Promised Help on Mortgage Payments, But Hit with Foreclosure Instead

Homeowners enrolled in Nevada’s mortgage assistance program have found themselves facing unexpected foreclosure notices as delays occur in the distribution of federal funds from the government to loan providers. The situation sheds light on the difficulties that many homeowners are encountering while navigating the complex web of pandemic-era assistance programs.

When Noelle Geraci, who recently lost her job at a private investment firm, faced the uncertainty of her financial situation, she took proactive measures to safeguard her most valuable asset: the home she shares with her mother in a Las Vegas suburb. Amidst the economic turbulence, Noelle began her job search and secured unemployment benefits. She also reached out to her mortgage provider, Flagstar Bank, seeking options to temporarily reduce or pause her mortgage payments until she could secure another job.

Flagstar Bank suggested that Noelle explore the Nevada Homeowner Assistance Fund, a program established to aid unemployed individuals in managing their mortgage payments during the pandemic. While hesitant at first, Noelle and her mother, Shirley, decided to inquire about the program. However, the program’s terms, including a three-year lien requirement in exchange for assistance, raised concerns for the Geracis. This lien, intended to protect the program’s interests, posed potential limitations on their financial flexibility.

Considering their circumstances – with Shirley being retired and Noelle facing a challenging job market in a city with high unemployment rates – the Geracis chose to apply for assistance through the Nevada Homeowner Assistance Fund. Upon qualification, they were eligible to receive up to a year’s worth of mortgage payments, which would be facilitated by a non-profit organization managing the program. This support alleviated the financial burden they were grappling with, offering a sense of relief.

However, despite the initial relief, their hopes were dashed when they received a foreclosure notice in the mail. The funds allocated by the U.S. Treasury, intended to flow through Nevada’s assistance program and reach their bank, had not reached Flagstar Bank as expected. Noelle’s attempts to seek clarification yielded no results, leaving her frustrated and anxious.

The root of the issue lies in the bureaucratic complexities involved in distributing federal funds through state agencies to homeowners’ mortgage servicers. In Nevada’s case, the state had entrusted the task to the Nevada Affordable Housing Assistance Corporation (NAHAC), a non-profit organization that had faced challenges in administering federal assistance effectively. This complex chain of distribution often leads to delays, with homeowners like the Geracis bearing the brunt of the repercussions when payments are not received on time.

The Geracis’ experience is not isolated, as similar issues have been reported in other states, highlighting systemic challenges within mortgage assistance programs. The situation in Pennsylvania mirrors the struggles faced by the Geracis, with individuals describing their experiences as nightmarish.

After being approved for a year’s worth of assistance, NAHAC advised the Geracis to halt their mortgage payments, reassuring them that the program would cover the payments. However, their optimism was short-lived when a foreclosure notice arrived in July, indicating that their loan was in default due to missed payments.

Shirley Geraci’s response to the foreclosure notice echoed the concerns of countless homeowners: “I don’t want to lose my house… It’s our investment.” The ordeal prompted a flurry of phone calls, resulting in conflicting guidance from NAHAC and the bank. While NAHAC assured Noelle not to worry about the foreclosure notice, the bank maintained that the arrears needed to be paid to avoid the foreclosure process.

The Geracis’ story serves as a cautionary tale, shedding light on the complexities and challenges inherent in mortgage assistance programs during times of economic uncertainty. As homeowners navigate these waters, it becomes clear that timely and transparent communication between government agencies, non-profit organizations, and banks is essential to ensuring that much-needed assistance reaches those who need it most.