$7M REMAINS IN STATE’S COVID MORTGAGE ASSISTANCE FUND

Connecticut doled out nearly $4.9 million in mortgage assistance during the first two phases of its homeowner assistance program, leaving just over $7 million in unused federal funds.

That money is set to be used to help cover set-up costs for the full Homeowner Assistance Fund Program such as advertisements, other marketing fees and the price to establish a web portal for applications through an outside vendor, said Nandini Natarajan, chief executive officer at the Connecticut Housing Finance Authority.

The finance authority is also internally discussing a possible third phase with unused dollars ahead of the full program’s start. But details have not been finalized, Natarajan said.

It’s unclear when the full program will launch. The state finance authority submitted its plan to the U.S. Department of the Treasury on Oct. 4 and is waiting approval, Natarajan said. After the plan is approved, it may take 30 to 45 days to get the program off the ground, Natarajan said.

Natarajan said that may be in early 2022.

“We’re doing everything we can to get ready,” she said. “We’re working on building out the software platform and cranking away on trying to get that stuff ready so when we do hear, we can launch.”

The program, funded through the American Rescue Plan Act of 2021, aims to prevent foreclosures at owner-occupied houses for people who were financially impacted by COVID-19. Connecticut was one of just a handful of states that launched a pilot program.

The pilot program was funded with about $12 million, and $10 million of that was designated for direct assistance. The full program is set to be funded with about $123 million.

The programs aim to prevent foreclosures following the pandemic. During the pandemic, the federal government allowed up to 18 months of forbearance, or temporary freezes on mortgage payments. Many of those options are expiring this fall.

Connecticut has a particularly high rate of 90-day mortgage delinquency, data shows.

Connecticut’s full program will have higher income eligibility limits, include people facing foreclosure for tax delinquencies and other fees and have more participating mortgage service providers, Natarajan said.

It will also allow assistance of up to $30,000. The pilot program only allowed up to $20,000 in assistance.

The state pilot program provided 341 homeowners with assistance. The median grant amount was $14,844, and the largest number of awardees were from Hartford County, according to data released this week.

“We were able to get 341 applications funded, which I thought was a good number for really only working with a few servicers,” Natarajan said. “I was pleased that there seems to be a good spread of applicants across Connecticut.”

The largest number of applicants — 268 — also cited financial hardship caused by job loss, furlough or reduced wages during the pandemic. Other reasons for financial loss included loss of self-employment, having to stay home with a child when schools and day cares closed and caring for a sick relative or applicants who lost income when they contracted COVID-19, the data shows.

And most reported that their incomes came from a job. Loraine Martinez Bellamy, an attorney at the Connecticut Fair Housing Center who focuses on foreclosure prevention, said she suspects many of those were people who fell behind early in the pandemic.

Many of her clients are back at work, Martinez Bellamy said.

She said the low percentage of people who were ineligible points to a process that doesn’t have overly burdensome documentation requirements.

“I was at least happy to see that they disbursed almost $5 million,” she said.

But the pilot program only allowed for mortgage assistance. Many people in Connecticut are facing foreclosure because of tax delinquencies, condominium association fees or other bills, she said.

Throughout the pandemic, there were more safeguards in place for people facing foreclosure because of mortgage delinquency, and mortgage foreclosures tend to move more slowly than foreclosures of other types, Martinez Bellamy said.

“Those are the folks that are most at risk of losing their house while the program is being developed,” she said.