Knowledge Use

The Courant has a sad article on mortgage relief in CT.

The Wrights, with yearly income of about $80,000, share a predicament with thousands of families in trouble in Connecticut — many of whom had reason to hope for help from the state. An examination of Connecticut’s mortgage relief programs shows that only a small fraction of homeowners have qualified for aid that was meant to reach many more families.

Even as foreclosures continue by the hundreds, more than $100 million set aside by the state to help families keep their homes is going untapped. The state programs are so narrow and carry so many restrictions that getting approval is nearly impossible.

From what I can gather from the article, there are several programs in CT and each comes with its own set of standards: EMAP, CTFAMILIES, and HERO:

Since July 1, a program to help homeowners make payments on their mortgages has helped one borrower so far, with just five approvals pending. That, despite 382 applications for the program — the Emergency Mortgage Assistance Program, or EMAP.

The centerpiece program, CTFAMLIES, has fared better, with 65 loan refinancings closed, totaling $13.5 million, among 309 applications. Another seven refinancings are approved, and awaiting a closing date.

In yet another program — the Homeowner Equity Recovery Program, or HERO — the state planned to buy mortgages from lenders, who would take a loss, and negotiate to set more affordable interest rates. HERO has yet to help a single homeowner, and just one loan is expected to close later this month, state records show.

These programs, according to the article, are managed by the Connecticut Housing Finance Authority. My intent here is not to write about the financials but to ask a few questions. If a relief program is going to be useful, it seems to me that a few important items are required: 1) develop a process to identify who needs assistance 2) develop a process for getting aid to them as painlessly as possible. Standards matter, but it’s not that difficult to develop them. Why do we need separate programs, which will confuse people having problems and looking for information and will put a lot of administrative load on the state and its employees?

Moreover, a quick look at the CHFA website is enough to confuse anyone or drive them bananas.