Federal approval of state mortgage relief programs ramps up

Oklahoma, Rhode Island, Tennessee and Pennsylvania are the latest states to announce government approval of their homeowner assistance programs.

Following congressional passage of the nearly $10-billion Homeowner Assistance Fund in March, approval of state plans has come in slowly, picking up at the start of the new year. Funding, included as part of the American Rescue Plan Act, will be distributed by state governments, who had submitted their proposals to the Department of the Treasury throughout the spring and summer.

On Monday, Oklahoma, Rhode Island and Tennessee all unveiled their mortgage assistance plans, with the application process already open in each state.

In Rhode Island, several state officials lauded the launch of that state’s $50-million relief package, which makes up to $50,000 available for each eligible applicant. The state’s senior senator, Jack Reed, helped lead efforts to craft the Homeowner Assistance Fund in Washington last spring.

“This is another example of the federal government giving states the resources to cope with impacts of the pandemic — in this case, averting further problems in our already stressed housing market,” Reed said in a press statement. “Getting this money out the door quickly is imperative if we want to help families, neighborhoods and communities.”

Tennessee also announced that its $168-million package, which was approved by the Treasury Department last week, was open to eligible borrowers. The funding offers up to $40,000 per household to residents of the Volunteer State to help them eliminate or reduce past-due payments and other delinquent housing costs.

Oklahoma, which received word of its plan’s approval just before Christmas, introduced a package of just over $87 million on Monday as well, according to a spokesperson with the Oklahoma Housing Finance Agency. The financial aid program will provide Oklahoma homeowners with up to $20,000 in mortgage relief grants.

Last Thursday, Pennsylvania governor Tom Wolf announced that his state had received Treasury Department approval of a $350-million package to benefit homeowners. Borrowers in Pennsylvania will be able to apply beginning Feb. 1, with aid available for mortgage reinstatement assistance, forward mortgage payment and support for housing property charges and utility assistance.

“The Homeowner Assistance Fund will prioritize individuals and families with the greatest need, as well as those who are socially disadvantaged. I am grateful that the U.S. Treasury has approved Pennsylvania’s plan,” said Gov. Wolf.

Financial assistance available through the Homeowner Assistance Fund consists of disbursements made directly to mortgage servicers or other third-party billing agencies on behalf of struggling borrowers. Applications must have incurred financial hardship resulting in a significant loss of income after Jan. 21, 2020, and not exceed income-eligibility requirements, which vary by state.

Meanwhile, in New York, which obtained federal approval of its $540-million HAF plan last month, Attorney General Letitia James issued a consumer alert in several languages advising of potential scam attempts exploiting the fund. She previously sent out warnings to servicers in December that they need to ensure all available loss-mitigation options were made available to clients before federal grants can be applied.