HAF payments can help struggling homeowners address financial hardships related to the pandemic. However, temporary financial assistance through the HAF program is just one option available. For instance, if a homeowner would be unable to keep up with regular mortgage payments once HAF assistance ends, that homeowner might be better served by first exploring loss-mitigation options such as a loan modification to lower the interest rate or lengthen the payment term. Housing counseling and plain language education materials can help homeowners determine the best option for them.
Integrating Housing Counseling and Plain Language Education Materials
Treasury has encouraged all HAF programs to integrate housing counseling services into HAF program plans. Housing counselors are fluent in the various options available to homeowners and can also help homeowners assess their financial situation holistically, often providing budgeting support and referrals to other available resources.
The State of Kentucky has developed a plain-language explainer video, available in English and Spanish, entitled "Know Your Options: COVID-19 Loss Mitigation Options." The video walks the viewer through the relative advantages and tradeoffs between loss mitigation and HAF options for homeowners through the Federal Housing Administration, the U.S. Department of Veterans Affairs, the U.S. Department of Agriculture, and Fannie Mae or Freddie Mac. This video outlines key questions the potential applicant should ask themselves and encourages engagement with their servicer. All HAF applicants in Kentucky are also paired with a HUD-certified housing counselor who helps the homeowner to assess and understand options. Housing counseling agencies walk the borrowers through their loss mitigation options. If the homeowner has exhausted, is ineligible for, or wishes to bypass loss mitigation options, and is also eligible for HAF, the housing counselor proceeds to process their HAF application.
The State of Tennessee assigns all HAF applicants to HUD-certified housing counseling agencies when their applications are submitted. This allows the housing counseling agencies to do early intervention to review loss mitigation options with homeowners. This early assessment process also considers the applicant's financial situation to help determine the type of assistance the homeowner needs to successfully sustain future mortgage payments. In addition to housing counseling, the state plans to provide HAF applicants with specific online education resources.
Integrating Other Loss Mitigation Expertise
The State of New York is incorporating a special case management team of attorneys with deep subject matter expertise in loss mitigation into its program. This team supports applicants through the loss mitigation process, especially helping to identify situations in which loss mitigation may be advanced by using HAF funds to pay off arrears or reduce the principal of the existing mortgage.