed defunct Countrywide Mortgage with one of the highest foreclosure rates in the nation nor Citibank are listed in the voluntary government program.

State officials caution applicants that they must first apply through their lenders for the Michigan program. Interest in the program has been elevated because funds will pay $5,000 to $10,000 in mortgage payments or half of payments for a maximum limit of one year.

Funds are available to mortgage holders who have been laid-off temporarily or have lost jobs due to medical reasons. Principal mortgage reductions for homeowners who are unable to afford mortgage payments could also be matched under the program, cutting a principal balance on a mortgage up to $20,000.

Mortgage relief for the unemployed is also being offered as part of Congress’ Financial Reform legislation for loan holders at risk of losing their homes, which is expected to be approved by Congress. The plan is modeled after a Pennsylvania program, authored by Congressman Chaka Fattah (D-PA) that will dedicate $1-billion in funds to assist homeowners from the Troubled Asset Relief Program (TARP).

However, getting aid to unemployed homeowners facing the possibility of foreclosure has been anything but quick in most areas of the country.  California has been targeted to receive relief to aid unemployed mortgage holders having trouble making payments. However, the program being administered by the California Housing Finance Agency is not expected to start taking applications until at least November, according to Ken Giebel of the agency.

“We’re hiring an outside contractor to put together the structure to provide the program,” said Giebel. “Systems must be put in place and many operational details need to be hammered out.”