Carol Haynes, a resident of Florence, Kentucky, found herself on the brink of losing her home following her husband's death in 2022. Both she and her husband fell ill from COVID-19, and his passing subsequently led to a freeze on his bank accounts. This freeze halted the automatic mortgage payments on their home, catching Haynes off guard.
Despite her step-daughter's successful negotiation of a loan modification to resume mortgage payments, the bank had already initiated foreclosure proceedings and was in the process of selling the loan. Haynes received a letter stating that her home would be auctioned on May 23. Faced with limited options, she chose to file for bankruptcy to halt the sale temporarily. Haynes hopes to present evidence of the loan modification in bankruptcy court to resolve the issue.
"I want to be around his things," she said. "I can feel him here. I think if I left here, I wouldn’t live long."
Local 12 news reported that they were unable to reach Haynes's new mortgage holder for comment.
This personal story is a microcosm of a larger issue affecting thousands of homeowners across the United States. According to research from property data firm ATTOM, nearly 360,000 foreclosure filings occurred last year, marking a 10% increase from 2022. Although foreclosure filings slipped 4% in April compared to March, the number of completed repossessions rose by 8% month-over-month.
Financial planning gaps, such as not having joint accounts or named beneficiaries, can lead to significant financial troubles, as seen in Haynes's case. Additionally, homeowners are grappling with rising property taxes, insurance bills, and persistent inflation, making it increasingly difficult to meet monthly mortgage payments.
In response to such financial hardships, several programs have been established to aid homeowners. The American Rescue Plan Act of 2021 allocated nearly $10 billion to assist homeowners facing financial difficulties due to the COVID-19 pandemic through the Homeowner Assistance Fund. This fund is designed to help manage mortgage payments, homeowner's insurance, utility payments, and other expenses, thereby helping homeowners avoid foreclosure.
Furthermore, the Federal Housing Administration (FHA) launched the Payment Supplement option for borrowers with FHA loans in 2023. This program allows mortgage servicers to reduce a borrower's mortgage payment by up to 25% for three years without changing the interest rate on the home loan, providing homeowners with much-needed breathing room to organize their finances.
