CT to Provide More Mortgage Aid to Prevent Foreclosures Amid Pandemic

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Connecticut is preparing to launch a second phase of a pilot program that aims to prevent foreclosures for homeowners struggling to pay off their mortgages due to the economic hardships caused by the COVID-19 pandemic.

The state has $ 10 million in pilot assistance, of which $ 1.84 million was used in the first phase of the pilot. In an upcoming phase, the state will raise the income threshold, allowing more homeowners to participate in the program, which provides a grant of up to $ 20,000 per applicant.

The second round will also involve more mortgage collection companies than the first, which will also allow more homeowners to participate.

Ultimately, the state hopes to provide a total of $ 123 million through the full program, which will be separate from the pilot, larger, and allow more residents to participate. It should start later this fall.

“We hope Connecticut residents stay alive and we are working hard to really make sure there are no delays or delays in making these programs available to everyone who needs them,” said Nandini Natarajan, CEO. at the Connecticut Housing Finance Authority.

The exact date for the second phase has not yet been set, although financial officials hope to start it “as soon as possible,” spokeswoman Lisa Kidder said Tuesday.

“We will do everything in our power to move as quickly as possible,” Natarajan said.

Funding for Connecticut is provided through the Homeowners Assistance Fund Program, which is administered federally through the US Treasury Department and administered by the authorities under a Memorandum of Understanding with the State Housing Department.

At the first stage of the program, households earning no more than 80% of the average income in the district were eligible. At the second stage, this limit will increase to 100% of the average income for the region.

Government officials said they increased the limits because many of the people who applied in the first phase had incomes between 80% and 100% of the region’s median income.

“At the first stage, we wanted to start with people with low income,” Natarajan said.

According to Natarajan, residents whose applications were not accepted in the first stage due to eligibility requirements will not have to reapply if their income meets the new requirements.

The Treasury allows states to set caps up to 150% of the region’s median income.

The first phase also included only three participating mortgage companies: AmeriNational Community Services, Idaho Housing and Financial Assistance, and Norcom Mortgage. In the second phase, it is planned to include more service companies, although the financial authority did not publish a list of these service companies awaiting final processing of documents.

The Mortgage Service is a company that collects mortgage payments from homeowners.

The plan for the full program is still in development. The finance authority hopes to submit it for public comment in September in conjunction with the launch date in the fall.

Connecticut was one of the few states to move forward with a pilot program after receiving a first installment from the Treasury, Natarajan said.

She said that they made this decision in order to get the money to the homeowners as soon as possible. The program, which started on July 1, received 315 applications, 135 of which were eligible. Those who did not meet the criteria, Kidder said, had an income in excess of the established limit, did not submit all the required paperwork, or did not prove financial difficulties related to COVID-19.

Sixty-one people moved their applications to the second phase because the authorities believed their applications would meet the requirements, and another 52 of their applications were moved to the second phase so that staff could try to get additional documentation from them.

Acceptance of applications for participation in the first stage ended at the end of July.

Natarajan said that in the first phase of the program, there may have been few candidates because people were still patient, which is a temporary freeze on mortgage payments. She believes the number of applications will increase as the abstention option expires.

Broader marketing and communication efforts will begin with the full program. The apps will also be translated into multiple languages ​​once the full program is launched, Natarajan said.

Lorraine Martinez Bellamy, an attorney for the Connecticut Fair Housing Center that specializes in foreclosure prevention, said she hopes to see changes to the program soon, including an increased dollar limit on aid and allowing aid to cover non-mortgage foreclosures.

According to Martinez Bellamy, there hasn’t been a “huge influx” of mortgage foreclosures lately because there was a federal moratorium on foreclosures until July 31.

The government also allowed borrowers to request an 18-month grace period, which meant that mortgage payments were temporarily suspended. Some people are still patient.

The abstinence option has helped increase the number of homeowners facing foreclosures or foreclosures due to condominium association or similar fees, Martinez Bellamy said.

“A lot of homeowners didn’t realize they were still responsible for paying taxes because they were being lenient,” said Ibijoke Akinbovale, director of the Housing Advisory Network of the National Reinvestment Coalition, a non-profit organization that works to give people the ability to build wealth, according to his website.

Akinbovale said it became a problem at the national level: “Very quickly, the tax element became a problem during the pandemic.”

Nationally, mortgage assistance hasn’t been as quick as expected, Akinbowel said.

Connecticut’s program has been receptive to many proposals for change from others, such as Martinez Bellamy, who work directly with those experiencing foreclosures, she said.

She said that about half of the cases she has seen in the past few months have come from homeowners going through non-mortgage foreclosures.

“I have communicated the urgency of helping these people as quickly as possible so that they do not lose their homes while waiting for the program to expand,” said Martinez Bellamy.

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