When Kimberly Edgar was unable to work due to COVID-19, the new Mortgage Assistance Program offered her a path for keeping her home in Brattleboro. Funded by the federal CARES Act, the program provides qualified Vermont homeowners with grants for up to six months of overdue mortgage and property tax payments.
By applying for mortgage assistance through the Vermont Housing Finance Agency who is administering the program, Kimberly and her family are weathering the financial storm created by the pandemic. Kimberly is a single mother who was working as a registered nurse in a unit with COVID patients at the start of the outbreak. She was forced to leave her job for fear of bringing the virus home to her three children, one of whom has special needs and is at high risk of complications. Kimberly is also a caregiver for her mother, who has cancer.
“I’m doing everything I can to support my family, but I have no idea when it will be safe for me return to work,” explained Kimberly. “So many people are dealing with situations like mine right now and I think this program can make a huge difference for lots of families.”
Like Kimberly, the vast majority of Vermonters who have applied for help with their mortgage are facing multiple challenges compounded by the COVID-19 pandemic. Caring for children and family members at home has slammed many homeowners with new responsibilities and expenses, such as higher utility bills. Other homeowners seeking mortgage help are facing challenges such as illness, higher day care costs due to new COVID-19 prevention requirements, and unanticipated car and home repair costs.
“Due to Covid-19, my children are home 24/7 increasing my home expenses for power, heat and food,” said one Vermont homeowner seeking mortgage help.
Vermont Mortgage Assistance grants are available to any homeowner who meets the program’s eligibility criteria, even if they have already arranged a forbearance agreement. As of August 14, 2020, 7% of all U.S. mortgages were in forbearance according to Black Knight.
Many homeowners seeking grants to help pay their mortgage lost income when the pandemic hit because they work in hard-hit industries. Some had jobs in restaurants, hotels, day care centers and schools. Others worked in the travel industry or had personal care jobs in hair and nail salons, massage therapy businesses or were personal care aides.
"Before the pandemic, I was a hair stylist in a nursing home but am now prohibited from entering the building and unable to pay all of my bills with unemployment," wrote one applicant for the Mortgage Assistance Program. Another wrote, “My job will not be hiring me back until probably 2021. The extra $600 in unemployment has been a godsend and has kept food on the table. My mortgage company thankfully allowed me to go into forbearance, but I don't know how I am going to pay back the forbearance.”
A homeowner in forbearance can pause or reduce their mortgage payments for a limited period agreed to by the mortgage servicer, avoiding immediate foreclosure. However, forbearance does not erase the amount ultimately owed on the mortgage. By providing grants on the homeowner’s behalf to the servicer for up to six missed payments, the Mortgage Assistance Program lowers the balance the homeowner owes at the end of the forbearance period.
The deadline for applying for mortgage grants was removed recently to continue to help homeowners who will need help in the coming months as the ripple effects from the pandemic continue to be felt.
“Extending the program into the fall means that more Vermonters will receive the help they need to stay safely in their homes, even if the pandemic causes them to lose income,” said Maura Collins, VHFA’s Executive Director. “We want to be ready to help if needs rise due to reductions in supplemental unemployment insurance benefits.”
Foreclosures in Vermont are paused until 30 days after the Governor’s declared state of emergency ends. Earlier this month, Governor Scott extended the state of emergency through at least September 15, 2020.
Since March, the rate of mortgages that are 60 or more days past due in Vermont doubled to 6%, as of industry surveys on June 30, 2020. The Vermont Department of Labor reported that 33,000 Vermont workers were unemployed in August, four times as many as before the pandemic in early March.
With over 300 applications submitted already, the mortgage assistance program is reaching many Vermonters suffering economic hardship. Program data suggests that in addition to having unsustainably high housing costs relative to decreased income levels, applicants are more likely to be vulnerable to the pandemic in other ways. 34% of applicants have a disability, compared to 15% of all Vermonters. Mortgage assistance applicants also have larger families than most Vermonters, with 38% of households having four or more members, compared to just 19% of all Vermont homeowners. Furthermore, 8% of applicants are non-white. While this number is small, it is higher than in Vermont as a whole, where 97% of homeowner households are white. Housing experts predict that Black and Latino households will be hardest hit by the economic impact of the pandemic.
VHFA is raising the income limit to expand eligibility for mortgage assistance to households with incomes up to 100% of the median, effective September 14. The new household limit is $21,000 in the past 90 days statewide ($24,000 in Chittenden County). If qualified applications exceed the total amount of funding available, homeowners with lower incomes will receive priority.
The Mortgage Assistance Program was created by the Vermont Legislature with the passage of H.966, an act relating to COVID-19 funding and assistance for broadband, connectivity, housing and economic relief. In addition to the Mortgage Assistance Program, the act dedicated funding for a variety of legal and counseling services, housing and facilities, eviction protection, rental assistance and other housing supports for Vermonters facing economic hardship totaling $62 million. Governor Scott signed the bill on July 2, 2020.
Mortgages eligible for assistance through the new program are not limited to those made through VHFA’s standard programs. Information and application materials are available on VHFA’s website at www.vhfa.org/map. Vermont Legal Aid’s hotline at 1-800-889-2047 is also available to answer questions about the program by phone.