Hardest Hit Fund: State Programs to Avoid Foreclosure


  • The Hardest Hit Fund operates in 18 states to help distressed mortgage borrowers.
  • Due to unemployment and drop in the value of homes many borrowers need help.
  • The HHF program helps borrowers get current, make monthly payments and reduce balance.
(1 Votes)

Getting Mortgage Relief: Hardest Hit Fund (HHF)

The housing crisis has affected American homeowners throughout the nation. The Obama administration started the MHA (Making Home Affordable program) in 2009 to help homeowners find foreclosure alternatives. Some of the main programs include the:

  • HARP refinance program
  • HAMP loan modification program
  • HAFA short sale program

However, certain states have been hit harder than others, experiencing bigger drops in home values, higher rates of foreclosure, and higher rates of unemployment. In response to these challenges, the Obama administration, under the directions of the US Treasury, instituted in Feb. 2010, the Hardest Hit Fund (HHF)  program, with an initial allocation of $1.1 billion of TARP funds over five states. Since then the program has been expanded to include 18 states and Washington, D.C. and over $7.6 billion of allocated funds. The HHF is operated by state HFAs (housing finance authority), which operate under different names. Each state has different programs, eligibility requirements, and amounts of funds available.

To help you find the right program to help you maintain your mortgage and avoid foreclosure, learn about:

  • Major HHF programs and goals 
  • Participating States and HHF program name
  • California's "Keep My Home California" HHF Program

Major Hardest Hit Fund Programs and Goals

The double-whammy of a drop in housing prices and loss of income, through unemployment or underemployment, makes it impossible for many homeowners to maintain monthly payments and/or sell their homes and pay off their mortgages.

The HHF program aims to help homeowners remain in their home, providing relief so they can make affordable mortgage payments on time. The programs vary by state, but include some or all of the following:

  1. Assistance to unemployed to make mortgage payments
  2. Assistance to reinstate delinquent mortgages.
  3. Reduce principal through principal reduction or curtailment programs so that the mortgage balance and payments are more affordable.
  4. Use funds to get rid of second mortgages and liens. 
  5. Provide funds to provide a smooth transition to a new more affordable home.

Most of the programs involve a 0% loan for a short period of time, which the borrower does not need to repay if they meet all the requirements of the program. Often the program involves registering a new lien on the property, although this requirement has been canceled in certain states, in order to help borrowers be eligible for MHA programs such as the HARP refinance loan and the HAMP modification program.

Lender participation is voluntary. Whenever you have problems with your mortgage, make sure that you speak to your servicer. However, don't just rely on the servicer for information about foreclosure avoidance programs.

Each state operates its own Web site with information about the types of programs offered, the eligibility requirements, and the amounts of funds available. Many of the sites warn consumers against falling prey to scams and unnecessarily paying for costly services.  Applying for an HHF program is free, so work directly with a state agency and housing counselor to avoid fees.

Participating States and Hardest Hit Fund Program

There are currently 18 states participating in the HHF program, under the auspices of state HFAs. Here is a list of participating states and links to their Hardest Hit Fund programs:

State with Link to Website Types of Programs Offered Funds Allocated (million)

Unemployment Mortgage Assistance  and Mortgage Reinstatement Program

$ 163
Arizona Unemployment Mortgage Assistance , Mortgage Reinstatement Program, and Short Sale Assistance $ 268
California UMA (Unemployment Mortgage Assistance), MRAP (Mortgage Reinstatement Program), PRP (Principal Reduction Program), and TAP (Transition Assistance Program) $ 2,795
Florida UMA (Unemployment Mortgage Assistance Program) and MLRP (Mortgage Loan Reinstatement Program), $ 1,058
Georgia Mortgage Payment or Reinstatement Program $ 339
Illinois Reinstatement Assistance and  Monthly Mortgage Payment Assistance $ 446
Indiana Benefit to Cover Monthly Payment on First mortgage, Benefit to Bring Mortgage Current $ 222
Kentucky UBP (Unemployment Bridge Program to help bring mortgage current) $ 149
Michigan Unemployment Mortgage Subsidy Program, Mortgage Loan Rescue Program, Modification Plan Program, Principal Curtailment Program $ 499
Mississippi Mortgage Assistance, Mortgage Assistance with Education, and Reinstatement Only $ 102
Nevada Mortgage Assistance Program, Mortgage Assistance Program Alternative, Principal Reduction Program, Principal Curtailment Program, Short Sale Acceleration Program, Second Mortgage Reduction Program, and Reinstatement $ 194
New Jersey Funds to Pay for Past Due funds and Monthly Mortgage Payments. $ 301
North Carolina Mortgage Payment Program, Second Mortgage Refinance Program $ 483
Ohio Rescue Payment Assistance (Help bring mortgage current), Mortgage Payment Assistance, Mortgage Modification with Contribution Assistance, Traditional Assistance, and Lien Elimination Assistance $ 570
Oregon MPA-U (Mortgage Payment Assistance - Unemployed), the LPA (Loan Preservation Assistance to help Reinstate Loans), and a LRAPP (Loan Refinancing Assistance Pilot Program in limited areas) $ 220
Rhode Island Help with Monthly Mortgage Payments, Pay for Outstanding Debt (including property tax), Obtain a Loan Modification, Relocate to Affordable Housing $ 79
South Carolina Monthly Payment Assistance, Direct Loan Assistance (to help with Reinstatement), and Transition Assistance $ 295
Tennessee Monthly Mortgage Payment Aid and Mortgage Reinstatement $ 217
Washington DC Lifeline Assistance (One time Payment to cover Mortgage Delinquency), Mortgage Monthly Payment Assistance, and Restore Assistance to Reinstate Loan $ 20

Many of the states have limited programs that deal with a very small amount of homeowners. Most states have programs for unemployed homeowners struggling to make payments. Lender (or Servicer) participation is voluntary and there is no solicitation by the lender, so you must be proactive to find out if you are eligible for the program.

Example: California's HHF Program - Keep Your Home California

California has the most funds allocated to its Keep Your Home California, an HHF program, established under California's HFA. Keep Your Home California has four main programs: 

  1. UMA: Unemployment Mortgage Assistance
  2. MRAP: Mortgage Reinstatement Assistance Program
  3. PRP: Principal Reduction Program
  4. TAP: Transition Assistance Program

The Keep Your Home California Web site includes an eligibility page. The programs are for homeowners suffering financial hardship. Here is what their Website states about eligibility:  

"Have You Suffered a Financial Hardship? In order to be eligible you must be experiencing a financial hardship that puts you at risk of default due to changes in household circumstance such as death, illness, disability, unemployment or loss of income. "

You may be eligible if you are suffering a financial hardship and: 

  1. Your home is your primary residence. 
  2. The home is in California
  3. You owe less than $729,750 on
  4. You receive your mortgage before January 1, 2010. (If your loan was originated after that date, you might still be eligible for all the programs except for the Principle Reduction Program.

Here are the steps to take if you want more information:

  • Gather your financial information including your current income and current monthly expenses. 
  • Get a copy of your mortgage statement that includes loan numbers. 
  • Contact the agency at 888-954-KEEP. 
  • Contact your servicer.

Struggling to make Payments – Look Beyond the HHF for Foreclosure Avoidance Programs

The HHF programs are limited in scope both in the type of help they offer, the number of borrowers that can participate and the number of participating lenders.  Not all . However, if you are suffering from a financial hardship, then you should seek the foreclosure avoidance program that best suits your financial situation.

The Basic solutions include:

  1. Refinance: Underwater borrowers should look into the HARP program (for Freddie Mac or Fannie Mae loans), FHA streamline (for FHA loans) and VA streamline loans (for VA loans. These programs require that you are current on your mortgages and have varying levels of credit and income requirements.
  2. Modification: If you are struggling to make payments and your home is underwater, then speak to the lender about a loan modification. The MHA program includes the HAMP program and some of the Hardest Hit Funds incorporate the HAMP program into their programs. Some of these programs include principal reductions. If you are in hardship, but can maintain your mortgage payments, then speak to your lender about a mortgage loan modification that includes a lower interest rate and lower monthly payment.
  3. Short Sale: If you can’t afford to pay the loan but can't sell your home because the sale price will not pay-off the loan, then speak to your servicer about a short sale or deed-in-lieu of foreclosure. The MHA HAFA program is designed to help homeowners who cannot afford their mortgages and are looking for a way to sell the property even though it is worth less than the balance of the loan.

Although the Hardest Hit Fund is very limited in scope, it is bringing relief to some homeowners in financial hardship, struggling to make their mortgage payments. If you live in one of the states offering the HHF program, then get advice directly through one of their counselors.

The Hardest Hit Fund Program is not intended to solve the housing problems, but to give aid and direction to some borrowers. If you are having trouble making your mortgage payments, make sure that you look into all the available options, in order to find the one best suited for you.

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