Colorado has distributed more than $2.3 million in aid since November 2021 to people who are in debt to their homeowners associations through a mortgage assistance program funded by the federal government during the height of the COVID-19 pandemic.
The money has gone to pay off unpaid HOA assessments, fines and attorneys fees.
At least 13 homeowners received more than $20,000 to settle their HOA debt under the Colorado Emergency Mortgage Assistance Program. One received nearly $60,000, including about $41,000 to cover attorneys fees.
The data on Colorado’s distribution of Emergency Mortgage Assistance Program funds was obtained through an open records request by Homeowners of America United, a homeowner advocacy group. The Colorado Sun was provided the data and then verified it with the state.
The program comes as HOAs have initiated roughly 3,000 judicial foreclosures in Colorado since 2018, according to an investigation published in August by The Sun. About 8% of the cases — or more than 250 — resulted in homes being sold at auction for a fraction of their value so that HOAs could recover what they were owed.
Gov. Jared Polis and Democrats in the legislature, in response to The Sun’s reporting, vowed to pass legislation this year at the state Capitol to try to reduce the foreclosures. Several measures are in the works for the lawmaking term that begins Wednesday.
The federal Homeowner Assistance Fund was created through the American Rescue Plan Act, which congressional Democrats passed in 2021. Colorado received $175 million to run its Emergency Mortgage Assistance Program, money that must be spent before October 2026.
The U.S. Department of Treasury let states distribute the aid to cover homeowners association fees or liens, which the Community Associations Institute, an HOA trade group, says marked the first time the federal government made HOA debts equivalent to mortgage delinquencies in emergency housing legislation.
Colorado joined the majority of states in opting to let their Homeowner Assistance Fund money be distributed to pay off HOA debts. Only a few states prohibited that use, according to the Community Associations Institute.
“In response to the concerning rise in foreclosures attributed to HOA fees and liens across various Colorado communities in 2022, the Division of Housing took decisive action to help address the issue within the Emergency Mortgage Assistance Program,” said Chynna Cowart, a spokeswoman for the Department of Local Affairs, where the Division of Housing operates out of. “Recognizing the imminent threat of displacement for homeowners, some of whom were mere days away from foreclosure, the inclusion of payment assistance for HOA fees and liens became a crucial component of the program’s framework.”
To qualify for the assistance a homeowner must have an income equal to or less than 100% of their area median income and have experienced a COVID-related impact to their finances, including job loss, reduction in income or increased health care costs.
The aid is capped at $40,000 per household, though Cowart said exceptions can be made — like in the case of the homeowner or homeowners who received nearly $60,000 to cover their HOA debt. In that situation, Cowart said the exception stopped an imminent foreclosure sale in Denver’s Green Valley Ranch neighborhood, where a high number of homes have been foreclosed on by an HOA.
“It kept the homeowner from losing their home,” she said.
As of December, about $81 million remained in the Emergency Mortgage Assistance Program fund.
Homeowners can apply for assistance through the program at www.MortgageHelpCO.org.