When Shane Ward bought a modest, red brick house in Pawtucket with his mother in 2005, a sense of accomplishment settled in.

“I think it was the best decision we made,” Ward said. “She was able to have her own home.”

For years, he lived in the house with his mother and sister. His mom grew grapevines in the backyard. Together, they never missed a mortgage payment.

The pandemic sent their finances into a tailspin. His sister lost work. Shortly after, their mother passed away and they lost her contribution to household expenses. Ward’s disability checks became the steadiest income.

They fell behind on the monthly mortgage payments — nearly $28,000 behind.

“We were definitely in survival mode,” Ward said.

Then, in late February, Ward received a foreclosure notice. The stress kept him up at night. But Ward had heard of a mortgage relief program that might be able to help him.

Rhode Island Housing received $50 million as part of a federal COVID relief program called the Homeowner Assistance Fund, an effort to help prevent foreclosure and displacement for low income homeowners. Many borrowers fell behind on their monthly mortgage payments during the pandemic and the Homeowner Assistance Fund, or HAF, provides Rhode Island Housing funds to help get them back on their feet.

But the need for assistance in the state has far outpaced Rhode Island Housing’s capacity to provide relief. Faced with an overwhelming number of applications and limited funding, the agency suspended the program just nine weeks after opening it. Now, as many low income homeowners are trying to catch up on past due balances, they’re unable to access relief, pushing them to the brink.

“You're not looking at $5,000,” said Lisa Galloway, a housing counselor with the West Elmwood Housing Development Corporation. “You're looking at $25,000, $30,000 in a lump sum to come up with.”

Ward rushed to apply to the HAF program as soon as he heard it was open. But by the time he had collected all the necessary paperwork, he was already too late. The program had just stopped accepting new applications. He felt blindsided.

“I know I'm not the only one that fell through the cracks,” Ward said. “I ain’t going to be able to write a check for 30 grand.”

Overwhelmed with demand

In 2021, Congress allocated $9.9 billion in American Rescue Plan dollars to create the Homeowner Assistance Fund, or HAF. All 50 states, Washington D.C., and five U.S. territories received funding according to relative need. Along with other low-population states, Rhode Island received $50 million.

Rhode Island U.S. Senator Jack Reed co-sponsored the legislation because he foresaw that homeowners who got behind on their mortgages during the pandemic would need relief.

“I knew that we had another issue coming up with respect to maintaining people in their homes,” Reed said. “And for many people that's the biggest investment they have.”

Still, he acknowledged that limited funding for the program means not all will be able to get the help they need.

“I'm afraid there are probably still some of those individuals and families that are facing real difficult issues with their mortgages,” Reed said.

As soon as Rhode Island Housing opened the program in January, applications flooded in. Peter Pagonis, the agency’s director of homeownership, estimates the agency received most of the 2,937 applications in the first two weeks of the program.

“We were caught a bit off guard,” Pagnois said. “The rush was higher than we thought.”

Almost immediately, Pagonis and his team started talking about suspending the program due to overwhelming demand. They wanted to avoid stringing homeowners along, giving them “false hope” for funding they might never receive.

Just nine weeks in, Rhode Island Housing stopped accepting applications. More than 2,800 people had partially completed applications they were unable to submit. After March 14, anyone who was facing foreclosure, was in need of relief, or who had yet to hear about the program would no longer be able to apply.

In retrospect, Pagonis says, the agency may have been “a little conservative” in closing the program so soon. If it finishes processing the complete applications and has money to spare, the agency will reach out to the homeowners who had started to apply but had been shut out in March.

Rhode Island’s HAF program was one of the first in the country to launch, so it’s still too early to say if the nine-week period was exceptional. But Pagonis did acknowledge that “it does seem like a small window to apply.”

Of the 56 U.S. states and territories that received HAF funding, 49 are currently taking in applications from distressed homeowners. Alaska and Florida have closed their mortgage relief programs entirely. Illinois, New York, and Puerto Rico have, like Rhode Island, stopped taking new applications. Utah has yet to launch its program at all.

In Rhode Island, more than 800 people have gotten help so far, 30% of the people who applied. More than half of the households have received over $15,000 in relief.

Most people who have received assistance were reinstated, which means they received a grant to pay off a lump sum of accrued debt in one shot. Others have seen the funding lower their monthly payments to an affordable amount, or pay down the utility and property taxes they owed. Some have even paid off their mortgages entirely with dollars from the HAF program.

For those people, the assistance has been a lifeline, Pagonis said. It has been the difference between hanging onto a home or being displaced. But many more are still struggling and unable to access that support.

‘How do you tell your girlfriend that we might not have a house?’

Today, housing counselors across Rhode Island are seeing homeowners face down tens of thousands of dollars in debt, trying to negotiate with their banks and mortgage servicers to avoid foreclosure.

“How do you come up with $30,000 when you're coming out of a situation of arrearage?” said housing counselor Lisa Galloway. “It's just unrealistic.”

In the late spring, Galloway started to get more calls from people with debt they didn’t know how to handle. One of those calls came from Philip Casey, a 39-year-old homeowner in Coventry.

During the pandemic, Casey had gone into forbearance, a protection that allows borrowers to temporarily pause their mortgage payments without penalty. He runs a disaster restoration business called Coastal Property Services out of his house and his income was unpredictable. He wasn’t sure he’d be able to make payments every month.

Millions took advantage of the opportunity provided by federal COVID relief measures to enter forbearance. But forbearance is not loan forgiveness, and for many the bills are coming due.

Right before the end of Casey’s forbearance period, his mortgage transferred to Mr. Cooper, a mortgage servicing company with a history of illegal and dubious practices. A few months later, Casey’s credit score plunged and his monthly statements started listing as delinquent the total amount of the deferred payments: about $30,000.

After months of back and forth, Casey said he was left with two options: pay back the entire amount of missed payments in one fell swoop, or refinance to a mortgage that would ultimately cost him more. Meanwhile, his credit was taking more of a hit and he fell deeper into debt.

Then, in July, Casey got a foreclosure notice in the mail.

“My stomach dropped when I saw that,” Casey said. “How do you go and you tell your girlfriend who you're trying to start a family with that we might not have a house?”

Casey hadn’t realized that he could lose his home until the foreclosure notice came. By then, Rhode Island’s HAF program was closed, so he could not access federal money meant for homeowners like him.

“I was in the position where I could have really used it,” Casey said. “That's a shame.”

Luckily, Casey has a mortgage backed by the Federal Housing Administration, which meant he could ultimately modify his loan. Casey connected with Galloway, the housing counselor, who was able to work with the U.S. Department of Housing and Urban Development to push the mortgage servicer to modify Casey’s loan and avoid foreclosure.

When Casey finally signed the new paperwork with a notary public in late August, his relief was palpable.

“The weight of the world is off my shoulders,” he said.

Casey has found a way to keep his house for now. Unlike many of the people who received funding from the HAF program, he will eventually have to pay off the $30,000 in paused payments. Many others have not yet found a solution as they’re coming out of forbearance and trying to get back on track with mortgage payments.

Federal foreclosure protections expired at the end of last year, exposing homeowners who are still behind to great risk. And that risk is not borne out equally. Nationally, Black homeowners remain behind on their mortgages at higher rates, which could have long term consequences for their ability to hang onto their homes. And low-income homeowners tended to stay in forbearance longer, leaving them with thousands of dollars to pay back.

“Where the homeowner assistance fund is most crucial is not in the typical experience, but on the margins,” said Michael Neal, a principal research associate with the Urban Institute. “Lower income homeowners of color tend to lag in terms of their recovery.”

The number of foreclosure filings each month has increased in Rhode Island since the beginning of the year, though they have yet to reach pre-pandemic levels, according to data from Black Knight, a mortgage analytics company. Some states introduced additional protections against foreclosure during the pandemic; Rhode Island was not one of them.

Awaiting stability

Unable to access the HAF program, Shane Ward took drastic action to save the house from imminent foreclosure. He doesn’t have a government-backed loan, so his mortgage companies are under no obligation to work with him to address the back payments and keep his house.

Compounding the problem, the past due payments from the pandemic are not Ward’s only crisis. The family took out two mortgages when they bought the house in 2005, including one structured around a balloon payment, which the U.S. Department of Justice considers a form of predatory lending. Now, he owes one of the companies a roughly $50,000 payment.

“I wanna be able to wake up one morning and [say] ‘Ok, the mortgage is set,’” Ward said. “But I can’t. I’ve been worrying every night.”

Ward hoped the HAF program would give him the financial resources to stop the foreclosure and negotiate a way forward with both his mortgage companies. But because the program closed so quickly, he was unable to apply.

“Maybe I could have paid off the loan with it,” Ward said. “It's a shame because I never got to know and see what could have happened, what could have been.”

Instead, Ward filed for bankruptcy in April. That stopped the scheduled foreclosure, but offered only temporary protection. His bankruptcy case was resolved in early September and he is once again at risk of losing his house. He’s hoping the mortgage companies will work with him on payment plans and loan modifications.

Ward shudders to think what his life would look like without the family home.

“I have no place to go,” he said. “There's no housing out there. What am I supposed to do, go to a homeless shelter with my dogs?”

Even with the Homeowner Assistance Fund closed to new applications, there are other supports available if you’re facing foreclosure or unsure how to get back on track with your mortgage.