$125M in Mortgage Relief Available to Alabama Homeowners

Update: The application portal for the Mortgage Assistance Alabama program discussed below is closed. However, even if a foreclosure has started, you might still have time to work out an alternative with your loan servicer. Contact your servicer to learn about available options. Also, if you have questions about the foreclosure process in Alabama or want to learn about potential defenses, consider talking to a foreclosure lawyer.

In early 2021, President Joe Biden signed the American Rescue Plan Act into law. This law created a Homeowner Assistance Fund, a federal program, to give $10 billion to the states to help households that are behind on their mortgages and other housing expenses due to COVID-19.

Eligible homeowners in Alabama who've experienced a financial hardship because of COVID-19 can get a portion of the approximately $125 million allocated to the state—up to $50,000 per household—from the Mortgage Assistance Alabama program. This program uses federal money to help homeowners in Alabama pay overdue mortgage payments and other home-related costs.

Available Financial Help for Alabama Homeowners

The Mortgage Assistance Alabama program offers three kinds of assistance to eligible homeowners:

• Mortgage payment assistance. The program will provide money to pay overdue or delinquent mortgage payments, pay off a COVID-19 related forbearance, or pay off a partial claim. The program might also provide you with 12 months of mortgage payments, including principal, interest, and escrow expenses.
• Loan modification assistance. The program will provide funds to pay down the principal balance of a first mortgage lien. The program provides a one-time payment to your servicer to recast the loan or to fill a financial gap that restricts your eligibility for a loan modification or to extinguish a lien.
• Lien extinguishment. This program is available to homeowners on a fixed income who have a first mortgage balance at or below $50,000. The provided assistance pays off the lien.

Eligibility Requirements for the Mortgage Assistance Alabama Program

To qualify for relief from this program, you must have suffered a financial hardship after January 21, 2020, because of COVID-19. In addition, you have to meet some other guidelines:

• The home, which must be located in Alabama, has to be your primary residence.
• The home must be a single-family home (attached or detached) or manufactured housing attached to real property. Second homes, seasonal or vacation homes, and vacant properties don't qualify.
• Your total annual household income must be less than 150% of the area median income.
• The maximum original principal mortgage amount on all existing mortgage loans on the property can't be more than the conforming loan limit.

You can qualify even if you previously received assistance from the Hardest Hit Alabama program. But if you're receiving federal mortgage payment assistance from another agency, you're not eligible.

How the Mortgage Assistance Alabama Program Works

Assistance is structured as a grant that you don't have to repay. Only in cases of fraud or wrongful misrepresentation would an applicant have to repay the funds.

Mortgage Assistance Alabama payments go directly to the loan servicer, not to homeowners.

How to Apply for the Mortgage Assistance Alabama Program

To apply for help from this program, go to the Mortgage Assistance Alabama website and take the pre-screening quiz. If you're potentially eligible, you can create an account and complete the online application. You may also request a hard copy of the application by contacting the program's call center at 888-460-9977 or you can complete the application over the phone.

You'll have to provide some documentation with your application, like mortgage statements, proof of income (such as pay stubs and tax returns), and a government-issued ID (like a driver's license). Click here for a complete list of documents you'll need to provide. The program accepts applications Monday through Friday.

Avoid Homeowner Assistance Fund Scams

If you get an unsolicited offer by phone, in the U.S. mail, through email, or by text message offering mortgage relief or foreclosure rescue services, be wary. Scammers sometimes target homeowners who've been affected by COVID-19.

The Mortgage Assistance Alabama program is free. If anyone asks you to pay a fee to get housing counseling or foreclosure prevention services from this program, it's a scam. If you experience fraud associated with this program, be sure to report it.

Learn More About the Mortgage Assistance Alabama Program

Call 888-460-9977 or go to the Mortgage Assistance Alabama FAQs website if you need more information. If you need help with your application, contact a HUD-approved housing counselor who will assist you at no cost. To find a counselor near you, go to HUD's website or call 800-569-4287.

Go to the program's Resources website to get a list of available resources that can potentially help with food and shelter or legal services.