Washington State Homeowner Assistance Fund – FAQs

1. What is the Homeowner Assistance Fund?

The Homeowner Assistance Fund is a bill passed by the federal government allotting almost 10 billion dollars to help homeowners who are struggling with mortgage payments as a result of COVID-19.

The purpose of the Homeowner Assistance Fund is “to mitigate financial hardships associated with the coronavirus pandemic” by preventing “homeowner mortgage delinquencies, defaults, foreclosures, loss of utilities or home energy services.”

2. What can the Homeowner Assistance Fund be used for?

HAF funds can only applied towards the following approved categories:

• Mortgage payment assistance, and other financial assistance to allow a homeowner to reinstate a mortgage or to pay other housing related costs related to a period of forbearance, delinquency or default.
• Principal reduction
• Interest rate reductions
• Payment assistance for utilities, including electric, gas, home energy, water, internet, homeowner’s insurance, HOA dues

3. How do I apply for the Homeowner Assistance Fund?

State governments are responsible for creating the application process and distributing the funds.

As of the date of this blog post (February 1st, 2022), some states (like California) are already distributing funds to homeowners.

States like Washington are in the process of creating their application process and expect the process to be ready in the Spring of 2022. Here is an overview of what to expect.

You can read Washington State’s proposed plan here.

4. How much money can I get?

Different states were allotted different amounts of money based on the number of mortgage delinquencies and unemployment rates in each state.

In Washington State, based on what’s been proposed so far, a homeowner can get $25,000 with an additional $12,500 if you meet additional qualifying factors for a total of $37,500.

5. Do I have to be in default to receive Homeowner Assistance Funds?

Yes. Generally, you will need to be behind on payments in order to receive HAF funds (in addition to many other requirements as dictated by your state).

The purpose behind the HAF program is to help homeowners who are currently behind on mortgage payments (or other bills like HOA dues or utility bills) get caught up in order to avoid foreclosure.

In Washington State, the proposed program explicitly states that you cannot receive funds to assist with any future financial hardship.

6. What do I do if I’m behind on payments and don’t qualify for HAF Funds?

If you’re behind on mortgage payments now and facing foreclosure or if you don’t think you will qualify for HAF funds, you can always apply for loss mitigation options directly with your lender.

Some states (like Washington) will even require you to do so before you become eligible for HAF funds so if you think you may apply for HAF funds, it may be in your interest to apply for these options now:

• Loan Modification: A loan modification is a new loan with new terms that allows you to resume mortgage payments without having to pay everything you owe all at once. Usually, your missed mortgage payments get added to your total principal balance and become due at the maturity date of the loan. It is common for loan modifications to offer reductions in interest rates, extended maturity dates, and sometimes – they lower the monthly mortgage payments.

• Repayment Plan: A repayment plan is an agreement that allows you to resume your regular mortgage payment and pay an extra amount on top of your mortgage payment until you’ve paid back all your missed payments. Once you have paid everything back, you continue making your regular monthly mortgage payment.

• Forbearance: A forbearance gives you a temporary break in having to pay your mortgage. Once approved for a forbearance, you are allowed to stop payments for the approved months without the lender taking foreclosure action against you.

• COVID-19 Deferral Agreement: For those of you who were placed on a COVID-19 Forbearance plan (and have Fannie Mae or Freddie Mac as your investor), you may be able to receive a deferral agreement which takes the amount of payments you missed during your forbearance and defers the amount owed to the maturity date of your loan so you can just resume your regular payment.

• Partial Claim COVID Transition Option: For those of you who were placed on a COVID-19 Forbearance plan (and have FHA as your investor), you may be able to receive a partial claim agreement which takes the amount of payments you missed during your forbearance and defers the amount owed to the maturity date of your loan so you can just resume your regular payment.

• Short Sale: A short sale allows you to sell an underwater property for less than what is owed on the mortgage. Your mortgage lender approves the sale and then typically waives the deficiency balance (the remaining amount owed) so you can sell your home and move on without owing the remaining balance.

• Deed in Lieu of Foreclosure: A deed in lieu of foreclosure is an agreement between yourself and your mortgage lender where you sign a document giving the house back to the bank in exchange for the bank agreeing not to foreclose on you.

Mortgage Relief Options For Washington Homeowners

Mortgage issues are complex. Banks and mortgage servicers can be very uncooperative. If you think you might need some help, you have some good options. Here are three articles to help you understand the help that is available to you.

What Can a Mortgage Attorney Do For You
What Can a Foreclosure Attorney Do For You
What to Look For In a Loan Modification Attorney

If you are a Washington homeowner who is behind on mortgage payments, considering HAF funds or just generally wondering what your options are, feel free to give me a call at (425) 654-1674.