Pa. mortgage program, closed for over a year to resolve backlog, will reopen in March, officials say

This story originally appeared on Spotlight PA.

A Pennsylvania mortgage relief program to help homeowners catch up after the pandemic will reopen in March after being closed for more than a year to resolve a backlog of applications and a series of internal problems.

The program will have an estimated $46 million remaining for new applicants, said Scott Elliott, a spokesperson for the Pennsylvania Housing Finance Agency, which runs the effort. That’s enough to cover roughly 3,350 more homeowners, according to a Spotlight PA analysis based on the average amount of assistance awarded so far.

“It’s great news that the program is reopening to new applicants,” said Rachel Labush, an attorney at Community Legal Services in Philadelphia. Homeowners who face foreclosure or are at risk of having their property sold for back taxes should make sure to flag this when they apply, she said, as the program prioritizes these applicants.

After the state took over from the company originally hired to run the Pennsylvania Homeowner Assistance Fund last spring, homeowners with pending applications had to register in a new system before they could receive assistance. Applicants who still have not yet done so have until Feb. 23, or their applications will be withdrawn, Elliott said. They will be able to reapply when the program opens again, but will not receive priority over other applicants.

The assistance program first opened in January 2022 with $350 million in federal funding to help Pennsylvania homeowners with late mortgage payments, utility bills, property taxes, and other housing costs.

Problems soon emerged.

A Spotlight PA investigation in January 2023 found the program often struggled to get the information it needed from mortgage companies, leaving homeowners waiting for months, uncertain whether they would receive assistance.

Some applicants with overdue utility bills had their service shut off while waiting. Others watched their credit scores plummet as they fell months behind on mortgage payments because of the delays. Homeowners also complained that program workers stopped responding to them.

The program stopped accepting new applications last February, with only a few days’ notice. PHFA announced that it would end its contract with the company originally hired to run the program and take over itself.

The transition process, however, took longer than expected and created new problems, Spotlight PA reported last summer. Thousands of homeowners who had already waited months had to register in a new system before they could get help. By late July, only about half had done so. The amount of money being paid out to homeowners slowed to a trickle. Some homeowners also found that mortgage payments the program was supposed to pay stopped abruptly, with no warning.

Since then, PHFA has steadily dispensed more money and re-registered more applicants. Still, around 6,100 homeowners who applied before the transition had not yet registered in the new system as of Feb. 1, program data show, despite receiving multiple reminders via phone call, email, and letters in the mail.

Nationally, roughly half of states have closed their homeowner assistance programs or temporarily stopped taking new applications, according to a presentation given to PHFA’s board of directors during a working session in December.

As of Feb. 1, Pennsylvania’s program has paid out almost $200 million to roughly 15,200 households, according to publicly available data.