Only a small percentage of the money set aside to help New Jersey's struggling homeowners — funds the state received as part of the American Rescue Plan stimulus package — has been distributed.
NorthJersey.com obtained records from the Housing and Mortgage Finance Agency through a public records request showing the state had given out fewer than 4% of the funds from October 2021 through September 2022. New Jersey rejected twice as many applications as it approved.
WNYC host Tiffany Hanssen spoke with NorthJersey.com housing reporter Ashley Balcerzak about the findings.
The transcript of their conversation below has been lightly edited for clarity.
Tiffany Hanssen: So first, give us a quick reminder of what money New Jersey received as part of that American Rescue Plan package. What were the expectations around the distribution of those funds to struggling homeowners?
Balcerzak: New Jersey received a little more than $300 million, and of that, $270 million was supposed to go out for assistance.
This money is supposed to help prevent foreclosures for people that owe money on their mortgages, property taxes, homeowners insurance — or homeowner association (HOA) fees or dues.
The program's been up and running for about a year, and New Jersey has only passed out about $10 million, which is about 4% of the funds. That's a much slower pace than in other states. I hear from a lot of families who are saying that they need the funds now.
All right, so talking about those families — who did apply for the money? What were the criteria they had to meet in order to apply?
You need to earn less than 150% of your area's median income; had been impacted by COVID; and had been current on your payments, as of January 2020. So, this couldn't be an issue before — it had to be due to COVID. It has to be your primary residence. And you can't have more than $75,000 debt.
As I understand it, it used to be lower than that. The debt criteria used to be $35,000, and it's changed to $75,000. What happened there?
Yes. Quite a few people were being rejected for having too much debt, and it did take quite a bit of time — about a year — to get this program up and running after the American Rescue Plan funds were received. People ended up accruing even more debt during that time, so the state agency dealing with this issue decided to raise the cap.
But one of the critiques was that this information wasn't shared widely with folks. People who may not have applied in the past didn't realize that this change in the debt cap had happened. So, we're trying to spread awareness there.
What state agency is this?
This is the HMFA. That stands for the New Jersey Housing and Mortgage Finance Agency.
All right, so how many applications did the HMFA receive?
They received close to 7,000 applications.
And of those, how many have been approved to this point?
Less than 700 families have received help, which is about 10% of the applications.
Why is it so few? Do we know?
The HMFA has to send in a report to the state treasury that actually outlines reasons for rejections, which is really helpful. "Unable to show a COVID-related hardship" is the reason you see overwhelmingly cited, which is really interesting.
I mean, we were all affected by COVID, right? That wasn't what applicants had expected the hurdles to be.
New Jersey has a requirement stating that you have to show that you either lost 10% in income or had 10% more expenses — and that requirement has also been very difficult for people to make.
I'm talking to homeowners and people who are helping them with their applications, and they feel like they're submitting all the proof that they need: tax returns, receipts, bank statements. Yet, they're still getting rejected for that reason.
What else are the residents telling you?
I spoke with a woman for this latest story who, after going back and forth with the agency for more than three months, she just gave up and ended up selling her house so she could pay off her mortgage and some outstanding liens.
Now, she's moved in with her daughter and is living in cramped quarters. It's a 68-year-old woman who was really excited to have this house. She said she feels like she had to give it up partly because of her experience with this agency.
We mentioned those changes in the $35,000 debt cap, up to $75,000.
Do we expect New Jersey to make other changes in terms of how they're reviewing these applications, who's being accepted and all of that? Can we expect more changes in the future?
I'm not sure if there will be more changes. When I speak with the HMFA, they're saying every large-scale program needs some time to ramp up. And they said that in the last couple of months, which weren't included in the report that they filed to the state treasury that I'm basing a lot of these numbers on, that they started to speed up a little bit. So, they have approved another $8 million worth of payments.
That's almost doubling what they've paid, but that's still a small portion of the overall money.
We'll see what happens. What advocates and [Department of Housing and Urban Development]-approved housing counselors are telling me is that communication should be improved and that the website and application itself could really be clearer that it's centered around people who need help with their mortgage.
It can be really confusing for people who just maybe don't have a mortgage and are behind on their property taxes. Those are suggestions that we've put out there. I'm not sure if they will be followed or not.