Colorado continues emergency mortgage assistance plan for homeowners at risk of foreclosure due to COVID-19 pandemic

COLORADO SPRINGS, Colo. (KRDO) -- State officials created a program to help tenants who struggled to pay rent during the COVID-19 pandemic, and now a similar program is in place for homeowners.

The program, under the Department of Local Affairs, is called the Colorado Emergency Mortgage Assistance Program and has $175 million to allocate through the end of 2026.

Homeowners are eligible to apply if they experienced a financial hardship related to the COVID-19 pandemic after Jan. 1, 2020 and have incomes equal to or less than 100% of their county's area median income.

The state said that 750 homeowners have received assistance so far, including 106 in El Paso County with 300 more cases pending; the average homeowner award is $9,000 and the maximum is $40,000.

Randi Davis, an administrator of the program in El Paso County, said that the state is currently processing applications from February and March, so we could be seeing just the tip of the iceberg -- because experts have said that a rising foreclosure rate is a sign that the area's hot housing market is about to cool off.

"The program actually started last fall," said Davis, who works for the Rocky Mountain Community Land Trust, an agency that counsels first-time homebuyers and helps potential buyers find affordable housing. "But in most places, you had to apply online. Now we have a local office that can help people navigate the process."

Davis said that she's been seeing 10 to 15 new foreclosures filed every week, and that the county is now at 455 foreclosures for the year -- three times more than last year.

Many people lost jobs or took pay cuts during the pandemic.

"Back in 2009, the county had an average of 102 foreclosures a week," Davis said. "Thankfully, we aren't there."

However, she adds that the apparent rise in foreclosures won't help people who are still struggling to find affordable and available houses.

"A lot of people are hoping this situation will help them," she explained. "Unfortunately, I think that cash buyers and investors will absorb the foreclosures we've had -- at least for a bit longer."

Davis said that there are two foreclosure-related factors at work.

"I think the foreclosures we're seeing here are not by homeowners, but by lenders," explained. "Probably smaller financial institutions who couldn't make it after missing out on so many mortgage payments. But I also think there are homeowners who didn't have a plan for how to cope with the pandemic, plus the higher interest rate and inflation we're seeing now."

Ann Kidd, head of the Pikes Peak Association of Realtors, said that the situation shouldn't put homeowners in a panic.

"The sky isn't falling," she said. "We aren't seeing the need for anyone to foreclose on a property, if they own the property. We have such a tremendous amount of buyer need in our city right now, there's no need for anyone to panic and go into a state of foreclosure."

But people who have, will have it on their credit record for seven years, Davis said -- and that will make it harder to find another home than the one they already lost.

For more information, visit: https://cdola.colorado.gov/emergency-mortgage-assistance.