Several of President Joe Biden’s cabinet secretaries — including the U.S. Secretaries of Housing and Urban Development (HUD), Veterans Affairs (VA), the Department of Agriculture (USDA) and the Treasury — released a joint statement on Friday encouraging federally-backed mortgage servicers to reiterate the availability of pandemic assistance funds to their customers.
Secretaries Marcia Fudge, Denis McDonough, Tom Vilsack and Janet Yellen call on such servicers “to make every effort to ensure no individual or family unduly experiences unnecessary hardship or foreclosure while assistance is available under the Homeowner Assistance Fund (HAF),” the statement reads in part.
Such actions that the Biden cabinet wishes to see taken include the pausing of foreclosure proceedings when a servicer is informed of a pending HAF application in order to mitigate the potential harm a displacement may cause to a vulnerable homeowner, the statement says.
“Pausing any pending proceedings is a vital step towards keeping families in their homes as they receive assistance through the HAF program and is consistent with Congress’s intent in putting in place the HAF program to protect vulnerable homeowners,” the statement reads. “During any such pause, we encourage homeowners and servicers to continue working together on loss mitigation options to ensure vulnerable homeowners eligible for assistance are able to choose the best path to staying in their homes and fully utilize available resources.”
The Biden cabinet secretaries also encourage servicers to make these pandemic-era loss mitigation options available for anyone who is having difficulty making on-time mortgage payments, the statement says, including those eligible for HAF funding.
“Treasury urges HAF program administrators to take steps to ensure their programs expedite handling of applications from homeowners with pending foreclosure proceedings, including determining the homeowner’s eligibility for HAF and in all communications with the servicer regarding the homeowner’s application,” the statement says. “Treasury also encourages HAF programs to develop expedited procedures for handling homeowners with immediate threats to housing stability and to support homeowners who may benefit from the agencies’ loss mitigation options.”
HAF programs have come online across the country, however some of the programs have been criticized for a slow rollout. In Texas, an attorney working on behalf of a pandemic-impacted homeowner said that the funds could have been deployed to help affected homeowners much sooner, saying one of his clients lost her home without available assistance.
Other states took several months to implement their assistance programs after President 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.
There are no specific reverse mortgage-specific attributes in the American Rescue Plan Act, but the HAF funds can be applied to reverse mortgage borrowers who have had trouble making necessary tax and insurance payments necessary to keep their loans in good standing, according to a Biden administration official who spoke with RMD in early 2021.
“The Homeowners Assistance Fund would be a way in which to provision funds to help homeowners, including seniors with HECMs, that may have back tax or insurance payments that need to be made due to hardships related to the pandemic,” the Biden administration official told RMD in February of last year. “And that would be one of the measures in which seniors and the HECM portfolio can be addressed.”
Read the statement from the Biden cabinet secretaries.