The NeighborWorks Alliance of Tennessee

What is the Hardest Hit Fund?

If you’re an unemployed or significantly underemployed Tennessee homeowner and are struggling to pay your mortgage, you can now receive forgivable loans through the Hardest Hit Fund Program — a free U.S. Treasury program administered in Tennessee by Tennessee Housing Development Agency (THDA) and accessible through NeighborWorks Alliance of Tennessee.

The Hardest Hit Fund Program provides loans of up to $40,000 to cover mortgage expenses for up to 36 months. These funds may be used to pay past-due, current and future monthly payments on mortgages and mortgage-related expenses such as property taxes, homeowner insurance and homeowner dues.

Program applications are handled by THDA partners, including NeighborWorks Alliance of Tennessee, a statewide consortium of NeighborWorks America-chartered, non-profit organizations. The Alliance is comprised of Affordable Housing Resource in Nashville, Knox Housing Partnership in Knoxville and United Housing in Memphis.

Am I eligible?

  • The Hardest Hit Fund Program provides loans to underemployed (income reduced by 30% or more) or unemployed Tennesseans who, through no fault of their own, are unable to make mortgage payments and at risk of foreclosure.
  • Homeowners previously unemployed or underemployed who are delinquent due to arrearages (overdue payments accumulated during such period) are also eligible for the Hardest Hit Fund Program.
  • Homeowners who are now on disability may be eligible.
  • Borrower eligibility criteria for the Hardest Hit Fund Program include:
    • Applicants must provide a financial hardship affidavit with appropriate documentation
    • Unemployment or underemployment must be through no fault of their own
    • Unemployment of underemployment must have occurred after January 1, 2008
    • Homeowners must have a history of timely mortgage payments with no more than two instances of delinquency
    • Principal, interest, taxes and insurance must be greater than 31% of household income after reduction of income
    • Borrower must have no more than six months of reserves to cover mortgage payments
    • Borrower’s income must be below $92,680
  • Property eligibility criteria for the Hardest Hit Fund Program include:
    • Balance on house cannot exceed $275,000
    • House must be a Tennessee owner-occupied, primary residence
    • Houses are limited to existing single-family homes or condominiums (attached or detached), including manufactured homes on foundations permanently affixed to real estate

How do I apply?

Potentially eligible homeowners can apply for the Hardest Hit Fund Program through NeighborWorks Alliance of Tennessee by calling 888-588-9129. You will need to provide income, unemployment and mortgage
delinquency information.

To connect with us online, please contact the representative for your region.

What happens after I apply?

  • After an initial phone consultation, a representative of the NeighborWorks Alliance of Tennessee meets with you to complete loan origination documents.
  • NeighborWorks Alliance of Tennessee certifies all required information and submits these documents to THDA for underwriting. Loan underwriting takes approximately 30 days.
  • Once underwritten, the homeowner closes the loan with NeighborWorks’ assistance at a NeighborWorks office, local bank or at the borrower’s designated location.

How does the loan work?

  • Payments are made monthly by THDA directly to the mortgage provider. Funds for overdue payments are disbursed at closing.
  • Loans are 0% interest, non-recourse, deferred-payment, forgivable and subordinate.
  • The forgiveness clause reduces annually the loan amount by 20% of the original, full loan amount for every year the borrower stays in the home up until five years. At this point, the loan is considered repaid and the lien securing the note is released.
  • If the property is sold, refinanced or no longer owner-occupied and sufficient equity proceeds are available, the loan balance is due and payable.
  • Should homeowners become reemployed, they may continue receiving assistance for up to an additional two months after reemployment. If homeowners become reemployed but mortgage payments still exceed 31% of their income, assistance can continue up to the appropriate maximum of 12 or 18 months.

Potentially eligible homeowners can apply for the Hardest Hit Fund Program through NeighborWorks Alliance of Tennessee by calling 888-588-9129.

To connect with us online, please contact the representative for your region.