Commencing February 1, 2022, the Pennsylvania Housing Assistance Fund (“PAHAF”) will begin taking applications from eligible Pennsylvania homeowners that meet the following criteria:
- Homeowner owns and occupies the property as their primary residence;
- Property is located in Pennsylvania;
- Homeowner is experiencing financial hardship as a result of the COVID-19 pandemic after January 21, 2020, which hardship could have begun previously and continued past said date;
- Household income is equal to or less than 150% of the area median income;
- Homeowner’s first mortgage is within the Conforming Loan Limits established by the US Department of Treasury; and
- Homeowner is unable to receive the same assistance for mortgage payment, mortgage reinstatement, property charges and/or utility payment from another federal, state, local, non-profit or tribal source.
The Pennsylvania Housing Financing Agency (“PHFA”) was allocated $350 million under the American Rescue Plan Act of 2021 to develop the PAHAF Program. The PAHAF Program will be funded solely from this source. It is important to note that this is a supplement and in addition to the PHFA’s standard mortgage assistance program known as HEMAP under Act 91 of 1983.
There are several differences between the HEMAP and PAHAF Programs. HEMAP is a pre-foreclosure program which requires a homeowner to be sixty days or more delinquent and have received an Act 91 Notice from the mortgage servicer. Subsequently, there are strict deadlines and requirements for the homeowner to meet with a counseling agency and submit an application to HEMAP for consideration. Provided those deadlines are met, the foreclosure is stayed until a decision is made. The PAHAF Program differs in that it does not necessarily impact an impending or pending foreclosure, nor does it require that the homeowner be facing foreclosure in order to qualify. For eligibility, an applicant need only be delinquent on housing expenses by at least one month, which can include mortgage payments, taxes and/or utilities. The delinquency cap is $30,000.00.
Further, under the HEMAP Program, any assistance provided to cure a pending default for a homeowner facing foreclosure is then secured by a junior mortgage on the qualified residence. There does not appear to be any collateralized repayment requirement under PAHAF as it is more targeted to those in temporary financial hardship who also do not have significant income or resources. No such median income restrictions apply to the HEMAP Program.
Yet, the funding available for the PAHAF Program exceeds the normal annual budget for HEMAP loans, and therefore, provides a substantially increased opportunity for homeowners to cure delinquencies and/or defaults of mortgages on their primary residences. It is important that lenders and servicers understand that this source of funds exists prior to and during the foreclosure process, but that it will not impact the case itself. The Philadelphia courts in the fall of 2020 did stay certain sheriff sales on anticipation of this program being implemented, but there does not appear to be any expected court delays, continuances, or stays now that the program is in effect.