The Kentucky Homeowner Assistance Fund is designed to help homeowners avoid foreclosure. But, not all homeowners are eligible for the program.
What Is the Kentucky Homeowner Assistance Fund?
In collaboration with the Kentucky Housing Corporation (KHC), a program called Team Kentucky Homeowner Assistance Fund (KYHAF) was launched to assist homeowners affected by the COVID-19 pandemic. The fund is designed to provide financial aid to prevent owners from losing their homes to foreclosure. In total, the program has a funding of $85.4 million.
History Behind the Kentucky Homeowner Assistance Fund
The year 2020 brought a lot of unexpected turmoil and grief as it marked the beginning of the COVID-19 pandemic in the United States. The pandemic forced businesses and schools to shut down, some permanently, while countless Americans were furloughed or left unemployed. This affected their source of income and, by extension, their ability to pay their bills on time. These bills include mortgages, utilities, and even homeowners association dues.
To prevent millions of Americans from losing their homes, the federal government created the American Rescue Plan Act. The Act gave rise to the Homeowner Assistance Fund, a program with the goal of helping struggling homeowners and keeping them from foreclosure.
The American Rescue Plan Act offers up to $9.961 billion in combined financial assistance. Participating states were required to submit a plan for approval to the U.S Treasury Department by July 21, 2021. Each state was set to receive a minimum of $50 million in funds. Many states received approval and are already actively implementing their programs — and Kentucky, which received approval in late December, is one of them.
Does the Kentucky Homeowner Assistance Fund Apply to HOA Dues?
Due to a loss of income, numerous Kentuckians found themselves struggling to make ends meet. Utility bills, mortgage payments, insurance premiums, and property taxes were piling up. When left unpaid, homeowners could face foreclosure and lose their homes.
The Kentucky Homeowner Assistance Fund can step in and ease some of the financial burdens for qualifying homeowners. They can use the fund granted to them to pay utility costs, delinquent mortgage payments, homeowners insurance, and property taxes. When approved, the funds will go directly to the utility companies, mortgage lenders, insurance providers, and county property tax administrators.
But, what homeowners association dues?
There is more than one way a homeowner can face foreclosure. Homeowners who are members of an HOA have an obligation to pay regular dues, which are used to cover the community’s shared expenses. While some HOAs initiated programs and budget cuts to help members throughout the pandemic, others have remained steadfast in their collection efforts. Even with consideration from HOAs, some homeowners still had difficulty meeting their financial obligations.
When a homeowner fails to pay their homeowners association fees, the HOA can place a lien on their property. It can then initiate foreclosure proceedings to collect what the homeowner owes. Fortunately, the KYHAF also applies to HOA fees. When approved, the funds will go directly to the homeowners association.
How to Apply for the Kentucky Homeowner Assistance Fund
The KYHAF formally commenced on Monday, Feb. 7, 2022. Homeowners can visit the Team KYHAF website to apply. If a homeowner qualifies for the fund, they can receive up to $35,000 in assistance.
The program will assign a housing counselor to every applicant. The counselor will provide the homeowner with guidance through the application process. This includes help with gathering, signing, and submitting the necessary documents. Counselors can also answer any questions homeowners may have about the program.
Homeowners only have until Sept. 30, 2025, to avail of the program’s benefits or until the funds run out.
How do you know if a homeowner qualifies for the fund? Kentucky has set certain requirements to measure eligibility. To qualify, applicants must:
- Have the ability to document a financial hardship following Jan. 21, 2020, because of the COVID-19 pandemic;
- Live at the residence as their principal residence or have lived there during the time of the financial hardship; and,
- Earn an income at or below 150% of the area’s median income.
To understand whether a homeowner earns below 150% of the median income in the area, visit the Homeownership Protection Center website.
Applicants must also submit the required documents below:
- Income verification
- Home valuation information
For income verification documents, these include 2019 tax filings, payslips, 1099s, and W2s. Homeowners can also request their employer to provide attestation. As for home valuation information, these include appraisals, tax assessments, and asset statements.
Time Is of the Essence
The Kentucky Homeowner Assistance Fund will certainly help a lot of struggling homeowners avoid foreclosure. But, it will not run forever. Considering homeowners only have until September 2025 or until the program depletes the funds (whichever comes first) to apply for the program, those who qualify should act now.
Managing a homeowners association does not come easy. Most communities need help from a professional HOA management company like Elite Management Services. Call us today at (855) 238-8488 or contact us online to request a free proposal.
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