Delayed Aid Frustrating Homeowners Facing Potential Foreclosure Housing Crisis | Seven Days

click to enlarge
Rob Donnelly

A pandemic relief program designed to help homeowners avoid foreclosure has been plagued by months of delays, preventing millions of federal dollars from flowing to desperate Vermont families. increase.

The Vermont Homeowner Assistance Program, launched in January, aims to help people who have lost income due to the pandemic to keep their homes. Homeowners can apply for grants of up to $30,000 to recover outstanding mortgage payments, property taxes, and utility payments.

Homeowners have so far requested a total of $25 million. But less than half of that money has been paid, with about 80 households waiting at least six months.

One of those groups is Kate Smith. Kate Smith quit her healthcare clerical job last year because she was pregnant and feared what would happen to her baby if she contracted COVID-19.

With one income less, Smith and her husband were granted a grace period by their moneylender, Rocket Mortgage, to temporarily stop paying the Barre family. They paid as much as they could during this 18-month period for her, but in the end he was late on paying $16,000.

The Smiths applied for the Homeowner Assistance Program in mid-January and were told the application would be processed in about 60 days. Her request for $1,500 to cover water and electricity bills was quickly approved. However, as of last week, their mortgage application is still pending.

The Vermont Housing Finance Agency, the nonprofit lender that oversees the assistance program, attributed the delay to its work of setting up an entirely new program and communicating with hundreds of different organizations to verify debt. is blamed on the complexity of

VHFA executive director Maura Collins says the $11 million the program managed to pay out made a big difference to these grant recipients. “The program works,” she said. “It’s just slower than expected.”

Foreclosures have declined nationwide during the pandemic, thanks to a federal moratorium. However, it has returned to pre-pandemic levels in recent months.

The same trend applies to Vermont.a seven days An analysis of court filings shows that lenders filed 347 foreclosure proceedings in the first seven months of the year. That’s 100 more him than the entire 2021 total, but still below pre-pandemic levels.

Vermont first began offering pandemic-related mortgage assistance in the summer of 2020 using $10 million in federal CARES Act funding. The program is also managed by the VHFA, and he helped over 900 applicants before it ran out of money last summer. Another round of funding approved by Congress gave him an additional $50 million.

The funding is part of a broader effort to keep people at home during the public health crisis. Another program for renters, run by the Vermont Department of Housing, has donated her nearly 140 million to applicants worth more than $120 million since it launched in April 2021.

Approximately one-fifth of homeowner assistance funds come from contracts with Vermont Legal Aid to help select applicants and third-party vendors that operate call centers and online portals available to program participants is spent on administrative expenses, including

The remainder will be paid to households below 150% of the regional median income ($160,000 for a family of four in Chittenden County) who have experienced pandemic-related financial hardship since January 2020. This included people whose workplaces were closed due to COVID-19 lockdowns and who had to quit their jobs to care for their families.

900 households applied within the first three weeks of the program’s launch, and an additional 3,600 since then. The VHFA planned to run the program for four years, but it could run out of funding sooner than that. The $25 million requested so far represents more than half of the available funding.

Collins said he had spoken with other program managers around the country and found the VHFA’s initial desire to make payments within two months of receiving an application “naive.” .

“I’m noticing that it’s taking longer than anyone would have liked,” she said.

Many holdups are associated with the seemingly simple task of verifying an applicant’s debts. The process could take months as VHFA staff struggle to get answers from mortgage lenders across the country.

Collins said he receives weekly reports showing longest outstanding applications and regularly questions staff about lack of progress. It could be something as simple as not being able to find a contact.

But it’s not just large businesses that don’t have a call back. Due to delinquent property taxes and utility bills, staff may have to contact remote towns and independent fuel companies in Vermont. The 44 tax delinquent towns in Vermont have not complied with VHFA requests and 85 are in arrears. One staff member is currently tracking these town officials full-time.

These bureaucratic hurdles can be annoying, Collins said, but they act as a safeguard against overpayments and fraud. Her VHFA attempts to verify the debt show that the agency is “doing due diligence on these public funds,” she said. “It helps us know that we’ve run a good program.”

It is a cold comfort to those caught in the knots of bureaucracy, especially when most people are unaware of these behind-the-scenes intrigues. Only confirmation that there is is provided. Third-party call center employees rarely get more insight than this.

Vermont Legal Aid attorney Grace Pazdan said the VHFA could do more to communicate with disgruntled homeowners. But even if homeowners know what’s causing the delay, there’s little they can do to move the process forward.

Candy Lyle’s family was behind on their mortgage payments after her husband lost his job due to a COVID-19-related layoff. They have been waiting to hear from her about her $16,000 aid application since April. She has called both her lender and assistance program multiple times a week asking about the delay, but has had little luck. I’ll say something,” Lyle said.

Meanwhile, their grace period ended last month and their lenders warned they could take legal action soon. .

No one should lose their home because of the delay, at least in theory.

Homeowners with federally-backed loans who apply for the assistance program are protected from foreclosure for up to 60 days. Vermont courts enacted similar protections for those without federally-backed loans. Mortgage lenders seeking foreclosure must inform homeowners of their assistance programs and their rights to request an extension if they apply.

But lawyers worry that some will go unnoticed. Few, if any, applications are processed within 60 days, Pazdun said, and state and federal protections don’t automatically extend that period. Have to.

Attorneys at Vermont Legal Aid have helped about 175 households navigate the system and expect to avoid foreclosure long enough to receive help. As for the hundreds of households they don’t represent, Pazdun said, “We don’t know.”

Some homeowners are facing tough decisions while waiting for lifelines.

When Barre’s homeowner Smith learned her moratorium expired in June, Rocket Mortgage gave her several options to avoid foreclosure, she said. The first was to pay off her $16,000 debt, which she couldn’t afford. Another was to slap the overdue balance on the end of the loan and disqualify her from the grant program.

The third option was more appealing. She was able to participate in a loan modification program that added an extra 25 years to her 15 year mortgage. This reduces your monthly payment, but adds thousands of dollars in interest over the life of the loan.

The fix included a three-month probationary period, during which Smith could revert back to his original loan at any time. Her hope was that the grant would arrive before the end of her trial period.

After confirming with Rocket Mortgage that her subsidy eligibility would not be compromised, she signed up for a loan modification and crossed her fingers.

Mr. Smith’s problem appeared to be over in early July, when the status of his application changed to “Paid.” However, when she checked her portal online a few weeks later, she found that her request was “pending.”

she couldn’t believe it. When she contacted the call center, her bewildered staff member promised to call back. Many other calls ended the same way. “All calls, no answer,” Smith said.

Late last month, with the help of a legal aid attorney, Smith finally learned what had happened. When she contacted Rocket Mortgage for her assistance program to verify her debt, her lender said she was no longer eligible because she participated in the loan modification program — her previous Despite the warranty.

Mr. Smith found himself in a predicament. He was told that to regain eligibility for the subsidy, he would have to exit the lender’s modification program. It wouldn’t have been a problem if she could have relied on the program to transfer money instantly. But any further delays could lead her to legal action, which she no longer wants to take, she said.

Mr. and Mrs. Smith eventually decided to add more debt to the loan and abandon the grant program without a better solution.

“Here’s the baby. This is where I brought my kids home. This is our life,” Smith said, holding back tears. “We can’t take that kind of risk with paperwork.”

On Tuesday, Smith finally got some good news. Her grant was finally approved. It should arrive next week.

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *