Pennsylvania’s Foreclosure Prevention Initiative Decried as a ‘Nightmare’ by Housing Activists

The Pennsylvania Homeowner Assistance Fund (PAHAF) was created last year with the express goal of aiding homeowners in settling their outstanding mortgage debt. However, the reality has been a protracted waiting period for aid that has left many individuals in precarious situations.

One such person is Deborah Brown, a retired counselor from Southwest Philadelphia, who is desperately trying to avoid foreclosure on her home. With a debt of nearly $30,000 due to six months of missed payments, she finds herself in an increasingly dire position. As a retiree living on a fixed income and responsible for caring for her adult son, who was left disabled by a severe stroke, her resources are limited.

Brown reminisced, “Both parents are gone. A couple of siblings are gone. I have nobody in my family who can really take care of or support us.” She saw a glimmer of hope when she learned about the PAHAF and promptly applied for aid last winter via the Pennsylvania Housing Finance Agency (PHFA).

The PAHAF was set up to distribute individual grants of up to $50,000 to homeowners financially affected by the pandemic, using the $350 million allocated to the state for foreclosure prevention through the American Rescue Plan. Despite the promising nature of the program, many like Brown are still awaiting the arrival of the funds.

In a heartfelt admission, Brown expressed, “I’m not suicidal or anything. I just feel down in the dumps. Like, when is this going to end?” This sentiment is shared by many of the 24,633 Pennsylvanian homeowners who applied for grants via the program. To date, 15,878 homeowners remain in financial limbo, anxiously awaiting funds to resolve their mortgage arrears and unpaid utilities. Notably, around a quarter of these individuals hail from Philadelphia.

Housing advocates have voiced their frustration, such as John Dodds, the Executive Director of the Philadelphia Unemployment Project, who described the situation as “a nightmare,” and highlighted the urgent need to expedite the process.

Initially, an external vendor, Innovative Emergency Management (IEM), operated the PAHAF on behalf of the PHFA. However, approximately a year later, the PHFA made the decision to manage the program internally in an effort to utilize its intimate understanding of Pennsylvania’s housing market and extensive network of lenders and agencies.

This shift in operations led to a temporary halt in accepting new applications and necessitated re-registration for those who had already applied. Advocates have claimed that this change wasn’t effectively communicated. Even though some grants are being distributed, the process is far from swift. While IEM managed to disburse over $102 million in 14 months, the PHFA has only been able to distribute around $13 million since February 2023.

Rachel Labush, a supervising attorney at Community Legal Services, lamented over the prolonged wait times and the stress they place on applicants, some of whom she has personally assisted and who have been waiting for aid since the program’s inception.

Scott Elliott, a spokesperson for the PHFA, acknowledged that funding has not been reaching homeowners as promptly as the agency had hoped. He attributed this partly to delays from third-party operators, including debt providers and utility companies. He added that the PHFA had not anticipated the number of pending applications that IEM would return.

Despite the delay, Elliott assured that applicants facing imminent foreclosure would be given priority, urging them to notify the agency. He also emphasized that while speed is essential, ensuring compliance with the U.S. Treasury, which oversees the program, is equally important. The program is expected to reopen if there are remaining funds after the current pool of applicants receives assistance.