The pandemic continues to have an impact on many homeowners’ ability to meet their financial obligations at no fault of the homeowner. To address homeowners’ complex and often rapidly changing challenges, Homeowner Assistance Fund (HAF) participants (including states, territories, and Tribal governments) can work with mortgage servicers1 to assist homeowners facing financial instability. HAF Programs and servicers can help prevent avoidable foreclosures and delinquencies by quickly empowering homeowners to identify and implement the solution that best meets their financial needs and efficiently allocates HAF resources.
Advantages to Coordinating with Servicers as a Practice
Provide timely assistance to households
Timely and coordinated processing of applications between HAF Programs and servicers can help support timely assistance to homeowners and avoid unnecessary foreclosures.
Reduce administrative burden
Establishing more uniform policies and procedures can reduce the administrative burden for HAF participants and servicers. These advantages can be multiplied as HAF Programs share promising practices amongst each other and encourage common processing practices with servicers.
Increase transparency about the application process
Homeowners, housing counselors, community partners, servicers, and HAF Programs can all benefit from operational transparency and clear expectations. Keeping all stakeholders updated on a regular basis through proactive communication channels can enable increases in efficiency, calm, and confidence in the HAF Program.
Example of a State HAF Program and Servicer Collaboration Supporting Homeowner Applicants
Key Steps to Build Efficient Processes with Servicers
- Build Streamlined Operations from the Start - Design operational plans based on key stakeholder’s input and operational capacity:
- Identify and enroll mortgage servicers of all sizes within the HAF Program’s jurisdiction. State HAF Programs that devote operational resources to onboard servicers prior to program launch and on an ongoing basis can reduce wait time for homeowners.
- Provide an outline of processes and expectations that clearly states which entities are responsible for specific actions within a specified amount of time. This can help increase efficient collaboration between all parties involved in the HAF Program including applicants, servicers, vendors, and HAF support staff.
- Onboard servicers to your HAF Program through a consistent process. Make resources available to help both applicants and program staff troubleshoot issues and escalate challenges to ensure smooth operations and expedite support for homeowners.
- Build out an operational plan that incorporates the Common Data File (CDF) and create alternative communication methods when servicers do not use the CDF. Some small–to-mid-sized servicers may only collect a certain amount of data to reduce burden for their staff who manually enter the information.
The State of California initially launched its HAF Program pilot by sending a notification (I Record) to servicers immediately upon receipt of a homeowner application. In order to more effectively serve the high number of applicants, the program administrators determined that conditional qualification of an applicant’s eligibility needed to be the first step. This streamlined the process for both the servicers and the California HAF Program by reducing the number of requests overall (I Records), and the number of requests for updated information (Y Records). The California HAF Program also started the practice of using an area of the CDF (the state fields) to ensure timely and uniform communication with the servicers, which resulted in an overall update of the CDF (to Version 7.4), and ultimately led to disbursement of funds on behalf of applicants more quickly.
- Ongoing communication through established channels and regularly scheduled conversations about State HAF Program processes and the status of applications can improve processing times. Predictable schedules and stated expectations of each component of the process can help avoid confusion.
- Providing opportunities for servicers to provide feedback through listening sessions and collaborative working meetings can prevent systemic issues and mitigate challenges.
- Design applications to gather information on the front-end from the applicant to help determine how the HAF Program and servicer can support the homeowner. This can help State Programs more efficiently address the different needs of each type of financial housing instability. These questions can help determine whether any additional information is needed, such as a trustee consent for a borrower in bankruptcy. Additionally, they can help the State Program determine if the homeowner is in communication with their servicer discussing loss mitigation solutions or even foreclosure.
Example front-end Questions
Is your home in the process of foreclosure?
If foreclosure is imminent or already in process, the State Program can flag the homeowner for expedited processing
Are you in the process of filing for bankruptcy or have you filed in the last X months?
Different information will need to be collected by the state for a Chapter 13 bankruptcy versus a Chapter 7 bankruptcy. For Chapter 13, the state will need to obtain trustee consent from the homeowner; for Chapter 7, the state may need to collect contact information for sending the post-petition notification if trustee notification is required.
Have you engaged with the servicer and, if so, are you under review for loss mitigation?
If a borrower is still being reviewed for loss mitigation, the financial support they may need or be eligible for could change once the review is completed.
Based on your last mortgage statement, what are the total mortgage arrearages?
If the amount of the borrower’s total arrearages is close to or above the State HAF Program’s cap, the State may want to consider an expedited approach and how a combination of HAF assistance and another form of loss mitigation might avert foreclosure. Identifying close-to or above-cap arrearages can also spur a State Program to communicate quickly with the servicer. States can also make exceptions to their cap if documented in their policies and procedures where at the time of application the Applicant was below the cap.
Would you be able to afford your regular mortgage payment after a forbearance period?
This question identifies which homeowners can be helped with a straightforward reinstatement payment and which may need additional support through other programs.
Are you or have you been working with a housing counselor?
Understanding if the applicant is or has worked with a housing counselor can help expedite the referral process.
Implementing Coordination - Promote timely coordinated processing and completion of applications with the following steps:
- Obtain permission from homeowners with a third party authorization (TPA) to enable communication between the Servicer and State HAF Program on their behalf. Consider adding other entities to the TPA that homeowners may want to communicate on their behalf. These may include housing counselors, utility companies, and homeowners associations.
- Use the CDF to efficiently transfer homeowner information from servicers to State HAF Programs on a regular basis. This will help ensure accurate and consistent payment calculations and transfer of funds as well as provide an efficient, two-way communication method between State HAF Programs and servicers.
- Continue to have a regular cadence (e.g., weekly or monthly) of communication (e.g., phone calls or email exchanges) with servicers about the status of applications in their queues, particularly those requiring special attention.
- Create and share “Aging Reports” on a weekly or monthly basis to highlight the files for which the State HAF Program is waiting for more information or a response from servicers. With consistent communication and set expectations, this practice can expedite processing for homeowners.
The State of California uses a weekly aging report to communicate with servicers. One notable feature is that the last column of the report identifies any incorrect fields so that program administrators can assist with fixing the submissions.
- Notifying the servicer in a timely manner when a homeowner's application has been conditionally approved ("I” record is sent) can help avoid stress for the homeowner, unnecessary foreclosures, and additional administrative burden for all stakeholders.
- Collaborate with servicers to develop operations to support timely processing of applications by continuously refining policies and procedures as well as finding opportunities for automation to increase efficiency. HAF Programs within the same region can collaborate to determine common practices to reduce variations on similar processes with common servicers.
The State of Oklahoma’s HAF Program began disbursing funds with participating servicers on behalf of applicants. However, Oklahoma's HAF staff noticed a disconnect between departments within the servicer organization. For example, when the Oklahoma HAF Program sent a payment, there was a delay on the servicer side in determining which homeowner’s account should receive the payment. To help expedite support for homeowners, Oklahoma HAF staff began sending an itemized and detailed remittance list (with the State identifier, the lender loan number and the borrower’s last name) along with detailed payment information (via email) to ensure the correct payment amounts were quickly applied to the appropriate accounts.
Build Process Transparency with All Stakeholders
- Work with servicers and other relevant stakeholders to ensure that applicants are engaged in the process of determining their best options. When available, refer homeowners to housing counseling services for support in navigating their options and understanding their own responsibilities within the identified solution.
- Ensure homeowners have access to updated information about the status of their applications and expectations for processing timelines. These updates can be provided through an online portal, regular email updates and/or through a call center operator. When homeowners are immediately made aware of issues with their application and know how to get in touch with the HAF Program, it can help quickly mitigate challenges and avoid processing delays. Additionally, providing updated application information can help reduce stress placed on homeowners and help them avoid making a potentially detrimental financial decision prior to their HAF approval.
The State of Michigan realized the need to increase customer service availability to help homeowners apply to the HAF Program. To quickly increase staff capacity, the HAF Program contracted with the state’s 211 service to answer questions, fill out applications for those without internet access, screen for eligibility and refer homeowners to other services they need.
- HAF Programs can list the servicers that are participating in their program on their website as well as information for homeowners whose servicers are not participating while still encouraging these homeowners to apply.
- Provide applicants with a process to dispute a denial of HAF assistance or elevate issues or barriers to applying. This can help ensure HAF funds are available to all homeowners in distress.
Housing stability of applicants
- Expedite pending foreclosure cases with servicers for homeowners determined eligible for support.
|The State of Oklahoma launched its HAF Program with a team of underwriting staff with experience in housing finance to expedite application processing time. However, the State’s HAF staff realized that homeowners already in court over foreclosure faced imminent displacement. By dedicating a staff member solely to foreclosure cases, staff could specialize their workloads and increase program efficiency to better meet the needs of homeowners.|
- Shortening the application processing time without sacrificing key information collection increases the financial stability of households, which can ultimately increase the overall number of households that the HAF Program can serve.
- Providing alternative application options and support can help serve homeowners who face obstacles using online applications and communication methods. Affected populations can include people with disabilities, lack of internet access or familiarity, the elderly and those with limited English proficiency.
- Working with servicers to develop streamlined operations that support creative solutions can help address a homeowner’s unique situation, e.g., combining HAF funds with loss mitigation options.
Empower HAF Applicants to Engage in the Process
- State HAF Programs can expand applicant access to networks of counselors and other educational resources, enabling applicants to gain the knowledge and ability to determine and select the best outcome for their financial needs.
|The State of Kentucky hired five new application processors and is incentivizing these staff to become HUD certified housing counselors by offering to pay for their training and certification. This improves outcomes for homeowners with access to an increased number of state-wide counselors who are directly involved in financial housing process.|
- Ensuring regular communication with each applicant throughout the application process can help reduce applicant confusion and help struggling homeowners make informed financial decisions.
Improve Outcomes for Homeowners and Collaboration with Servicers
- State HAF Programs that engage servicers before the HAF portal goes live can reduce how long applicants wait to receive support. Enrolling servicers can be a lengthy process because it can be challenging to identify the authorized personnel who can agree to participate in HAF and the IT staff to set up the information transfer through a portal or the CDF.
- HAF Program staff can stay updated on the changing impacts of the pandemic and economic environment on the needs of homeowners and adjust program offerings accordingly by holding regular discussions with legal aid, housing agencies, and other stakeholders.
- Provide on-going trainings and communications for partner organizations and servicers to educate homeowners on their various options and local market trends can improve outcomes for homeowners.
- Sharing processes and procedures to work with servicers can help emphasize promising practices and lead to more efficient operations that reduce administrative burden for all stakeholders and HAF Programs.
Some HAF Programs administered by Tribal Governments or Tribally Designated Housing Entities may need a more nuanced approach to work with servicers given their population’s location and unique needs. Consider your program’s operational capacity when building out processes given the potential volume of applicants and how to most effectively share information with large and small servicers. Identifying the core set of data or information to request from all servicers will help with efficiency, even if the program opts for a manual approach.
 Mortgage servicers play an essential role in the financial aspect of homeownership. Servicers process the loan payments homeowners make on their mortgage, track principal, and interest paid, and manage escrow accounts.
 HAF Common Data File or CDF: The HAF CDF is a business tool that offers a streamlined and consistent way for servicers and program administrators to transmit data to each other about a particular homeowner. The CDF includes an agreed-upon process for interactions between state program administrators and servicers and a set of definitions, timelines, and data fields that help any participating servicer or state program collect, process, analyze, and make decisions about a particular homeowner. Using the CDF enhances the ability of servicers and state programs to quickly provide support to homeowners in distress. The CDF guide describes how to use the CDF, with protocols related to the order of activities, turn-around times for document exchange, communications expectations, transmitting and processing payments, and handling servicing transfers.
 Homeowner Third-Party Authorization: A third-party authorization, signed by the borrower, allows a program administrator to communicate with various third parties about the status of a HAF applicant or HAF-eligible homeowner. Third parties may include external advisors, like housing counselors or legal aid attorneys, bankruptcy trustees, utility companies, condo associations, or state taxing authorities. Of particular importance, TPAs enable servicers to communicate private borrower information to state program administrators and other crucial third parties. All of these stakeholders typically need a TPA to be able to legally transmit information crucial to resolving the homeowner’s financial obligations. Use of this authorization expedites information sharing, enabling all stakeholders the opportunity to resolve cases quickly, without unnecessary evaluation of unique borrower certifications and authorization forms.