The federal government’s flagship program to help homeowners avoid falling behind on their mortgages, having utilities cut off or being forced out of their homes, is finally rolling out across America through programs pilots.
But repairers say running the $10 billion fund, dubbed the “Property Relief Fund,” has been chaotic and cumbersome. Industry trade groups, which played a key role in launching the program in March 2021, described the process as “a huge collaborative effort”, but also as a “complicated thing to deal with”.
Still, they say the HAF rollout has been a mixed success — despite all the logistical headaches, the financial aid is helping borrowers stay home. HousingWire spoke to service agents to get some insight into how the rollout was going for industry players.
The HAF program, a “huge burden”
The HAF program, managed by the Treasury Department, was designed to give states significant leeway in how they use federal money. This is precisely what makes it so complex and problematic.
“My favorite slogan when I talk about HAF is ’50 states, 50 programs,'” said Courtney Thompson, product manager at sage. “I think the Treasury logic is that states have experienced delinquency and the impact of COVID-19 differently, so they wanted to give states flexibility.”
Thompson said the flexibility built into the HAF has been a “huge burden on repairers” and has weighed on repairers’ earnings and loss mitigation valuations. Repairers, by law, are required to communicate clearly with borrowers about the options available. But because programs vary, it can be a challenge.
“The consumer is always instructed to call the repairer and the repairer is liable, under penalty of unfair, deceptive or abusive acts or practices (UDAAP) to communicate clearly to the consumer and without confusion,” said Thompson. “In this case, the repairer has their own loss mitigation programs that the consumer can apply for, and as a result of COVID-19, there are more programs and more opportunities for assistance, and then you have HAF that a borrower can potentially request.”
Servicers and stakeholders working with the HAF program say states differ not only in logistics, such as the number of employees to run the program, but also in each state’s requirements for HAF applicants. Some states require little documentation, while others require borrowers to provide detailed information about their finances. An important caveat: Borrowers must apply for the HAF themselves.
Kimberly Hare, President of Service Faysaid many state administrators are “confused” about how to run their programs, which has resulted in more work for repairers.
“States got money and they weren’t told how to handle the distribution,” Hare said. “A lot of them are late and don’t have the people to run the programs, and we have to repeat sending documents because they get lost. That’s twice the work of sending data back and forth.
Gisele Roget, who runs a Washington, D.C.-based public affairs firm Overbrook Square Groupsaid another challenge for managers is considering the guidelines surrounding the loans they manage.
“I think one of the main nuances is that repairers also have to follow the guidelines published by the Federal Housing Administrationthe Federal Housing Finance Agencythe Department of Veterans Affairs and the agriculture department“, said Roget. “Repairers who participate in these programs must comply with all applicable guidelines.”
Hare said there appears to be an “education gap” between states regarding which borrowers should be eligible for funding.
“Instead of focusing on borrowers who were impacted during the pandemic, some states haven’t restricted that and are allowing borrowers who were in default long before the pandemic hit,” Hare said.
Although the fund was created specifically to help homeowners affected by the pandemic, the Treasury allows homeowners experiencing financial hardship after January 21, 2020 to apply for government assistance.
Stakeholders working with the HAF program said these guidelines were developed on the assumption that the pandemic may have worsened or further exacerbated the financial situation of some already struggling homeowners.
Trade groups helping states and repairers maneuver HAF remain optimistic about the future of the program.
The National Council of State Housing Agenciesan advocacy organization for public housing agencies, said that so far service officer participation “has been very strong” and that many states have resolved the issues to the benefit of landlords.
“States have worked as hard and as diligently as possible to design programs and get their plans approved by the Treasury, so they can start helping homeowners,” said Greg Zagorski, senior landlord specialist. homeownership at NCSHA.
Representatives of the Housing Policy Councilwho worked to set up the HAF program, said he is encouraged by the states from which the money is distributed to borrowers in need.
The HAF “is at the end of the mitigation and loss mitigation work,” an HPC spokesperson said. “The fund will fill the holes in the end.”
It was not immediately clear how much money was allocated or distributed from the HAF programs. Zagorski said the Treasury will release a first-quarter report this summer and the second-quarter report is expected to be released Aug. 15.
In recent months, real estate agencies have heightened their rhetoric on the program.
Secretaries of HUD, VA, USDA and the Treasury in a joint statement released in May said that servicers of federally backed mortgages should offer HAF financing as a loss-mitigation option to borrowers who are struggling to make their mortgage payments.
Agency officials said they encourage owners and repairers to continue working together on loss mitigation options to ensure available sources are fully utilized.
The multi-agency news release also asked repairers to hit the pause button on the foreclosure process if a borrower requests assistance through the HAF.
“Suspending any ongoing proceedings is a vital step in keeping families in their homes as they receive assistance through the HAF program,” the statement read.
The Consumer Financial Protection Bureau also issued a warning in March that it will carefully consider complaints from borrowers who claim they have not been given the opportunity to apply for the HAF.
The watchdog said servicers should give borrowers enough time to work through the HAF application process before moving forward with foreclosures. Cases in which a landlord is seized while an HAF application is pending “will merit further investigation.”
“The service community has done a fantastic job keeping up with the speed of change during this time,” Thompson said. “And finally, because federal investors and insurers have now been very, very clear from a regulatory perspective that consumers need to be offered HAF before foreclosure processes, that makes me think that all will be well. “
She added: “It’s what I call a ‘three little birds moment’, where there was all this noise and all this work to get to a place, but in the end, because it there is some consistency now in the expectation that HAF is something to pay attention to, every little thing will be fine from a consumer perspective.