States are gearing up to distribute nearly $ 10 billion in aid for homeowners who have been hard hit during the pandemic. So how can struggling homeowners get in line for the cash?
The Homeowner Assistance Fund, created by the latest COVID-19 relief package, provides allocations to states, U.S. territories and tribes with the aim of staving off mortgage delinquencies, foreclosures, utility shut-offs and other issues for vulnerable homeowners.
To qualify, homeowners must have lower incomes and have suffered a financial hardship, such as job loss or hefty healthcare expenses, after Jan. 21, 2020. The aid isn’t limited to mortgage borrowers: Homeowners who need help with delinquent property taxes, homeowner’s association fees, internet service and other expenses may be eligible.
While states are still designing their HAF programs and may take several months to start distributing aid, homeowners can position themselves now to be part of the action, housing advocates say.
Mortgage borrowers who are experiencing a hardship and haven’t yet talked with their loan servicers should make that call now. Find out whether you qualify for a forbearance that temporarily suspends your payments, a loan modification that may reduce your monthly payment, or other options. “You’ll be in a better position to access the state money if you’ve already contacted your servicer” and evaluated what options are available to you now and what additional help you might need, says Julia Gordon, president of the National Community Stabilization Trust, a nonprofit that works to protect neighborhoods from blight.
Borrowers and servicers also need to focus on long-term solutions now to avoid “chaos” in the fall when a wave of struggling borrowers emerge from forbearance, says Diane Thompson, a senior adviser at the Consumer Financial Protection Bureau.
When communicating with your servicer, “document everything,” says David Dworkin, CEO of the National Housing Conference. “And keep those records.”
Create a file, Dworkin says, that includes any evidence of the pandemic’s impact on your financial situation, such as layoff notices, unemployment insurance income and documentation of your pre-COVID income.
For extra help, contact a housing counseling agency approved by the U.S. Department of Housing and Urban Development. These agencies will be working to assist homeowners eligible for the HAF program. The CFPB offers a tool to help you find a counselor in your area.