More than 16,000 Michigan households are in line for aid to help stay in their homes and keep the lights on, but a bottleneck with the state agency approving the money means it’s taking several weeks for dollars to go out.
Earlier this year, a record high number of applications and a staffing shortage at the Michigan State Housing Development Authority, the agency responsible for distributing the money, caused the hold up. The delays could put strapped homeowners at risk of utility shutoff notices or mortgage foreclosures if the program doesn’t ramp up, housing counselors said.
In mid-February the state launched the Michigan Homeowner Assistance Fund, also known as MIHAF — a grant program for those behind on their mortgages and utilities, backed by $243 million in federal pandemic relief aid.
MIHAF offers up to $25,000 per household and is meant to keep Michiganders — including many who may not have been able to tap into other funds like one meant for renters — in their homes.
“Ultimately, the repercussions could be that people will lose their homes, they will be without lights, they will be without water, if we don’t find a way,” to accelerate the program, LaKesha Hancock, director of counseling and a HUD-certified counselor at Detroit-based U-SNAP-BAC, said last month.
The top needs Hancock has seen for MIHAF money include help to catch up on property taxes and electric and water bills, she said. Of the nonprofit’s 138 clients who applied for the program, five have been approved and moved to the funding stage, Hancock said.
“You have to think about what our families are struggling with right now,” said Stacey Tutt, a senior staff attorney with the National Housing Law Project. “Rental prices are skyrocketing across the nation and if a homeowner loses their home, the chances of being able to even find an affordable rental are slim in the current situation.”
Influx of applications
So far, the program has been sluggish, housing counselors say. It’s not entirely unexpected and they’re hopeful that it will pick up.
A statewide dashboard shows that 2,859 of applicants out of 22,845 — or 12% — were approved and funded as of Wednesday. Another 2,783 have been canceled, meaning the lender resolved the delinquency through a loan modification, partial claims or a household didn’t respond to requests for information. A little more than 900 have been denied because the household may have been above the income limit or MSHDA could not confirm occupancy or property ownership.
Meanwhile, about 71% of applications are still in queue. Of that, 12,764 are being reviewed and 3,504 are “conditionally approved,” meaning the lender or utility company has to confirm a delinquency.
Mary Townley, MSHDA director of homeownership, said that when the program first launched, a large number of applications came in but the agency didn’t have full staff yet.
“That has created a delay in us getting responses back to homeowners,” Townley said last week. “We are getting through that big influx that we received at the very beginning of the program, and we will start to see our turn times for reviews much shorter than they were in the past.”
MSHDA received more than 14,000 applications in February and March and had around 20 staff members. The numbers have since gone down to about 2,000 households in June that have applied. The agency currently employs 60 people and is looking to hire a few more, Townley said.
It can take about eight weeks to get approved and then up to 30 days to get funded. The timeline depends on how quickly servicers confirm delinquency, according to MSHDA.
“Between some process improvements and then being fully staffed, we should be able to get through any remaining bottleneck that we have,” Townley said. Those improvements, she said, include how staff are reviewing files.
The goal is to get funds out within 45 days, Townley said. As of Wednesday, MSHDA has spent roughly $20 million of its tranche of federal aid. The average household is getting about $7,000.
“We just weren’t prepared for such a volume that first six weeks of the program,” she said. It has since slightly “tapered off” but MSHDA is still getting a “fair amount of applicants every week.”
Aid lifted ‘a big weight’
Tyquima Mack, an east side Detroit resident, got caught up in that initial backlog. She applied March 1 and was approved in late June, she said.
Mack — a mother of seven — said she owed about $3,800 in property taxes for her home. The fines and fees added up, even before the pandemic. But she fell even farther behind on the payments in 2020 because of bills that piled up after Mack and her sisters’ families decided to live together during the pandemic.
She wasn’t working her health care job for a little over a year because she didn’t want to bring the virus back home, she said.
“When they decided to launch the MIHAF program for homeowners, that was a big weight off of our shoulders … that was something that we had to rush and get to,” Mack, 41, said.
Mack described the months between applying and being approved as a “waiting game.” She worried about the program running out of dollars before they got to her.
The Wayne County Treasurer’s office earlier this year announced that taxpayers who applied for the MIHAF program ahead of a March 31 deadline could protect their home from foreclosure.
Knowing that grant dollars are in the pipeline is a relief, she said. She can go to work without the pressure of having to make enough money to catch up on payments she’s behind on.
“I could work in peace now, instead of working stressfully,” Mack said.
As of last week, 562 out of 6,223 — or 9% — of Detroit households that applied have been approved and funded, according to MSHDA. The average grant amount is about $3,000. Help for property back taxes accounts for the bulk of approvals, followed by utility assistance.
Among Detroit households, 81 applications for mortgage assistance were funded, along with 16 land contract cases. Homeowners can get help on more than one type of need, according to MSHDA.
“In July, if MSHDA can’t get through their backlog, I think that you’ll start seeing more foreclosure filings,” said Beth Martinez, a HUD housing counselor and extension educator at Michigan State University Extension, a group helping people apply for MIHAF.
Martinez said last month that of MSU Extension’s nearly 200 clients for MIHAF assistance, less than 10% had been approved and funded so far.
Sylvia Saldana, assistant director of programs in housing stability services for the Wayne Metro Community Action Agency, said many homeowners are working with servicers to set up repayment plans and other agreements.
“Fortunately, servicers have been working with their borrowers and not foreclosing on their properties,” Saldana said in an email. “A challenge we do foresee in respect to the foreclosure timeline is the fact that forbearances are expiring and the length of time for applications to be processed can pose a challenge.”
Unlike other safety nets created to help renters hurt financially during the pandemic, MIHAF assists a range of vulnerable homeowners — including those with land contract homes — who had limited aid during the health crisis.
Marilyn Mullane, executive director of Michigan Legal Services, said there’s also concern for land contract cases in forfeiture proceedings in court that may not have been approved yet.
The court can either adjourn those cases if an application for MIHAF has been made or if MSHDA can make clear to providers and to courts that while applicants are being processed, forfeiture proceedings should not continue, she said.
The bottom line is that time is of the essence, housing counselors said.
“These clients are stuck between a rock and a hard place,” Martinez said.
Townley said that once an application has been “conditionally approved,” MSHDA submits a request to halt the foreclosure. Most lenders, she said, will stop the foreclosure but require more than a week’s notice prior to the foreclosure sale.
Slow rollouts nationally
In a plan submitted to the U.S. Treasury Department, MSHDA said that the MIHAF program would help more than 13,700 households in Michigan.
Out of the roughly 1 million mortgages serviced in Michigan, 3.7% were past due, according to MSHDA, citing survey 2022 data from the Mortgage Bankers Association.
The MSHDA brief to Treasury Department notes — citing data from the Federal Reserve and software company Black Knight — that mortgage forbearances are more common in low income areas than higher income communities. Delinquencies were also higher, MSHDA said, for loans in lower income neighborhoods and places with a large minority population.
Pandemic era forbearances are ending, housing experts said, and that’s why it’s even more important for programs like MIHAF to ramp up. What’s more, rising interest rates mean that loan modifications will not translate into reduced payments, according to the Federal Reserve Bank of Philadelphia.
Out of the 8.78 million mortgages in the U.S. that went into forbearance at the start of the pandemic, 15% are still not paying, the Philadelphia Fed recently reported.
“I can anticipate there will be more people that are in (foreclosure) because a lot of people went into these forbearances during COVID and as forbearances come to an end, there’s a lump sum due,” said U-SNAP-BAC’s Hancock, who also worked as a housing counselor during the last foreclosure crisis.
MSHDA works directly with the servicers, like mortgage or utilities, to get payments out. The agency has a list of what it calls its “participating partners.”
“A lot of lenders and utility companies and tax assessors are running out of patience and proceeding. They’re not waiting anymore, at which point this doesn’t become a solution,” Martinez, of MSU Extension, said.
Federally backed loans are pausing foreclosures for up to 60 days if someone applied for the assistance program, but program administrators have to notify the lender, said Sarah Mancini, staff attorney with the National Consumer Law Center.
“A third of homeowners don’t have any protection from foreclosure while they’re applying for (the Homeowner Assistance Fund),” she said. “The delays create a risk of people losing their homes when they could have gotten this assistance. It is so important for all the state programs, including Michigan, to ramp up the approvals and get them going as fast as possible.”
Townley said that MSHDA flags applicants who say they are at risk of foreclosure have gotten utilities shut off.
“It’s a timing issue,” she said. “If we can get our turn times down to that 45 days, and if homeowners can get to us a little bit more in advance of the foreclosure, it should work out for everyone.”
Alex Makohn, manager of homeownership assistance programs at Southwest Solutions, said the nonprofit has had some homeowners who have had sheriff sale dates set or shut off notices, and so a clear timeline is key.
Townley said MSHDA posts turn around times on its website.
“The logistics in trying to launch these programs across the nation have been a bit overwhelming,” Tutt said.
Michigan’s slow rollout is not unusual. That’s the case across the country, Mancini said.
“There’s still an opportunity to ramp things up and get more people approved faster,” she said. “But eventually the risk of that kind of delay is that people will end up getting foreclosed on while they’re waiting for help and that is what we do not want to see.”