The state of California is maintaining its mortgage relief program funded by the 2021 American Rescue Plan, which includes assistance for reverse mortgage borrowers. But the funding is running low and could soon be exhausted soon, according to estimates from state housing officials as reported by the Los Angeles Times.
After extending availability for the program to more qualified recipients in February, officials now warn that those who could benefit from the financial assistance — designed primarily as an option for homeowners who were financially impacted by the COVID-19 pandemic — will need to act quickly if they want help.
A tally on the program’s official website shows that more than $823 million of the original $1 billion allocation to California has been used and the remaining $177 million could evaporate within the next couple of months.
“When you look at who received those funds, it’s been a real success,” Rebecca Franklin, president of the California Housing Finance Agency’s Homeowner Relief Corp., told the Times, adding that “we really were successful at getting the money to those populations who really were hit harder by the pandemic.”
The average amount of assistance provided by the program stands at just over $24,000 per household, and grants have been issued to more than 33,000 households across the state. The program rolled out in California in late 2021.
The federally created Homeowner Assistance Fund (HAF) is available to all borrowers, including reverse mortgage holders, in an effort to keep them compliant with their loan obligations, which was explained to RMD in early 2021 by Biden administration officials.
“The Homeowner Assistance Fund would be a way in which to provision funds to help homeowners, including seniors with [Home Equity Conversion Mortgage (HECM)s], that may have back tax or insurance payments that need to be made due to hardships related to the pandemic,” an administration official told RMD in February 2021. “And that would be one of the measures in which seniors and the HECM portfolio can be addressed.”
But for forward and reverse mortgage borrowers across the board, the HAF has had challenges reaching full deployment nationwide. Last month’s effort in California to expand the base of qualified beneficiaries was partially done to get more aid to homeowners faster, since there has been an awareness problem across the country.
This has been particularly true of potential reverse mortgage beneficiaries. HECM servicing professionals explained at reverse mortgage industry events that there have been difficulties in making reverse mortgage borrowers aware of the available funding — which is overseen by individual states — and had requested the help of loan originators to get the word out to their clients.