Pa. homeowners face foreclosure while they wait for money from the state to help pay their mortgages

A kidney failure diagnosis forced 80-year-old Deborah Brown into retirement a few years ago against her will. Since then, she’s been fighting to keep up with bills and hold on to the Southwest Philadelphia rowhouse where she’s lived for 50 years.

“Before I retired, it was just a struggle,” she said. “Now it’s more than a struggle. It’s almost an impossibility.”

Paying her mortgage got harder. Her gas got shut off. Her son had a stroke early in the pandemic and moved in with her.

Brown applied for help through a state pandemic-relief program offering homeowners up to $50,000 for assistance with mortgage payments and utility bills. That was at the end of January, a day before the program closed to new applicants. Now, she said, she’s six months behind on her mortgage, and she’s among thousands of Pennsylvania homeowners still waiting for help — some of whom applied much earlier than Brown.

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“In the meantime, I’m getting letters from the mortgage company. I’m getting calls from the mortgage company. I’m getting calls from collection agencies,” she said.

For far, Pennsylvania has paid out $119 million — about a third of the $350 million it received through the federal American Rescue Plan Act for its Homeowner Assistance Fund. The private contractor that the state hired botched management of the program, including improperly denying some applications. So the Pennsylvania Housing Finance Agency took over earlier this year. It faces a backlog of more than 15,000 applications.

The nonprofit Philadelphia Unemployment Project said it knows of lenders that have foreclosed on Pennsylvania homeowners who were waiting for assistance.

And now, homeowners who previously applied must re-register in order for the state to consider their applications, and housing advocates are worried that homeowners don’t know that. In the five-county Philadelphia region, a little more than half of roughly 7,500 current applicants had re-registered, as of Friday. Statewide, more than 9,600 applicants had not registered again.

“People are facing the loss of their homes while they’re waiting for the money to come through,” said Rachel Labush, supervising attorney at Community Legal Services of Philadelphia. “We’re concerned that many people have given up or don’t know they need to do anything now and are waiting.”

Philadelphia and Chester are among the counties with the highest numbers of applicants who have not re-registered. The Pennsylvania Housing Finance Agency is hosting re-registration events in July in those counties.

Labush said some clients didn’t receive the emails meant to alert them to what they need to do, and others don’t regularly use email. At the end of May, the agency started calling applicants, and homeowners should be receiving letters, too, the agency said.

Applicants should call the agency’s hotline at 888-987-2423 if they need assistance.

In Philadelphia, the Residential Mortgage Foreclosure Diversion Program has been tracking homeowners with pending applications and pausing their cases, Labush said, but homeowners in other counties are vulnerable.

A spokesperson for the Pennsylvania Housing Finance Agency said the agency has contacted the state office that oversees the courts. He said that office will help get the word out to courts that handle foreclosures and sheriff’s sales about the Homeowner Assistance Program and the courts’ ability to expedite cases in which homeowners are in imminent danger of losing their homes.

In a statement, the agency said it “recognizes the urgent need for many Pennsylvanians to receive financial assistance from [the program] and is working diligently and methodically to ensure that federal funds are appropriately distributed.”

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Pennsylvania has until 2025 to distribute the funds, but homeowners across the state are running out of time as foreclosure proceedings continue. In May, Philadelphia was among the major metropolitan areas where lenders started the foreclosure process on the most properties, according to the real estate data company Attom.

A coalition of legal aid groups and housing advocates spoke about the urgency of getting funds to homeowners at a news conference Tuesday in Harrisburg.

“We cannot afford to have administrative bureaucracy stand in the way of homeowners accessing those resources,” State Rep. Donna Bullock (D., Philadelphia) said during the news conference. “We cannot afford to allow homeowners to go into foreclosure, to sheriff’s sale, when there are dollars on the table waiting for them.”

The program is not accepting new applications, as the state makes its way through the backlog. This month, the Pennsylvania Housing Finance Agency plans to post on its website an accounting of applications processed and in progress and funds distributed and remaining.

To be eligible for funds, households could make no more than 150% of the area median income. In the Philadelphia region, that’s $141,750 for a family of four. According to federal guidelines, 60% of funds must go to households with incomes at or below 100% of area median income. That’s $94,500 for a family of four.