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HOUSING FINANCE AGENCY

PA Homeowner Assistance Fund Plan

[51 Pa.B. 5942]
[Saturday, September 11, 2021]

Chapter 1. General

§ 1.1. Overview.

 Under section 3206 of the American Rescue Plan Act of 2021 (Pub.L. No. 117-2) up to $9.961 billion was provided for states, the District of Columbia, U.S. territories, Tribes or Tribal entities, and the Department of Hawaiian Home Lands to provide relief for our country's most vulnerable homeowners. On April 14, 2021, Treasury released ''Homeowner Assistance Fund Guidance'' (HAF Guidance) which outlined policy guidelines for states' HAF programs. This included a description of qualified expenses, eligibility criteria, and protocols for HAF Plan submission to Treasury for approval.

 The statute required the Department of the Treasury to make allocations for each state, the District of Columbia, and Puerto Rico based on homeowner need, determined by reference to (1) the average number of unemployed individuals; and (2) the number of mortgagors with mortgage payments that are more than 30 days past due or mortgages in foreclosure.¹

 Based on the identified methodology PA was allocated $350 million. On June 25, 2021, the PA General Assembly authorized Pennsylvania Housing Finance Agency (PHFA), as the administrator of this program. PHFA has titled this program PA Homeowner Assistance Fund (PAHAF) and under newly released Treasury guidance, dated August 2, 2021 has created this plan document for public comment and input.

§ 1.2. PAHAF Program Objective & Program Operating Principals.

 The purpose of PAHAF is to mitigate financial hardships associated with the coronavirus pandemic by providing funds to eligible homeowners for the purpose of preventing homeowner mortgage delinquencies, defaults, foreclosures, delinquent property taxes, loss of utilities or home energy services, and displacements of homeowners due to financial hardships experienced after January 21, 2020.

§ 1.3. Program Operating Principals.

 a) Maximize the number of PA eligible households at the greatest risk for mortgage delinquency, default and foreclosure.

 b) Utilizing proactive outreach and marketing programs to ensure income eligible homeowners are reached.

 c) Ensure that the application, approval, and disbursement process is easily accessible, clear, and straightforward.

 d) Put homeowners in best position to succeed in the future while maximizing existing federal, state, and local resources to avoid duplication of services, programs and dollars.

Chapter 2. Key Treasury Guidance & Definitions

§ 2.1. Eligible Homeowners.

 Homeowners are eligible to receive amounts allocated to a HAF participant under the HAF if they experienced a financial hardship after January 21, 2020 (including a hardship that began before January 21, 2020 but continued after that date) and have incomes equal to or less than 150% of the area median income (AMI) or 100% of the median income for the United States, whichever is greater. PAHAF may provide HAF funds only to a homeowner with respect to qualified expenses related to the dwelling that is such homeowner's primary residence.

 For purposes of PAHAF, PHFA has determined eligibility at 150% of the county area median income.

§ 2.2. Targeting.

 Not less than 60% of amounts made available to each HAF participant must be used for qualified expenses that assist homeowners having incomes equal to or less than 100% of the area median income or equal to or less than 100% of the median income for the United States, whichever is greater. For purposes of PAHAF, PHFA has determined eligibility at 100% of the county area median income. This targeting also includes socially disadvantaged borrowers as well as those with specific types of federally backed loans.

 The Agency will be undertaking both comprehensive and specific efforts to engage with local stakeholders, community groups and other trusted partners to ensure the targeting provisions are reached.

 Any amount not made available to homeowners that meet this income-targeting requirement must be prioritized for assistance to socially disadvantaged individuals, with funds remaining after such prioritization being made available for other eligible homeowners

§ 2.3. Treasury definitions for purposes of this program guidance.

 100% of the area median income for a household—two times the income limit for very-low-income families, for the relevant household size, as published by the Department of Housing and Urban Development (HUD) in accordance with 42 U.S.C. § 1437a(b)(2) for purposes of the HAF.

 150% of the area median income for a household—three times the income limit for very-low-income families, for the relevant household size, as published by HUD in accordance with 42 U.S.C. § 1437a(b)(2) for purposes of the HAF.

 Mortgage—any credit transaction (1) that is secured by a mortgage, deed of trust, or other consensual security interest on a principal residence of a borrower that is (a) a one- to four-unit dwelling, or (b) a residential real property that includes a one- to four-unit dwelling; and (2) the unpaid principal balance of which was, at the time of origination, not more than the conforming loan limit. For purposes of this definition, the conforming loan limit means the applicable limitation governing the maximum original principal obligation of a mortgage secured by a single-family residence, a mortgage secured by a two-family residence, a mortgage secured by a three-family residence, or a mortgage secured by a four-family residence, as determined and adjusted annually under § 302(b)(2) of the Federal National Mortgage Association Charter Act (12 U.S.C. § 1717(b)(2)) and § 305(a)(2) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. § 1454(a)(2)). A reverse mortgage, a loan secured by a manufactured home, or a contract for deed (also known as a land contract) may fall within this definition if it satisfies the criteria in this paragraph, in accordance with applicable state law.

 Socially disadvantaged individuals—those whose ability to purchase or own a home has been impaired due to diminished access to credit on reasonable terms as compared to others in comparable economic circumstances, based on disparities in homeownership rates in the HAF participant's jurisdiction as documented by the U.S. Census. The impairment must stem from circumstances beyond their control. Indicators of impairment under this definition may include being a (1) member of a group that has been subjected to racial or ethnic prejudice or cultural bias within American society, (2) resident of a majority-minority Census tract; (3) individual with limited English proficiency; (4) resident of a U.S. territory, Indian reservation, or Hawaiian Home Land, or (5) individual who lives in a persistent-poverty county, meaning any county that has had 20% or more of its population living in poverty over the past 30 years as measured by the three most recent decennial censuses. In addition, an individual may be determined to be a socially disadvantaged individual in accordance with a process developed by a HAF participant for determining whether a homeowner is a socially disadvantaged individual in accordance with applicable law, which may reasonably rely on self-attestations.

Chapter 3. PAHAF Homeowner Needs Assessment

 The Commonwealth used a variety of data sets to determine the extent to which various types of homeowners may be at risk of default, foreclosure, or housing instability. The following combination of public and proprietary data were used to develop estimates of COVID-related homeowner needs in Pennsylvania: Home Mortgage Disclosure Act (HMDA) (12 U.S.C §§ 2801—2811), loan-level data (2007 to 2019), U.S. Census American Community Survey (Census ACS) 5-Year Estimates (2015—19), PHFA borrower records, Bureau of Labor Statistics' Local Area Unemployment Statistics program (2020 to Q1 2021), zip code-level Mortgage Analytics and Performance Dashboard (MAPD) data on loan performance collected and compiled by the private research firm Black Knight, LLC. and accessed from the Federal Reserve Bank of Atlanta (2020 to Q1 2021)², tax delinquency data from Allegheny County (courtesy of the Western Pennsylvania Regional Data Center) and the City of Philadelphia (courtesy of OpenDataPhilly), and delinquent utility account information from the Pennsylvania Utilities Law Project.

 These data were analyzed to understand the contemporary volume of homeowners across the Commonwealth and how homeownership varies across different regions of the state and among different populations. These analyses were developed with a particular focus on estimating the total population of PA homeowners who could benefit from support from the HAF related to mortgage assistance, and other housing related costs such as utilities, taxes, condominium association fees, etc.

§ 3.1. Homeownership Landscape in Pennsylvania.

 Pennsylvania is home to 3,480,978 owner-occupied households. The state is divided into six regions established by the PA Housing Finance Agency (see Map 1). These regions are used throughout this document to describe the state's demographic, economic and housing conditions and how they vary geographically.

 The number of homeowners and homeownership rates vary considerably across the state's different regions—from a high of 71.9% in the Northwest to a low of 65.3% in the Southeast. However, in every region the homeownership rates for households of color are well below those of white homeowners. Homeownership rates for households of color are highest in the Philadelphia region (Southeast) and in the Northeast—those regions of the state with the largest number of owner-occupied households of color (See Table 1).
 

 The vast majority of homeowners in PA live in single-family homes (93.5%). Of the nearly three and half million owner-occupied housing units, about three million (3,253,640) are one-unit detached or attached dwellings. Only about 90,000 units are in small and large multifamily buildings, and about one hundred thirty thousand (133,560) homeowning households live in manufactured homes, both in manufactured home communities (MHCs) or on privately-owned land. (See Table 2.)

Table 2. Owner-Occupied Housing Types in Pennsylvania

	Housing Units		Population
#	%	#	%
1 Unit	3,253,640	93.5%	8,455,835	94.9%
2-4 Units	43,829	1.3%	86,869	1.0%
5+ Units	49,053	1.4%	76,685	0.9%
Manufactured	133,560	3.8%	284,795	3.2%
Boat, RV, Van, Etc.	896	0.0%	2,016	0.0%
Total	3,480,978	100%	8,906,200	100%

*Source—ACS 2015—2019

 Figure 1 presents the share of PA homeowners who own their homes free and clear.

 Approximately forty percent (40%) or 1,386,046 households do not have a mortgage. A substantially greater share of white households than households of color own their homes unencumbered from mortgage debt; forty-one percent (41%) and thirty-four percent (34%), respectively. In addition, a greater share of lower income households, regardless of their race and ethnicity, own their homes without a mortgage than the overall population of homeowners; forty-five percent (45%) for households making less than one hundred fifty percent (150%) of the area median income versus forty percent (40%) for households of all incomes. (See Figure 1.)

 According to Home Mortgage Disclosure Act (HMDA) data on home loans originated between 2007 and 2019, about a third of Pennsylvania homeowners purchased their homes with non-conventional mortgages secured by the Federal Housing Administration (FHA), the U.S. Department of Veterans Affairs (VA) or the United States Department of Agriculture's (USDA) Rural Housing Service or Farm Service Agency (RSA/FSA). The overall volume of these non-conventional mortgages is concentrated in the greater Philadelphia area (Southeast), greater Pittsburgh (Southwest), and the Northeast (See Table 3). Because they generally offer more flexible qualification requirements, non-conventional loans are more prevalent among lower income and Socially Disadvantaged borrowers.³

 Map 2 presents the Census tract share of all home purchase originations that were made to buyers with incomes at or below 100% of their Area Median Income.

 

PHFA Regions	Originations to Households <= 100% AMI			Originations to Households > 100% AMI	All Originations
White Households	Households of Color	Total
Region I Southeast	150,378 (33%)	60,904 (13%)	211,282 (46%)	248,965 (54%)	460,247 (100%)
Region II Northeast	98,661 (43%)	23,905 (10%)	122,566 (53%)	109,458 (47%)	232,024 (100%)
Region III South Central	116,853 (48%)	14,664 (6%)	131,517 (54%)	111,575 (46%)	243,092 (100%)
Region IV North Central	41,331 (47%)	1,324 (1%)	42,655 (48%)	45,940 (52%)	88,595 (100%)
Region V Southwest	126,733 (44%)	9,449 (3%)	136,182 (47%)	152,234 (53%)	288,416 (100%)
Region VI Northwest	36,705 (50%)	1,568 (2%)	38,273 (52%)	35,223 (48%)	73,496 (100%)
Statewide	570,661 (41%)	111,814 (8%)	682,475 (49%)	703,394 (51%)	1,385,869 (100%)

 Approximately forty nine percent (49%) of home purchase originations between 2007 and 2019 were for households with incomes at or below their Area Median Income (AMI). Approximately eleven percent (11%) of home purchase originations were for households of color with incomes at or less than one hundred and fifty percent (150%) of the AMI. Analysis of the data at the census tract level reveals that most of these low-income households, and particularly households of color, are concentrated in cities (Philadelphia, Pittsburgh, Harrisburg, Allentown), as well as the Northeastern part of the state. Map 3 presents the Census tract share of home purchase originations made to households of color with incomes up to 150% of their Area Median Incomes.

PHFA Regions	Originations to Households <= 150% AMI			Originations to Households > 150% AMI	All Originations
White Households	Households of Color	Total
Region I Southeast	242,264 (53%)	80,214 (17%)	322,478 (70%)	137,769 (30%)	460,247 (100%)
Region II Northeast	149,971 (65%)	30,334 (13%)	180,306 (78%)	51,718 (22%)	232,024 (100%)
Region III South Central	173,683 (71%)	19,427 (8%)	193,110 (79%)	49,982 (21%)	243,092 (100%)
Region IV North Central	64,155 (72%)	2,102 (2%)	66,257 (75%)	22,338 (25%)	88,595 (100%)
Region V Southwest	192,320 (67%)	13,529 (5%)	205,849 (71%)	82,567 (29%)	288,416 (100%)
Region VI Northwest	54,367 (74%)	2,111 (3%)	56,478 (77%)	17,018 (23%)	73,496 (100%)
Statewide	876,760 (63%)	147,717 (11%)	1,024,477 (74%)	361,392 (26%)	1,385,869 (100%)

Source: Home Mortgage Disclosure Act, 2007—2019.

 Overall, the greatest volume of home purchase lending to low to moderate-income households is concentrated in the Southeast, Southwest and South Central regions of the state. The largest volume and share of low to moderate-income homebuyers of color are concentrated in the Southeast and Northeast regions of the state.

§ 3.2. Coronavirus Pandemic Impact.

 Throughout the Spring of 2020, the health system in the Commonwealth and throughout the country strained against surging COVID-19 cases, and millions of Pennsylvanians followed the stay-at-home order. For some, that meant working from home, but for many, the closure of non-essential businesses and the stay-at-home order meant temporary reduction or loss of income, and in some cases, long-term unemployment. By April 2020, the Pennsylvania economy lost about 926,000 jobs.⁴ The State's initial unemployment claims peaked in the first week of April at 390,753.⁵ In April 2020, the Philadelphia Federal Reserve developed a methodology to identify workers who would be at the greatest risk of unemployment due to nationwide closures of unessential businesses and shifts to remote work.⁶ Maps 4—6 present the distribution of at-risk workers across the Commonwealth, and large urban centers, at the outset of the pandemic.

 

 Pandemic-related job losses were widespread throughout Pennsylvania, but the pace of the ongoing recovery has varied across Pennsylvania's counties. Figure 2 presents the changes in employment for Pennsylvania, along with Philadelphia and Allegheny counties.

 Employment levels bottomed out in April 2020, when employment was down fifteen percent (-15%) statewide compared to January, 2020, before the pandemic hit. Employment in Philadelphia (-15%) and Allegheny (-16%) counties declined by about the same share as statewide. Philadelphia has recovered job losses more slowly than the rest of the State or Allegheny County. As of May 2021, employment had rebounded to five percent (-5%) below pre-pandemic levels in Allegheny County and statewide but were still ten percent (-9%) below pre-pandemic levels in Philadelphia.

 The impact of pandemic-related job losses in Pennsylvania has been felt disproportionately by people of color. Black and Hispanic Pennsylvanians have faced much higher unemployment rates than white Pennsylvanians. Figure 3 presents the 2020 annualized unemployment rates for PA residents of different racial and ethnic groups.

 Black Pennsylvanians had an annualized unemployment rate of 17.2% in 2020, and Hispanic Pennsylvanians had an annualized unemployment rate of 14.4%, compared to a 7.8% unemployment rate for white Pennsylvanians.⁷ The annualized unemployment rate for Asian Pennsylvanians was also higher (10.2%) than white residents, although within the survey margin of error.

§ 3.3. Estimating Target Populations for HAF Supports.

 ACS 2015-19 records provide the most reliable way to identify areas in Pennsylvania with high populations of low income and Socially Disadvantaged homeowners—those with and without mortgages who may be eligible for assistance under one of the PAHAF programs. Table 4 presents the number of owner-occupied homes with and without a mortgage, disaggregated by pre-pandemic income and Socially Disadvantaged status.

 Using the estimated target populations in Table 4, each population segment was further broken down by their vulnerability to foreclosure. Target populations who are the most likely to need assistance may be homeowners with a mortgage who are coming out of a forbearance plan; homeowners without a mortgage who were unable to pay their real estate tax obligations; homeowners who may be delinquent on their home loan; or homeowners in condominiums who are delinquent on association fees.

§ 3.4. Estimating At-Risk Homeowners.

 The federal CARES Act, passed in March 2020, provides forbearances for homeowners with federally backed mortgages. The Mortgage Analytics and Performance Dashboard (MAPD) data, which was compiled by the private research firm Black Knight and provided to PHFA by the Federal Reserve Bank of Atlanta, shows that for a sample of six hundred thousand (600,000) mortgages, the statewide delinquency rate increased from below three percent (2.7%) in April 2020 to just under four percent (3.7%) by January 2021. The forbearance rate peaked in June 2020 at 8.7% and has declined steadily since to 4.3% in January 2021 (See Figure 4).

 According to data from the Mortgage Bankers Association (MBA), about 6.6 percent of mortgages in the state were delinquent in Q4 2019, prior to the pandemic. By Q4 of 2020, the delinquency rate had increased to almost 9 percent among Pennsylvania homeowners (See Figure 4).

 Figure 5 shows that forbearance rates were (and remain) much higher in the Philadelphia (Southeast) Region and the Northeast compared to the rest of the state—both during the peak and as the crisis has eased. Forbearance rates began trending up in the North Central and Northwest regions towards the end of 2020 and into 2021.
 

 Applying a combined average mortgage forbearance and delinquency rate observed in Figures 5 and 6 (10.5%) to the population of PA homeowners with incomes below 100% of AMI (See Table 3), approximately 62,633 PA owner-occupied households were delinquent and 28,676 were in forbearance in the first quarter of 2021. In total, an approximated 91,309 owner-occupied households with incomes below 100% of AMI are currently in forbearance or delinquent on their mortgages. Table 5 presents the estimated number of households in delinquency and forbearance across different racial and ethnic groups, using nationally estimated delinquency and forbearance rates for different racial and ethnic groups.⁸

Table 5. Estimated Count of Income Eligible Households in Delinquency or Forbearance by Racial/Ethnic Groups

	Total Households
Black	11,870
Hispanic	18,262
Asian	4,565
Other Race	1,826
White	54,785
Total	91,309

 * Source: IPUMS (ACS 2015—2019), Mortgage Bankers Association, Federal Reserve Bank

 Table 5 suggests that roughly 36,500 socially disadvantaged homeowners' mortgages are either in forbearance or delinquent. Map 7 presents the zip-code level geographic distribution of the combined delinquency/forbearance rate across the Commonwealth, along with zip-codes with elevated populations of socially disadvantaged households (i.e. above the state median).

 

 There are zip codes across the Commonwealth with combined delinquency/forbearance rates above 10%—from Philadelphia to Scranton, Johnstown, in the Southwest and Northwest. The greatest concentrations of zip codes with elevated populations of Social Disadvantaged households tend to be clustered in the Southeast (Philadelphia), Northwest (Erie), South-Central (Harrisburg and York), Northeast (Monroe), and Pittsburgh areas.

§ 3.5. Anticipated Needs for Property Tax Assistance.

 Many Pennsylvania homeowners without mortgages have income losses from the COVID-19 pandemic that have resulted in property tax arrearages, including many socially disadvantaged homeowners. Based on American Community Survey, 2015—2019 data from Integrated Public Use Microdata Series (IPUMS), an estimated 952,213 Pennsylvania homeowners are income eligible at 100% of AMI and do not currently have a mortgage, including 108,698 socially disadvantaged homeowners. Socially disadvantaged homeowners without a mortgage live predominately in Philadelphia (43%), Allegheny (8%), Montgomery (7%), and Delaware (7%) counties. Income-eligible Hispanic homeowners without a mortgage also commonly live in Berks (9%) and Lehigh (8%) counties.

 Tax delinquency data from Philadelphia and Allegheny counties suggest that homeowners with COVID-related income losses could be thousands of dollars behind on property taxes. Tables 7 and 8 show the number of tax delinquent homeowners in these counties and the distribution of property tax arrearages.

 

 In Philadelphia, 2,271 homeowners became newly delinquent on property taxes in 2020, possibly because of COVID-related income losses. These homeowners were typically about $611 dollars in arrears, although the average is almost twice that amount ($1,153). In Allegheny County 700 homeowners were newly tax delinquent in 2020,⁹ with a median delinquency arrearage of $1,172 and average of $1,743.

 Map 12 shows where in Philadelphia homeowners behind on their taxes live and shows that likely the majority of these homeowners are socially disadvantaged. The geography of property tax delinquency in Allegheny County (see Map 13 below) also suggests that many socially disadvantaged homeowners may need assistance with property tax arrearages.

§ 3.6. Anticipated Needs for Utility Assistance.

 In addition to household needs for mortgage assistance and tax arrearages a great deal of low to moderate income households in PA could also benefit from support for utilities arrearages incurred due to income losses associated with the COVID-19 pandemic. Accessing reliable data for utility arrearages is challenging due to the diverse range of providers, both public and private, across the Commonwealth. However, the Pennsylvania Utility Law Project (PULP) collects a range of data points from the Commonwealth's largest utility providers on a semi-annual basis to track 'at risk' accounts and dollar values of arrearages associated with these accounts.

 In February 2021 there were 814,508 'at risk' accounts associated with $852,054,166 in outstanding debt reported by most of the state's largest utility providers to PULP. This represents roughly 16% of all PA households. While it is not possible to know which of these delinquent accounts are associated with renters and those associated with homeowners, a conservative estimate of 10% of the income eligible owner-occupied households in PA in need of utilities assistance would represent roughly 182,000 households. And a recent report from Philadelphia's Community Legal Services and the PA Utility Law Project found that utility delinquencies are disproportionately concentrated among socially disadvantaged residents.¹⁰

Chapter 4. Stakeholder Engagement and Public Comment

 Pennsylvania has a robust network of non-profit Legal Service Providers operating across the entire Commonwealth and PHFA has established a solid working relationship with the network. PHFA held a meeting on July 6, 2021 and received comments from PA Legal Service Providers June 15, 2021 and July 20, 2021 specific to all of the elements of HAF funding pursuant to Treasury guidance and specific to the PAHAF under consideration. In addition, PHFA has an active and engaged Housing Counseling Network and administers its own funding along with grant funding from HUD and Neighborworks to 65 agencies across the state. PHFA held three virtual meetings with the Housing Counseling network with over 164 participants in the month of July. Housing Counselors were encouraged to provide ongoing feedback and input into the PAHAF plan elements. The Agency has also held conversations with many other individual community and stakeholder groups, including numerous state elected officials briefing them on various aspects of the program plan and implementation.

 PHFA will hold two statewide hearings detailing the Treasury guidance requirements for eligible homeowners, qualified expenses and qualified hardships. The forum will be a virtual public meeting designed to solicit feedback from community members, legal service providers, advocates, and housing counseling agencies, as well as the public. PHFA has partnered with numerous community agencies, particularly those that coordinate services for socially disadvantaged homeowners, across the state to encourage their local program partners and constituents to attend the hearing and provide feedback. Those community agencies will be sending email blasts, social media posts and organizing in-person sessions for those without internet access to attend the on-line public forum.

 The public meeting will be advertised through PHFA's social media and email list serve. A PHFA HAF page was created and a list of interested parties has been accumulating. All names on that Listserv will be notified. Public notices will be issued in the PA Bulletin, on the PHFA website and distributed widely to community groups.

 PHFA will also take stakeholder comments from PA Mortgage Bankers, Community Development Financial Institutions (CDFIs), Community Development Corporations (CDCs), community-based non-profits that serve the target audience, elected officials, legal service providers and housing counseling agencies. Additionally, separate meetings have been held where requested to address specific issues related to socially disadvantaged individuals.

 The public comment period is open from September 11, 2021 to October 11, 2021. Public comments will be recorded and addressed, informing the final version of the PAHAF Plan.

 The public may submit written comments regarding PAHAF Plan to HAFCommentsphfa.org. The plan and information about submitting public comments is also posted on the PHFA website www.phfa.org/haf/.

§ 4.1. Housing Finance Agency Coordination.

 The National Council of State Housing Agencies holds meetings twice a week with mortgage servicers and state agency leaders to discuss best practices, coordination of activity where applicable, and review program requirements. Several members of the Pennsylvania Housing Finance Agency team have actively participated in these meetings. In addition, one-on-one meetings have been held with a number of states, particularly those that administered Hardest Hit Funds, in order to ascertain best practices and lessons learned from those programs that would apply to the PAHAF program.

Chapter 5. PAHAF Program Design

§ 5.1. Definitions.

 The following words and terms shall have the following meanings:

 Applicant—A homeowner or a program partner applying on behalf of a homeowner.

 Homeowner—The owner-occupant of a dwelling consisting of one-to-four-unit dwelling who has experienced a material reduction in income or material increase in living expenses after January 21, 2020, associated with the coronavirus pandemic. This term is interchangeable with the term ''mortgagor''.

 Income—Includes compensation for services, including fees, commissions, fringe benefits, and similar items. Income will also include all gross income derived from businesses.

 Lender—A mortgagee whose debt is secured by a first lien on the property of a homeowner. This term is interchangeable with the term ''mortgagee.''

 Mortgage—A lien, other than a judgment, on a fee simple or leasehold interest in real property which constitutes the principal residence of the homeowner, located in this Commonwealth together with credit instruments secured thereby. The term also includes an obligation evidenced by a security lien on real property upon which an owner-occupied mobile home is located.

 Mortgagee—A lender whose debt is secured by a first lien on the property of a homeowner. This term is interchangeable with the term ''lender.''

 Mortgagor—The owner-occupant of a dwelling consisting of a one- to four-unit dwelling, who has experienced a financial hardship after January 21, 2020, due to the COVID-19 pandemic. This term is interchangeable with the term ''homeowner.''

 Qualified Financial Hardship—A material reduction in income or material increase in living expenses associated with the Coronavirus pandemic that has created or increased the risk of mortgage delinquency, mortgage default, foreclosure, loss of utilities or home energy services, or displacement for a homeowner. The homeowner has experienced a material reduction in income and/or a material increase in living expenses associated with the COVID-19 pandemic that began, continued or worsened any time after January 21, 2020 (including a hardship that began before January 21, 2020, but continued after that date).

§ 5.2. Eligible Homeowners.

 Eligible Homeowners must meet the following criteria:

 a) Homeowner must be a natural person or trustee of a living trust that holds title to the property. Heirs, equitable owners, and successors-in-interest, as that term is defined in section 1024.31 of Title 12 of the Code of Federal Regulations (12 CFR 1024.31), meet this ownership requirement. A reverse mortgage, a loan secured by a manufactured home, or a contract for deed (also known as a land contract) may fall within this definition.

 b) Homeowner must have experienced a Qualified Financial Hardship after January 21, 2020 (including a hardship that began before January 21, 2020, but continued after that date).

 c) Homeowner must currently own and occupy the property as their primary residence and be located in Pennsylvania.

 d) Homeowner must meet the Homeowner Income Eligibility Requirements.

 e) Homeowner must agree to provide all necessary documentation to satisfy program guidelines within timeframes established by the State, including self-attestation.

 f) The original, unpaid principal balance of the homeowner's first mortgage or housing loan, at the time of origination, was not greater than the conforming loan limits in effect at time of origination.

 g) Based on Treasury guidance, HAF funds should supplement other loss-mitigation efforts. Thus, homeowners will be encouraged to utilize other loss mitigation resources, if available, while simultaneously applying for HAF.

§ 5.3. Qualified Expenses.

 HAF participants may use funding from the HAF only for the following types of qualified expenses:

 a) Expenses that are for the purpose of preventing homeowner mortgage delinquencies, homeowner mortgage defaults, homeowner mortgage foreclosures, and displacements of homeowners experiencing financial hardship:

 1) mortgage payment assistance;

 2) financial assistance to allow a homeowner to reinstate a mortgage or to pay other housing-related costs related to a period of forbearance, delinquency, or default;

 3) facilitating mortgage interest rate reductions;

 Assistance is available for a first mortgage on the property of an eligible homeowner, subject to all other eligibility criteria. PAHAF Funds will be used to bring accounts fully current, with no remaining delinquent amounts, and to repay amounts advanced by the lender or servicer on the borrower's behalf for property charges, including property taxes, hazard insurance premiums, flood or wind insurance premiums, ground rents, condominium fees, cooperative maintenance fees, planned unit development fees, homeowners' association fees or utilities that the servicer advanced to protect lien position. Payment may also include any reasonably required legal fees.

 b) Expenses that are for the purpose of preventing homeowner mortgage delinquencies, homeowner mortgage defaults, homeowner mortgage foreclosures, and displacements of homeowners experiencing financial hardship:

 1) Forward payment assistance for a period of 6-months forward.

 Assistance is available for a first mortgage on the property of an eligible homeowner, subject to all other eligibility criteria. PAHAF Funds will be used to pay the monthly mortgage including property taxes, hazard insurance premiums, flood or wind insurance premiums, ground rents, condominium fees, cooperative maintenance fees, planned unit development fees, or homeowners' association fees that the servicer will advance to protect lien position.

 c) Expenses that are for the purpose of preventing homeowner mortgage foreclosures, and displacements of homeowners experiencing financial hardship for those homeowners that currently do not have a mortgage or have a reverse mortgage on the property.

 d)

 1) Property taxes; and

 2) Property Insurance.

 e) Expenses for past due utility bills, particularly for those utility bills where no program currently exists in PA to assist the homeowner that could result in liens, possible foreclosure and homeowner displacement. Homeowners will be required to apply for identified utility assistance, prior to making application for the PA HAF utility portion of the program.

§ 5.4. Estimating Anticipated Program Costs to Meet Need.

 Assistance will be limited to a maximum of $30,000 per household over the life of the program. Based on available data related to the monthly mortgage costs for income eligible borrowers (roughly $1,219)¹¹ and the length of delinquency or forbearance (almost half of eligible owners were behind 3 months or fewer),¹² the estimated total cost of catching up all income-eligible homeowners in delinquency, forbearance, and foreclosure would be roughly $725.5 million.

 Approximately $50 million of the HAF funds will be used to develop and administer the program, and for housing counseling and legal services. After accounting for Administrative and Housing Counseling & Legal Service Provider expenses to develop and administer the fund, PAHAF will have approximately $300 million available for eligible homeowners in PA.

 To maximize the number of homeowners that can receive assistance under the PAHAF program, three separate scenarios were analyzed to identify a cap for the amount of support individual homeowners could receive under the program: $20,000; $30,000; and $40,000. These cap levels were selected under the assumption that these amounts of support should be sufficient to meet the needs of the vast majority of income-eligible homeowners in the Commonwealth.

 Building estimates of homeowner supports per household to each cap level involved the following steps:

 a) Assign eligible homeowners in need a 'number of months' behind. Although nearly half of qualifying owners were behind three months or fewer, the Federal Reserve Bank of New York estimates that one in eight owners is behind 11 months or more. For the 91,309 eligible households the number of months behind was assigned based on estimations from 100 simulations that assigned a months-behind on the basis of the share of homeowners with varying months behind using forbearance and delinquency records from the NY Fed—duration of forbearance and delinquency ranged from one to 11-months;

 b) Assign a monthly owner cost, sampled from the 2015-2019 ACS microdata for income eligible homeowners with a mortgage;

 c) Homeowner total costs = (months behind+1) multiplied by monthly owner costs;

 1) One additional month was added to the 'months behind' to ensure that supports provided would fully cover outstanding costs for homeowners & timing difference between application & fund disbursement. d) Limit benefits for homeowners over the cap.

 The $30,000 cap established for PAHAF supports for individual households will be sufficient to meet the needs of the vast majority of PA homeowners in need of assistance. Table 6 presents the amount of assistance, the number and share of eligible homeowners who could be supported, and the number and share of eligible homeowners whose need would fall above the $30,000 cap limits for direct PAHAF support for homeowners.

 

 *Data Sources: IPUMS (ACS 2015—2019); Mortgage Bankers Association; Black Knight; Atlanta & New York Federal Reserve

 Table 6 suggests that direct HAF assistance for eligible PA homeowners could support 38,251 homeowners—roughly 42% of all income eligible homeowners in the Commonwealth. Additionally, only 1% of income eligible homeowners would likely need support above the $30,000 cap for HAF supports. Indeed, based on these estimates, the greatest share of HAF supports will likely go to homeowners with the lowest needs, while only a small share of homeowners will need assistance up to the $30,000 cap—although these homeowners will require a greater share of the overall HAF supports. Figure 6 presents the estimated share of homeowners and the share of HAF costs that will be deployed at different levels of support under the proposed HAF program with a $30,000 cap.

 

 As seen in Figure 6, over 40% of homeowners in need of $5,000 or less will account for less than 20% of the HAF available funding, while the roughly 1% of homeowners who need support up to the $30,000 cap will account for about 5% of the total HAF funds committed under the proposed program. Overall, a $30,000 cap per household will be sufficient to meet the needs of the vast majority of the eligible households across the Commonwealth, with the majority of HAF funds being deployed to households with needs well below this threshold.

Chapter 6. Marketing and Outreach

§ 6.1. Target Populations.

 Homeowners in Pennsylvania with incomes equal to or less than 100% AMI of the county area median income of the United States.

 Socially disadvantaged homeowners in Pennsylvania with incomes equal to or less than 150% AMI of the county area median income.

 Numerous counties and communities have significant proportions of socially disadvantaged homeowners. The PAHAF program will expend extensive time and resources to ensure that our marketing and outreach efforts are focused on engaging these homeowners to apply for program funds.

§ 6.2. Marketing and Outreach Campaign.

 PHFA is a primary provider of affordable housing in Pennsylvania and has been communicating with low-income and moderate-income families, and communities of color for decades. PHFA has direct experience marketing housing programs and services to socially disadvantaged populations and has built strong relationships with business partners tied to these communities. PHFA has established credibility and trust in the communities the PAHAF was created to serve.

 The outreach campaign will employ several strategies to reach homeowners struggling in the wake of the pandemic. Communication strategies, incorporating earned and paid media will be tailored to the audience with messaging translated and delivered in both English and Spanish and potentially additional languages, as those needs are identified. The communication initiative will include a paid media campaign, utilizing digital advertising. The digital ads will look to emphasize short videos over plain text. Digital advertising has a number of key advantages, including demographic targeting for language, geographic targeting to reach low-income communities and affordability. Nextdoor & Facebook ads are an extremely successful and cost effective medium with potential to reach a broad audience, while also targeting specific demographics eligible for PAHAF.

 Earned media will be another component of the campaign. PHFA has extensive history working with a variety of publications and local news stations. Press releases and interviews with local and state-wide journalist will be a useful tool to get the word out about PAHAF through trusted information sources. Virtual and in-person town halls focused in key geographic areas with targeted outreach to local government and community message boards will also be employed tactics.

 Partnerships with community and business partners and state legislatures that have already established trust with eligible homeowners is another key strategy. Information can be shared with these groups through a specialized web portal, or through virtual seminars that can accommodate hundreds of partner participants dispersed widely around Pennsylvania. It may also include developing an Outreach Tool Kit to share with Community Action Agencies, Housing Counseling Agencies, PA Non-Profits that work with the target audience, Legal Service Providers, faith-based leaders and community-based organizations, with a particular focus in the county's/region's with high concentrations of potential PAHAF homeowners.

 Additionally, PHFA will utilize its partnership with the PA Mortgage Bankers, Community Development Financial Institutions (CDFI), Community Development Corporations (CDC) and loan servicers with PA eligible clients to engage those groups as a referral source for PAHAF applicants.

§ 6.3. Data Driven Methodology.

 The PAHAF program will utilize a data driven approach to targeting the most at need low-to-moderate homeowners earning less than 150% of AMI and socially disadvantaged. By using this data driven approach PAHAF will focus messaging to target audiences to maximize marketing dollars.

 For instance, Maps 8—11, below present forbearance/delinquency rates in Philadelphia, Allegheny, Lackawanna, and Monroe counties, and identify areas with a high concentration of homeowners that will be a target population for the PAHAF program. In addition, we have also identified high concentrations of target population homeowners with no mortgage in the following counties: Philadelphia, Allegheny, Montgomery, Delaware, Chester, Bucks Lehigh, Berks, Dauphin, and Monroe counties. PHFA will continue to refine these data to ensure marketing resources are focused on reaching the most vulnerable for the PAHAF program.

 

 

 Feedback will be a critical component of the Marketing/Community Outreach Campaign. Listening to impacted homeowners and trusted partners will ensure a more impactful campaign and help fine tune the marketing approach to reach the target audience. PHFA will be constantly monitoring the different dimensions of the marketing program and will make adjustments, as needed, to ensure a successful PAHAF program.

Chapter 6. Budget

 PHFA is planning to outsource this program to a highly qualified Third-Party vendor(s) to develop the software and manage the overall operations including the administrative task identified below to utilize their expertise in rapid deployment of critical funds to eligible homeowners.

 A total of $35 million is allocated for administrative expenses, which include PHFA administrative cost and Third-Party Vendor cost, as defined below:

 a) Administration of intake, eligibility review, escalations, disbursal of assistance.

 b) Application portal creation and management.

 c) Call center operations, including language line and accessibility services.

 d) Marketing and outreach by organizations with experience and capacity for reaching low-to-moderate income homeowners and socially disadvantaged populations.

 e) Data analysis and reporting, compliance and technical assistance

 f) Technology vendors

 Allocation of 5% ($17,500,000) for Housing Counseling and Legal Aid Services Funds are to be made available for the provision of holistic foreclosure prevention housing counseling and non-profit legal aid services to homeowners to prevent foreclosure and/or displacement, and to aid homeowners who may be eligible for HAF in applying. Agencies funded to provide general housing counseling (as distinct from legal assistance) must be HUD approved.

 Funds disbursed under the program $297.5 million.

 The administrative budget for this program based on Treasury and PA legislation is expected to be $35 million. However, PHFA and our supplier partners that are administering this program, are committed to our responsibility as fiscal stewards of these funds and will work together to manage costs with a focus on providing as much assistance as possible to our communities.

ROBIN L. WIESSMANN, 
Executive Director

[Pa.B. Doc. No. 21-1553. Filed for public inspection September 10, 2021, 9:00 a.m.]

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¹  Specific data and methodology for funding can be found here: https://home.treasury.gov/system/files/136/HAF-state-territory-data-and-allocations.pdf.

²  Atlanta Fed calculations using Black Knight's McDash Flash daily mortgage performance data (available with a two-day lag), U.S. Census Bureau 2017 FIPS Codes.

³  https://www.fha.com/fha_loan_requirements

⁴  https://data.bls.gov/timeseries/LASST420000000000003

⁵  https://www.workstats.dli.pa.gov/Products/UCActivity/Pages/default.aspx

⁶  https://www.philadelphiafed.org/community-development/housing-and-neighborhoods/which-neighborhoods-and-households-will-be-most-impacted-by-covid-19; https://www.philadelphiafed.org/community-development/workforce-and-economic-development/which-workers-will-be-most-impacted

⁷  https://www.bls.gov/lau/ex14tables.htm

⁸  https://files.consumerfinance.gov/f/documents/cfpb_characteristics-mortgage-borrowers-during-covid-19-pandemic_report_2021-05.pdf

⁹  Not all municipalities in Allegheny County had reported 2020 tax liens by the time of this writing, so this number understates the extent of need for property tax assistance there.

¹⁰  https://clsphila.org/wp-content/uploads/2021/03/CLS_UtilityReport_20200324.pdf

¹¹  IPUMS (ACS 2015—2019), adjusted to 2021 dollars. In 2021, the median monthly costs for income-eligible owners with a mortgage, including principal, interest, taxes, insurance, and utilities was $1,219.

¹²  Mortgage Bankers Association, Federal Reserve Bank 13 https://libertystreeteconomics.newyorkfed.org/2021/05/whats-next-for-forborne-borrowers.html

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