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FAQ: Homeowner Assistance Funds

and Reverse Mortgages

March 2022

What is the Homeowner Assistance Fund (HAF)?

In the American Rescue Plan Act of 2021 Congress created the Homeowner Assistance Fund

(HAF) to provide $9.9B to states, territories, and tribes to help homeowners facing hardship due

Department has established broad eligibility guidance based on the American Rescue Plan Act

language. Under that guidance, homeowners experiencing financial hardship after January 21,

2020 are eligible for HAF funds. In addition, eligibility includes homeowners:

▪ Experiencing financial hardship BEFORE January 21, 2020, if hardship continues after this date;

▪ With incomes equal to or less than 150 percent of the area median income for their

household size or 100 percent of the median income for the United States, whichever is

greater, and who are “socially disadvantaged individuals;”

• (HUD provides a calculator. See FY 2021 Homeowner Assistance Fund Income Limits)

▪ With expenses related to their principal residence on a one-to-four unit property;

▪ Living in condominiums, cooperatives or manufactured homes;

used for qualified expenses, including assistance with:

▪ Mortgage payments;

▪ Financial assistance to allow homeowners to reinstate a mortgage or pay other housing-

related costs related to a period of forbearance, delinquency, or default;

▪ Principal reduction, and to facilitate mortgage interest rate reductions;

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▪ Property charges, including:

• Insurance (homeowner, flood, and mortgage insurance);

• Utility payments including electric, gas, home energy (oil and firewood), water;

• Internet, including broadband access;

Of note, not all HAF programs will cover all the expenses listed above. It will depend on how the

state, territory or tribe sets up its program. In addition, the local program determines the

maximum dollar amount allocated for each qualified expense.

The Department of Treasury encourages programs to pair HAF funds with other home

preservation program funds, such as property tax relief programs and utility assistance programs.

Where they exist, homeowners are also encouraged to apply for assistance from other programs.

HAF funds can be used to supplement, instead of replace, other program funds.

Homeowners can use HAF in conjunction with loss mitigation options under some program

guidelines. For example HAF assistance can be used as part of a borrower’s loan modification,

partial claim amount, and, for reverse mortgages, as part of a repayment plan.

Many older homeowners with reverse mortgages fell behind on property charges during the

pandemic and are facing foreclosure. HAF programs can provide financial assistance if a

borrower is having difficulty paying property charges, or making other housing related payments.

Almost all reverse mortgages are FHA-insured Home Equity Conversion Mortgages (HECMs).

HUD, which oversees the HECM program, states explicitly that HAF funds can be used to pay

for delinquent property tax and insurance on defaulted HECMs. See HUD FAQ KA-06002

(Feb. 4, 2022). Additionally:

▪ FHA mortgage servicers are required to accept and apply the HAF funds where they are

available. See HUD FAQ KA-05996;

▪ Homeowners should apply to have their mortgage reinstated. Servicers will advance funds

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▪ Homeowners should request a COVID-19 HECM Extension (forbearance);

• Based on hardship directly or indirectly related to the pandemic;

• A HECM Extension is available as long as the COVID-19 National Emergency is

▪ Attorneys and advocates should let NCLC and the National Housing Law Project (NHLP)

know if you are assisting a reverse mortgage borrower in applying for HAF and you

encounter a roadblock.

Will they stop the foreclosure process if my client applies for HAF?

Currently HUD only allows a pause of the foreclosure process if the homeowner has been

approved for HAF funding. See HUD FAQ KA-06003 (Feb. 4, 2022). Once the homeowner

receives final approval for HAF assistance, the servicer will take steps to pause or end the

foreclosure proceeding, depending on state law requirements. This means the foreclosure

process will continue, and fees will accrue while the homeowner is waiting for a decision.

It is important to stop the foreclosure process long enough for the homeowner to apply for HAF

Homeowners should seek legal assistance to determine if state law provides for protections.

Advocates also should ask the HAF administrator to expedite the HAF application review on

this basis.

In addition to seeking legal assistance, if a foreclosure sale is scheduled with a pending HAF

application, advocates can reach out to NCLC or NHLP.

How do homeowners apply for HAF funds?

Currently, at least 24 states/territories are accepting applications. Each state, territory or tribe

developed their own program so the application process can vary. Typically, the homeowner will

need to:

▪ File an application attesting to a financial hardship after January 21, 2020;

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States may provide waivers or exceptions to documentation requirements due to extenuating

circumstances such as disability, practical challenges related to the pandemic, or tech

challenges. In addition, the Department of Treasury discouraged states from imposing additional

eligibility requirements (e.g., related to foreclosure status, credit score, bankruptcy status, liens).

Once approved money will go to the mortgage servicer, utility company, or contractor making

repairs to the home – if they participate in the HAF program. Many programs will provide the

money as a grant. Some may have additional requirements or require repayment, for example,

if a home is sold before a certain date.

Will HAF programs do outreach to homeowners?

Yes, states and territories will target certain populations of homeowners in need of assistance.

cultural bias because of their identity as a member of a group without regard to their

individual qualities;

▪ Then the funds will be made available to other eligible homeowners.

Targeted outreach includes prioritizing assistance to limited English proficient consumers and

homeowners with FHA, VA and USDA insured or guaranteed loans.

What challenges will homeowners face when applying for HAF funds?

Keep in mind that HAF programs are just getting established. Your state’s program may not be

up and running. Additionally, reverse mortgage companies and other mortgage servicers are in

the process of establishing agreements with the state programs. As discussed above, many

consumers will be put in foreclosure and may be seeking a meaningful opportunity to access

HUD offers a number of options to help reverse mortgage borrowers behind on property charges.

HUD allows reverse mortgage servicers to offer borrowers with property charge arrears:

▪ A repayment plan of up to 60 months in length. If a borrower had a prior repayment plan,

current policy limits the length of the plan to 60 months minus the term of the prior

(unsuccessful) repayment plan. If the reverse mortgage is nearing the Maximum Claim

Amount, that may also cause a servicer to offer a shorter repayment plan. HUD typically

does not allow a successive repayment plan if a borrower has defaulted on a prior plan and

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owes more than $5,000 in arrears. However this policy has been waived during the

pandemic (currently waived through June 30, 2022);

▪ If all borrowers are over age 80 and at least one borrower has critical health circumstances,

such as a chronic illness or disability, the servicer may offer an At Risk Extension, in which

the foreclosure is deferred for one year. This option is renewable;

▪ Finally, a chapter 13 bankruptcy is a good option if nothing else works. The reverse