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Wolf extends deadline for millions in pandemic rent and mortgage relief, but will banks participate?

By PhillyNews.FYI , in Philadelphia News , at October 6, 2020 Tags: , , , , , , , , , , ,


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Pennsylvania renters and homeowners struggling because of the pandemic just got an extra month to apply for relief. The deadline for a state program funded by the CARES Act has been extended to Nov. 4, thanks to an emergency order issued Monday by Governor Tom Wolf.

There were still millions available when the initial programs expired on Sept. 30. Lawmakers in Harrisburg were moving to pass an extension, but a COVID outbreak stalled their plans.

While Wolf’s order does give people more time to access the Pa. Mortgage Assistance Program (PMAP) and Rental Relief Program (RRP), questions remain about the logistics of getting the money where it needs to go.

Residents whose loans are being processed by Wells Fargo, for example, have been left in limbo as the commonwealth’s biggest lender waffles on its participation. After getting approved, Southwest Philly resident Mike Zwick was told in mid-September the bank would not accept PMAP funds, and that he’d receive a letter of rejection in the mail. A week later, Zwick was told on the phone by Wells Fargo that the bank was rescinding its decision to pull out, and that an acceptance letter was in the mail.

As of this writing, Zwick still hadn’t received notice of a formal decision from his mortgage lender, he said.

The bills being fast-tracked through the Pa. Legislature before it went on forced coronavirus recess — known as House Bill 2868 and Senate Bill 1290 — would fix some of the issues around the relief fund’s financial pipeline, according to their sponsors, Rep. Sue Helm (R-Dauphin) Sen. Art Haywood (D-Philadelphia).

“We tried to help tenants [with the original program], but we forgot about the landlords and the lenders. This bill would fix it.” Helm told Billy Penn, adding, ” [Wolf] didn’t correct the problems that my bill corrects.”

Are you a homeowner or renter who’s having issues with your PMAP or RRP application or loan? Let us know.

Of its $25 million starting pot, PMAP had received applications for $11.4 million as of Oct. 2, and the total approved assistance was $3.8 million. Even less was actually given out to homeowners, who must have experienced pandemic-related disruptions in order to qualify. Disbursals at the beginning of October totaled just $580k, 1/50th of the full amount available.

On the rental side, less than 10% of the $50 million allocated to RRP was claimed, and fewer than 3,000 of the 26k applicants have received funds.

Part of the holdup may be because of the size of the programs’ loans — if they’re too small, taking them on doesn’t make sense for banks, in cold financial terms. As initially designed, homeowners could get a maximum of $1,000 for six months, and renters were capped at $750.

The state recognizes the size issue, said Pennsylvania Housing Finance Agency spokesperson Scott Elliot.

“Once we launched both CARES programs in July, it was clear that the level of assistance was not high enough to encourage landlords and lenders to participate, especially in urban areas where costs are higher,” Elliot said.

The pending General Assembly bills would address these issues, along with several others. The potential changes in the stalled legislation include:

  1. Increasing assistance caps to track with industry standards:
    • Boost the cap on PMAP mortgage relief from $1,000 to $1,500
    • Base maximum rental assistance on 130% of HUD’s annual Fair Market Rent calculation for the county, rather than the current cap of $750
  2. Eliminate the requirement that households be at least 30 days in arrears to be eligible
  3. For banks, remove the requirement to waive rights to remaining rent or mortgage obligation upon acceptance of CARES assistance
  4. For banks, permit a small portion of the allocated funds to cover expenses incurred during the administration of the program

Increasing the cap from $1,000 to $1,500 for mortgage relief would “be able to cover an estimated 85% of the applications received” according to PHFA Director Robin Wiessmann.

If the program was updated, would the big banks bite? Unclear. James Baum, a spokesperson for Wells Fargo, explained that the bank had discussed its issues with PHFA leadership around the issues that prevent us from participating more fully, but declined to identify any specifics. “Should these issues be resolved, we will make PMAP available for all qualified customers,” Baum said.

The legislature is set to reconvene on Oct. 19. Now that Wolf has extended the program’s deadline, the bills to reform the program are even more essential, said Rep. Helm. “We’re working on it, we’re gonna get this done.”

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