How the Homeowners Assistance Fund Can Affect Foreclosures

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IN Treasury Homeowners Assistance Fund can go a long way in reducing foreclosures because they restart slowly – depending on when it comes and how it will be distributed.

The Black Knight’s most optimistic estimates are that nearly $ 10 billion in US Bailout Act funds could cover a 30% increase in missed mortgage principal and interest payments since the start of the pandemic, with variations from state to state.

But when and how this money will actually be used – and who will receive it – depends on how quickly the government’s plans will be implemented. They are due to be submitted to the Treasury by the recently extended and flexible August 20 deadline, which is a mystery to the maintenance staff as loan payments begin in the next few weeks.

“Timing gets complicated because clients lose patience willing to help, but the government program may not work,” said Dana Dillard, chief executive of Housing Finance Strategies, a consulting firm and former head of mortgage lending.

Funds may start to rise when abstinence expires
Depending on how quickly they are processed and what the verification process is, HAF money – which was part of the COVID-19 relief package passed by Congress in March this year – may start rolling out some time after the end of the summer.

“Subject to timely receipt, review, and approval of state plans by the Treasury, we expect the programs to launch this fall,” said Stockton Williams, executive director of the State’s National Board of Housing Agencies.

If the money disbursed through these programs arrives in the next couple of months, it could coincide with the period starting in September when, according to Black Knight, service companies can process 18000 withdrawals of abstinence per day… But uncertainty about when funds will be available makes it difficult to account for them during upcoming training sessions.

“Foundations and programs are not really deployed yet, and suffering and out of patience occurs in large numbers in September and October. So we’re a little behind in … understanding the options at the state level, ”Faith said. Schwartz, founder and director of Housing Finance Strategies. “Nonetheless, public funds will be a welcome and useful interim solution for consumers who are not fully involved in loans or are not eligible for … loss mitigation. These funds can avoid foreclosure and help those who need it most. “

Slow phased foreclosure begins can be helpful in maintaining the effectiveness of HAF products, even if they are delayed.

“Technically, the foreclosure moratorium is over or over, but it’s a tiered restart. Abandoned property and foreclosures initiated before the pandemic will be the first, ”said Mike Rawls, CEO of Xome, a subsidiary of Mr. Cooper.

Beginning August 31, foreclosures in connection with the pandemic will be limited to abandoned properties and borrowers who do not respond to outreach within 120 days in accordance with Clause X’s rules for servants. This gives states time to disburse aid funds before the risk of foreclosures for people struggling with the pandemic begins next year.

“This is an important part of the housekeeping policy,” said Matt Douglas, vice president of the Housing Policy Council. “Housing Assistance Fund Dollars are only available to those who have seriously violated the law since the start of the pandemic, and Reg X bans remain the same.”

Test case of how you can distribute money
However, not all of HAF’s money will go towards foreclosure prevention. While this is one of the permitted uses, it will likely also be used for homeowner insurance and utility bills.

The New Mexico Mortgage Finance Authority, for example, tested two HAF programs. One provides assistance to borrowers who have not paid their mortgage or property tax payments, and the other provides funding for emergency roof repairs, said Rebecca Velarde, senior director of policy and planning at NMMFA.

States were allowed to use up to 10% of their money for start-up costs and testing in preparation for formal plans, and New Mexico was one of the first to do so.

“We have a very old housing stock in New Mexico and many rural areas,” Velarde said, explaining why the state wanted to change its testing program.

The state’s pilot program provides mortgage assistance directly to service companies that help with homeowners. Like all HAF money, funds were directed to the most needy borrowers, as measured by low to medium income indicators. In the case of roofing aid, they targeted “extremely low” incomes.

While the state pilot has individual criteria, it also uses some of the proposed standards for datasets and conventions. These include a proposed shared data file, a template for third-party authorizations, and a service organization-government collaboration agreement that were available across industry groups, Velarde said.

Hardest Hit Fund, Abstinence Advocacy – Landmarks for HAF
The National Council of Public Housing Agencies, the Housing Policy Council and their members have provided templates that are updated versions of some previously used with Hardest Hit Foundationto the Treasury for consideration as part of efforts to improve the efficiency of HAF allocation. HHF was a homeowner assistance program distributed in states after the Great Recession.

Housing groups are also reusing the web and information methods used to disseminate information about pandemic-related payment suspension programs to ensure that money is received on a massive scale and fast enough to prevent as many pandemic-related foreclosures as possible.

“We’re redirecting our campaign to hard-to-reach borrowers and letting them know government resources are available,” said Schwartz, who also worked with Dillard to spearhead a tolerance campaign called “Out of order? That’s okay, ”jointly with a coalition of public and private housing.

The campaign tested a wide range of reach, from billboards to online ads, with social media and email receiving the strongest responses, she said. Industry groups have confirmed they hope to use a similar campaign to help states spread awareness of HAF money.

“We hope that [messaging] ready for our members, which they can easily download and include either through social media or on their websites, ”said Sara Singhas, director of credit management at the Mortgage Bankers’ Association.

Ultimately, however, each state must allocate funds and implement a verification process for distribution, so any enhancement of their messaging services must be fair and accurate, Douglas said.

“The best practice might be to communicate to all defaulting borrowers about the availability of these resources and their criteria,” he said.



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