Earlier this year, while most of America anxiously awaited word on additional stimulus checks as President Biden signed the American Rescue Plan Act of 2021, many may have overlooked an even more meaningful allocation of relief funds. The Homeowner Assistance Fund (HAF), which provides up to $9.961 billion to U.S states, including the District of Columbia and Puerto Rico, U.S. territories, tribal entities, and the Department of Hawaiian Homelands, was specifically created to provide relief for U.S. homeowners financially impacted by COVID-19. The objective of the HAF is to make an earnest effort to help homeowners struggling to make mortgage payments avoid ending up in serious default or foreclosure.
Who Qualifies for Relief Funds
Section 3206 of the American Rescue Plan Act of 2021 authorizes the U.S. Department of the Treasury to alleviate financial hardships that have resulted from the pandemic. Under this section of the act, states, territories, and tribes have access to relief funds to specifically help homeowners experiencing delinquency, default, foreclosure, loss of utilities, and/or that have been displaced from their homes. The financial hardship must have occurred after January 21, 2020, and aid must be sought at the state, territory, or tribe level. Each state received a minimum of $50 million that must be spent by September 30, 2025. Tribes and U.S. territories received lesser amounts of aid but must still apply relief monies in a manner similar to the states and within the same timeframe.
Distribution of Funds
In order for homeowners to access relief under the Homeowner Assistance Fund, distressed borrowers must first contact a state Housing Finance Agency, typically referred to as a HFA. There is a method for allocation of mortgage aid that is tied to each state’s volume of delinquencies, foreclosures, unemployment, and other income indicators. Additionally, 60 percent or more of the funds must be provided to mortgage borrowers with less than the national or local median income. Depending upon the Homeowner Assistance Fund programs offered at the state, territory, or tribe level, homeowners may also receive funds to help cover property taxes, homeowners association (HOA) dues, utilities, and more. To qualify, homeowners must provide documentation of financial hardship and must own their home with an outstanding principal balance of less than $548,250.
As federal protections under the Coronavirus Aid, Relief, and Economic Security (CARES) Act begin to sunset, with the most recent extension set to expire at the end of June, there are still numerous state and locality protections with highly varied parameters and expiration dates. Navigating this myriad of relief and protection options can be extremely tedious in tandem with ongoing expiration extensions. The Homeowners Assistance Fund creates a very real opportunity for states to provide relief alternatives to homeowners before these protections expire, therefore avoiding serious economic devastation from delinquency.
More Changes, Made Easy
Traversing yet another set of nuanced rules and relief options is probably the last thing your team wants to face. Our industry swung off of the Great Recession into disaster recovery and then the pandemic. If you haven’t had the time or resources to embrace some of the more sophisticated workflow and workout applications that are now available, wait no longer. Clarifire provides an automated workflow and automated decisioning application that was created along the same timeline as these historic industry events, evolving in advance of typical industry solutions and offering the innovation needed now for today’s mortgage servicer.
The CLARIFIRE® application is offered on a secure SaaS-based platform, facilitating ease of implementation, full service and optimal functionality. Designed to facilitate loss mitigation that is variable, complex, and must scale exponentially, CLARIFIRE® not only meets your needs but aids your distressed borrowers with immediacy and relevancy. To find out how to modernize your default servicing operations to facilitate the Home Assistance Fund (HAF) and more, reach out to us directly at 866.222.3370 or visit us at eClarifire.com.
Let us show you how to future-proof your organization with CLARIFIRE®. Truly BRIGHTER AUTOMATION®.
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