The state adopts the Pennsylvania Mortgage Relief Program

In an abrupt change, Pennsylvania’s ailing mortgage relief program will no longer work with the private company originally contracted to operate it and will temporarily stop accepting new applications beginning February 1 while it completes the transition.

The move comes less than a week after a Spotlight PA investigation found the program struggled to get the information they needed from mortgage companies, leaving homeowners searching for answers and waiting months for help. As a result, some applicants had to shut down their utilities and saw their credit scores plummet.

The application pause, announced with just days notice, will give the program time to address a backlog of outstanding applications and manage the transition from the contractor’s software systems, according to the Pennsylvania Housing Finance Agency.

It is unclear how long the program will be closed to new applications. Homeowners with pending applications will not have to resubmit but will need to register with the new system, an agency spokesman said in a press release. The agency said applicants will receive an email with follow-up information.

The agency did not respond to questions from Spotlight PA as to why it made the change.

The program, which is funded by $350 million in federal pandemic assistance, started last February and will cover mortgage and utility debt, past due property taxes and other housing costs, and ongoing mortgage payments for some homeowners.

However, problems coordinating with mortgage lenders meant the program fell short of its internal goal of getting help to homeowners within 60 days of applying. The average wait time was more than twice as long in mid-December.

As of Jan. 30, the program had disbursed approximately $94 million, about a quarter of the money available. For the first six months, Pennsylvania’s spending ratio was similar to other states, many of which faced similar difficulties.

After the Pennsylvania legislature ruled that the housing authority would oversee the program, officials there outsourced day-to-day administration because of the “massive overhead” involved in quickly ramping up a new and complex program, according to an agency newsletter.

In October 2021, PHFA signed a five-year, $27.5 million contract with Innovative Emergency Management, Inc., a company with a proven track record of delivering disaster relief programs. IEM has also been hired to run matching mortgage programs in North Carolina, Puerto Rico and Virginia.

The Housing Agency signed the program policies and retained oversight, while IEM was contracted to process applications, disburse funds, provide marketing and provide a call center for applicants’ questions on site.

Complaints of poor communication from IEM case workers have dogged the program. Nearly two dozen applicants told Spotlight PA that they were having trouble getting updates from the program, adding to their frustration and anxiety during the long wait. Homeowners said their assigned caseworkers stopped responding to calls and emails, and that the call center provided only vague updates.

As part of the revision, new contacts will be assigned to applicants during the week of February 6th, per FAQs published online by PHFA. Among the questions: “I have been waiting for my application to be processed for a year. How long does it take to process?”

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