Homeowner Assistance Fund's COVID aid disbursement nearly done

The majority of Homeowner Assistance Fund distribution appears to be done as it comes up on its third anniversary next month, and state housing agencies report they've made headway addressing processing issues.

Notably, the Pennsylvania Housing Finance Agency, which last year had to bring a process handled through a vendor in-house to address delays, reported Monday that it was able to get $10.7 million in funds to people who needed it last month, up from $9 million in December.

"We continue to make steady progress getting financial assistance into the hands of homeowners," said Robin Wiessmann, executive director and CEO of Pennsylvania Housing Finance Agency, in a press release.

The state, which has a total of $350 million to distribute, is continuing to work to ensure applicants are registered on the current system it's had in place since replacing its vendor.

Meanwhile, state distribution of the total $9.96 billion in HAF funds was reportedly at least two-thirds complete by the end of the third quarter, with $6.68 billion in assistance going to distressed homeowners, according to the latest report. That's up from a little over half in the second quarter.

Roughly half or 23 states had closed their programs at the time of this writing, suggesting that many have finished distribution, according to data from the National Council of State Housing Agencies. The NCSHA tracks the status of different jurisdictions' programs.

Processing delays and the lack of completed application submissions by program deadlines appear to have been the main efficiency challenges for the program, which has helped soften the impact of pandemic housing relief's wind down.

Numbers the Treasury tracks related to reasons for denials show "application not completed within program timeframes" was an issue for 39% of homeowners in the third quarter of last year.

Other than the 32% of homeowners denied for unspecified reasons, that percentage far exceeded numbers in the next largest categories: lack of a COVID-related hardship, 9%; income eligibility, 7%; and a lack of delinquency in states where that's a prerequisite, 6%.

Other reasons state programs denied homeowners included finding delinquency amounts were above program maximums at 3%; that properties were not primary residences at 2%; and principal amounts that were above the conforming limit at 1%.

Servicer ineligibility, at 1%, was particularly low, suggesting public directives to mortgage companies to accommodate HAF such as the Federal Housing Administration's, the Consumer Financial Protection Bureau's, and New York's have been broadly compelling to the industry.

While the states have allocated a significant portion of the funds to mortgage delinquencies and defaults or foreclosures, HAF funds may also cover other housing costs such as utilities.

The Treasury also added Property Assessed Clean Energy loans to the list of housing-related financial issues states may decide to allocate HAF funds to last year. 

PACE loans, which are used for clean energy home improvements like solar panels are super liens that travel with the property rather than obligations that stay with a borrower.

The American Rescue Plan Act established the Homeowner Assistance Fund in March 2021.

In addition to providing nearly $10 billion in assistance for homeowners, the plan allocated over $21.55 billion to rental relief in addition to other smaller allocations for other forms of housing issues.