Nearly 30 states have launched programs to distribute $9.961 billion in federal aid for households who are behind on their mortgages.

As the number of new COVID-19 cases continues to drop, Americans are hoping that the worst of the pandemic is behind them. But a $9.961 billion federal program destined to help households who are behind on their mortgages is just getting off the ground in many states.

The Homeowner Assistance Fund (HAF) program is overseen by the U.S. Treasury Department, and administered by state housing authorities, territories, and tribes. The goal of the program is to help homeowners experiencing financial hardship after Jan. 21, 2020 avoid mortgage delinquencies and defaults, foreclosures, loss of utilities or home energy services, and displacement. Funds from the HAF may be used for assistance with mortgage payments, homeowner’s insurance, utility payments, and other specified purposes.

According to the National Council of State Housing Agencies (NCSHA), close to 30 thirty states, Guam, and Puerto Rico have launched HAF programs, while others are still working to get their programs approved and up and running.

Homeowner Assistance Fund by state

Source: National Council of State Housing Agencies

The HAF program was created by the American Rescue Plan Act, which was passed by Congress in March of 2021. But it’s taken awhile to get the program up and running in some states, as each state is required to submit plans for approval by the Treasury Department to make sure the relief is distributed as Congress intended.

The Treasury Department issued initial guidance to states in August to use in formulating their plans, which it has continued to update. On Feb. 24, the Treasury Department issued additional guidance on the use of program income, eligible housing counseling services, administrative expenses, eligible uses of funds, and approaches for household income verification.

Some states have been administering pilot assistance programs while they finalize their full HAF programs. For more information on how federal HAF program relief is being distributed in your state, visit the interactive map maintained by NCHA.

Information on HAF programs administered by tribal governments is available on the National American Indian Housing Council (NAIHC) Tribal Housing Assistance website.

Grants of up to $80,000 in California

California launched its HAF program on Dec. 27, allowing homeowners to apply for grants of up to $80,000 that cover past due mortgage payments in full.

To raise awareness of the one-time grants, which don’t have to be repaid, the CalHFA Homeowner Relief Corporation (CalHRC) has released a multicultural HAF toolkit with information on who is eligible, and how to apply. The toolkit is available in English, Chinese, Spanish, Korean, Vietnamese and Tagalog, and includes program flyers and social media posts.

CalHRC — the agency designated to disburse the State of California’s allocation from the American Rescue Plan Act’s Homeowner Assistance Fund — hopes that community organizations will help spread the word about the program.

“Community groups have their fingers on the pulse of our neighborhoods and deeply understand the struggle many homeowners have faced over the past two years,” said CalHRC President Rebecca Franklin, in a statement. “Because these groups work closely with many of the homeowners who would benefit from the California Mortgage Relief Program, we want to provide essential resources they can share within their communities.”

Foreclosures expected to grow

About 8 million homeowners applied for mortgage forbearance during the pandemic, and 275,000 borrowers remain behind on their loan payments, according to data aggregator Black Knight. Among the 1.4 million homeowners who have left forbearance since the beginning of October, one in four were still in loss mitigation.

Black Knight estimates that foreclosure starts were up seven-fold in January as borrower protections that were put in place during the pandemic were lifted. But foreclosure starts remain below pre-pandemic levels. While 32,879 loans were referred to foreclosure during January, that’s down 23 percent from pre-pandemic level of 42,834 seen in January, 2020.

Thanks to rising home prices, borrowers who are unable to come to terms with their lenders may be able to avoid foreclosure by selling their homes.

Distressed property marketplace Sundae’s new lending service for investors, Sundae Funding Inc., will finance finance investor purchases in California, Florida, Georgia, Texas and Colorado with more states to be added over the next few months.

RealtyTrac offers a similar platform for investors in the market for distressed or foreclosed properties, with financing options available through various partner lenders.

Plans are also being laid for an expected increase in foreclosures. Last year the Biden administration announced it will give individual owner-occupants, families and nonprofits more opportunities to purchase homes that have been foreclosed on before they’re offered to large investors.

RES.NET, a technology platform provider for loan default management, has revamped its real-estate owned (REO) portal to help banks, mortgage lenders, loan servicers and real estate brokers coordinate to dispose of REO properties owned by lenders. RES.NET’s subscription-based agent membership gives real estate agents the opportunity to win REO listings from loan servicers and manage their own properties.

Get Inman’s Extra Credit Newsletter delivered right to your inbox. A weekly roundup of all the biggest news in the world of mortgages and closings delivered every Wednesday. Click here to subscribe.

Email Matt Carter

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