NJ speeds up giving out mortgage aid to prevent foreclosures but still trails other states

New Jersey is starting to pass out out money more quickly to help struggling homeowners avoid foreclosure and working out some of the earlier kinks in a federal mortgage aid program. Overall, the Garden State distributed about a third of the multimillion-dollar pot of federal money over the nearly two years the fund has been operating.

Since launching the Emergency Rescue Mortgage Assistance program in February 2022, homeowners have been approved for nearly $105 million to cover mortgage payments, property taxes, homeowner’s insurance, HOA fees, liens and other housing costs — about 39% of the budgeted direct payment assistance.

Families can receive up to $75,000 in help, an increase from the original $35,000 cap.

Overall, New Jersey was allocated $325 million from the federal stimulus package, the American Rescue Plan Act, to help low- and middle-income families affected by COVID-19 catch up on housing payments if they had fallen behind.

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Including administrative expenses, New Jersey’s Housing and Mortgage Finance Agency has allocated 35% of the overall program funds, or about $113 million, in the first year and eight months, according to the state’s latest progress report to the U.S. Treasury Department. States have until Sept. 30, 2026, to allocate the money.

“We get the impression that HMFA is making an effort to make this go better,” said Maryann Flanigan of Legal Services of New Jersey, who helps clients having problems with the application process. “We see the difference, and it seems like the response times are moving faster.

"We’re hearing about more approvals than we were before," Flanigan said. "Overall it seems like it’s going in the right direction.”

The agency has increased its administrative capacity and simplified documentation requirements, and it “continually assesses its programs to maximize productivity and effectiveness,” said agency spokesperson Shaheed Morris.

The state is requiring fewer financial forms than in earlier stages, said Bonita Holmes, director of loan counseling and loss mitigation for New Jersey Citizen Action. And it appears that an earlier burdensome rule, which required homeowners to show they lost at least 10% in income or had expenses rise at least 10% as a result of the pandemic, has been changed, with the agency now relying on a self-attestation that they lost income due to COVID-19.

“That was hard for people to show, even though they did have a hardship,” Flanigan said.

Holmes is seeing delays on the servicer end, with it sometimes taking 60 days or more after her clients submit their applications to the state, and the state is waiting for the servicer to come back with the required information on the mortgages.

“I'm shocked, because you would think they would want to move quickly to get the money,” Holmes said.

More turned away than accepted

Since the program launched, the agency has still turned away more people than it has accepted. As of Sept. 30, 3,736 applications were approved, compared with 5,186 denials. The most common reason for denial, affecting more than 2,200 families, was that the application was “not completed within program timeframe.”

“If an applicant has been unresponsive for 30 days or more, three attempts are made to contact them … If there is no response, the application is marked inactive and denied,” Morris said. “Denied applicants can, and frequently do, contact the agency upon denial, which results in their application being reactivated, completed, and reviewed on its merits.”

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More than 1,700 did not prove they had a COVID-related financial hardship, 1,200 didn’t meet the income eligibility, 227 had too much debt, and 216 had servicers who refused to participate in the program.

Saved his Clifton home thanks to the aid

Ahmet Akdag, 28, was able to hold on to the two-family home he bought in Clifton in 2019 thanks to the $34,000 in ERMA funds he received.

But the process took close to a year and a half, multiple appeals and help from his state legislator to get to that point, and without that persistence and advocacy from Assemblyman John McKeon, Akdag isn’t sure he would have been able to save his home.

A self-employed business consultant, Akdag started losing work when the pandemic hit, and he applied soon after the mortgage aid program opened so he could stop relying on his savings to make his mortgage payments.

The agency denied his application months later because he had too much in his savings account. But by the time he received the notice, Akdag said, he had completely drained the account. He had made a note in his application that he was relying on those funds to make his payments.

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He appealed through two different formats, submitting proof that his unemployment had ended and his bank account statements. He received the same answer.

The following summer, he tried McKeon’s office, and within two weeks he got a call from the mortgage aid program and was accepted after providing more paperwork. The $22,000 covered about seven months of owed mortgage payments, as well as $12,000 to help him with four months going forward so he could get back on his feet while he found a new job with a logistics company.

Extremely confusing process

Akdag found the whole journey “extremely confusing” in terms of communication.

“I was really confused with what was going on, who was actually responsible, because that was one of the difficulties: I just didn't know who to speak to,” Akdag said, adding that he was contacted by different parties through different formats, including an online portal and the mail. “It wasn't clear who was actually the point of contact. So that really threw things off track.”

But in the end, the mortgage aid program was a “huge relief” for him, his mother and sister who live with him, and the family that leases the unit below him and who were behind on their rent.

The relief was even more pronounced when, a week after he was accepted, he received a letter in the mail from his servicer alerting him that it planned to start the foreclosure process.

“Many applications are getting approved because of outside advocacy … it requires some extra help, even though in an ideal world, applicants could get the aid on their own,” Flanigan said.

For a list of HUD-approved housing counselors, visit consumerfinance.gov/find-a-housing-counselor.

NJ trails other states in distributing mortgage aid

New Jersey still lags behind other states in administering Homeowner Assistance Funds, with 20 states and territories closing their programs and six states accepting waitlist applications, said the National Council of State Housing Agencies.

New York gave out $428 million to more than 24,000 families. Pennsylvania has handed out $173 million to nearly 13,800 families, with $125 million remaining. Florida approved more than $518 million to 26,000 families.

Nationwide, New Jersey led the pack of states with the most foreclosure filings in the third quarter of 2023, according to ATTOM Data Solutions. New Jersey had one in every 794 homes with a foreclosure filing, followed by Maryland, with one in 816, and Nevada, with one in 818.

More than 13,300 New Jersey families faced a foreclosure filing in 2023, with the highest numbers in Camden, Essex and Ocean counties, the Administrative Office of the Courts reported.

This article originally appeared on NorthJersey.com: NJ speeds up handing out mortgage aid to prevent foreclosures