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At-Risk Owners Struggle to Get Pandemic Aid

Federal pandemic bills include funding to help at-risk owners avoid foreclosure, but many states’ delivery programs are sluggish, says Jacksonville Legal Aid rep.

NEW YORK – Homeowners hoping to stave off foreclosure by tapping federal pandemic aid have found themselves facing an uphill climb. The nearly $10 billion Homeowner Assistance Fund relied heavily on individual states to set up distribution programs, and some have responded better than others. Obstacles have ranged from sluggish program implementation to application backlogs.

“The homeowner shouldn’t be fighting on two battlefronts,” says Jim Kowalski Jr. with Florida’s Jacksonville Area Legal Aid.

The National Council of State Housing Agencies reports that the assistance fund apportioned roughly $2 billion to more than 150,000 households through the end of September, while Attom estimated that there were some 324,000 foreclosure filings last year. That’s more than twice the number in the previous year, but foreclosure moratoriums account for much of the increase.

Most states handed out the money as grants, but about 200 homeowners have complained about the program so far to the Consumer Financial Protection Bureau (CFPB), including some concerning foreclosures that proceeded while they were waiting on aid.

Servicers are required to pause foreclosure proceedings for 60 days when a homeowner with a Fannie Mae or Freddie Mac loan applies for funds, but that’s not required for Department of Veterans Affairs loans (VA loans) and other government-backed mortgages.

Some supporters say assistance programs in states like New York and Texas are running smoothly, while some other states “are taking an alarming amount of time,” according to National Housing Law Project lawyer Stacey Tutt.

According to Tutt, homeowners who get assistance approval after a prolonged delay might find their unpaid debt has increased in the interim, forcing them to tap even more assistance funds that leave less for other applicants.

Source: Wall Street Journal (01/22/23) Eisen, Ben

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