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Texas launches foreclosure prevention program for forward, reverse mortgage borrowers

The state of Texas announced this week that it is launching its own Texas Homeowner Assistance Fund (TXHAF) Program backed by the $10 billion homeowner assistance fund established with the passage of the American Rescue Plan Act of 2021. The program will allow borrowers of either traditional forward or reverse mortgage loans to take advantage of new assistance designed to keep them out of foreclosure.

The program is being administrated by the Texas Department of Housing and Community Affairs (TDHCA), which began taking applications at the beginning of the month. While much of the public-facing materials are geared toward the ability for assistance to reach delinquent forward mortgage borrowers, a specific provision offers the ability for reverse mortgage borrowers to also benefit so they can make required payments to keep their loans in good standing.

“[Borrowers who] have fallen behind on one or more payments: mortgage, property tax, property insurance, HOA/condo association fees [may be eligible for assistance under TXHAF],” the program’s website reads.

According to local reporting by the Texas Tribune, the establishment of the Texas program comes after 25 states have already set up their own homeowners’ assistance programs funded by the same source of federal cash.

A Texas attorney believes that the funds could have been deployed to help affected homeowners much sooner. Amir Befroui, an attorney who oversees the Foreclosure Prevention Project at the nonprofit organization Lone Star Legal Aid, cited a client of his who is a pandemic-impacted reverse mortgage borrower as a key example.

A woman in the city of Longview — situated roughly 130 miles east of Dallas — had been rendered unable to pay her property taxes and homeowner’s insurance after the death of her husband. She was ultimately foreclosed upon by the lender, according to Befroui.

“If this money had been rolled out at any point in 2021, I could have saved the house,” he told the Tribune.

Like Texas, other states took several months to implement their assistance programs after President Joe Biden signed the American Rescue Plan Act into law in March, 2021. Other high-population states including New York and California set their own programs up in mid-December. Vermont got its program off the ground in late January.

A spokesperson for TDHCA explained to the Tribune that some of the lag in getting the program up and running came from a requirement for “extensive planning with outside stakeholders and analysis.”

Visit the Texas program’s website, and read the story at the Texas Tribune.