Kentucky Mortgage Relief Program: What Ended, Where Help Is Now, and How Kentucky Foreclosure Works

Team Kentucky HAF and why it closed

HAF was federal money from the 2021 American Rescue Plan Act, meant for owners who fell behind because of the pandemic. Kentucky Housing Corporation launched its share as the Team Kentucky Homeowner Assistance Fund in February 2022. Applicants worked with a housing counselor and had to show a COVID-related hardship and income at or below 150 percent of area median income.

According to the Team Kentucky HAF portal, the program could pay these costs, up to $60,000 per household for grant agreements signed on or after October 17, 2022:

• Up to six months of mortgage payments and/or reinstatement of a past-due balance.
• Reducing or wiping out a COVID-era partial claim or loan deferral.
• One-time catch-up of past-due property taxes, homeowners or flood insurance, and HOA or condo dues that were not paid through escrow.
• One-time catch-up of past-due electric, gas, and water bills.

The money was always limited. The portal itself says the program expected to operate through June 30, 2025, or until funds ran out, and later KHC notices gave September 2025 as the outer date. We could not find an official KHC notice naming the exact last day applications were accepted, so we will not guess one. What is certain is the federal side: the U.S. Treasury HAF page says the period of performance for HAF awards has ended and recipients may no longer use HAF money to help homeowners. There will be no new round.

Where Kentucky homeowners get help now

With the grant gone, help is spread across several groups. Each does a different job, so contacting two or three in the same week works better than waiting on one.

If the mortgage is only one of several bills you are juggling, our guide to Kentucky hardship grants lists one-time help for utilities and other costs that can free up money for the house payment.

Programs Kentucky Housing Corporation still runs

KHC’s mortgage assistance page now sorts homeowners into two groups. If you pay your mortgage to KHC, you work directly with KHC’s servicing team. If you pay any other company, KHC sends you to the Kentucky Homeownership Protection Center and to housing counselors.

If KHC services your loan

KHC’s guide for its own borrowers lists a forbearance plan, a loan modification that can stretch the term to 30 or 40 years at a fixed rate, a zero-interest principal deferment that is not due until you sell, refinance, or pay off the loan, and a combination of the two. KHC says you may need to make three or more trial payments before a permanent change is approved. It also asks you to open every letter it sends, since later letters may be legal notices.

Military Housing Assistance

This small state program, created by the Kentucky legislature, helps households where a member is on active duty outside the United States. According to KHC:

• The service member must list Kentucky as home of record, and household income must be at or below 200 percent of area median income.
• You cannot have been more than 60 days behind when the member left for pre-deployment training.
• KHC can pay up to 12 months or $5,000 per household as a grant, and longer if the deployment is extended.
• Up to six credit counseling sessions are available at KHC’s expense.
• You must tell KHC within 30 days after deployment ends.

Getting a workout from your servicer

The company that sends your monthly statement is your servicer, and it holds most of the power to fix a missed-payment problem. Federal mortgage servicing rules in 12 CFR 1024.41 give you real protections:

• 120-day wait: a servicer generally cannot file the first foreclosure paper until you are more than 120 days behind.
• Complete application: if you send a complete loss mitigation application during that window, the servicer cannot file until it decides and any appeal is done.
• Later applications: a complete application received more than 37 days before a scheduled sale must still be reviewed, and the servicer cannot move for a sale judgment or hold the sale while that review is pending.
• Written decision: you get a letter listing each option you were considered for, and a right to appeal a modification denial in many cases.

Call the loss mitigation department, not general customer service. Write down the date, the name of each person, and what they said. Send documents through the servicer’s upload portal or by a trackable method, and keep copies. A counselor can review your package before it goes in, which cuts down on “missing document” delays.

FHA, VA, and USDA loan options

VA home loans. The VA’s page for borrowers who are behind lists repayment plans, special forbearance, loan modifications including a 40-year term, and the new VA partial claim. With the partial claim, VA pays your missed payments to bring the loan current and you repay VA when you sell or pay off the home. You must first finish a three-month trial payment plan, and VA says servicers have until November 28, 2026, to add the partial claim to their systems. Ask your servicer where it stands. VA loan technicians at 877-827-3702 can also step in with the servicer.

FHA loans. HUD requires FHA servicers to run through a set list of home-retention options. These can include an FHA partial claim, which moves the past-due amount into a zero-interest second lien. The rules were revised in 2025, so ask which options you qualify for today and whether a recent workout limits you.

USDA loans. Many rural Kentucky homes are financed through USDA Rural Development. If you have a guaranteed loan, your private servicer handles the workout. If you have a direct loan, call USDA Rural Development about payment assistance or a moratorium.

Fannie Mae and Freddie Mac. If either company owns your loan, payment deferral and Flex Modification are often available. Both have free online lookup tools that show whether they own your mortgage.

How a Kentucky foreclosure moves through court

Kentucky does not allow foreclosure by private sale. KRS 426.525 says plainly that foreclosure of a mortgage is forbidden outside the court process, with narrow exceptions for abandoned property. So every case starts with a lawsuit in the circuit court of the county where the home sits. A typical case runs like this:

1. Default and servicer contact. Late notices, then a breach or acceleration letter. The 120-day federal wait usually applies before filing.
2. Complaint and summons. The lender files a complaint and you are served. Under Kentucky’s civil rules you generally have 20 days after service to file a written answer. Lenders must also name other lienholders, such as a second mortgage or tax lien holder.
3. Judgment. If you do not answer, the lender can ask for a default judgment. If you answer, the case moves forward on the facts and you can raise defenses. Under KRS 426.005, the judgment can order the home sold and can also include a personal judgment for the debt.
4. Appraisal. Before the sale, KRS 426.520 requires the home to be appraised under oath by two disinterested people, and the appraisal is filed with the court.
5. Advertised sale. The master commissioner, an officer of the court, advertises the sale in the newspaper as KRS 426.560 requires, then sells the home at public auction.
6. Confirmation and deed. The court reviews the sale, and the commissioner’s deed must be approved by the court before the buyer takes title.

Even after a case is filed, you can usually keep working with the servicer. Many Kentucky cases settle with a modification or are dismissed after the loan is brought current. Do not ignore the summons while you wait for a decision, though. Filing an answer keeps your defenses alive.

The commissioner sale and your right of redemption

Kentucky gives a limited buy-back right. Under KRS 426.530, if the home sells for less than two-thirds of its appraised value, you may redeem it within six months of the sale. To do that, you pay the clerk the sale price plus 10 percent yearly interest and the buyer’s reasonable costs for upkeep, utilities, insurance, taxes, and similar expenses. The buyer still gets immediate possession during those six months, so redemption is mainly a way to get the home back with new financing or family help.

If the sale brings more than two-thirds of the appraisal, no redemption right applies. If the sale brings more than what you owe and the costs, any extra goes through the court, and you or other lienholders can claim it. If it brings less, the lender may hold a personal judgment for the shortfall, which is why it matters to raise defenses and talk to a lawyer before judgment.

Kentucky homestead exemption for older and disabled owners

Property taxes are part of most Kentucky mortgage payments, so lowering them lowers the bill. The Kentucky Constitution and KRS 132.810 create a homestead exemption for owners who are 65 or older during the tax year, or who are classified as totally disabled under a government or retirement-system program. The home must be your personal residence on January 1.

The Kentucky Department of Revenue set the maximum exemption at $49,100 of assessed value for the 2025 and 2026 tax periods, up from $46,350. The amount is reset every two years for inflation, so a new figure for 2027 and 2028 should appear by the end of 2026.

• Where to apply: your county Property Valuation Administrator (PVA), online, by mail, or in person.
• Deadline: DOR says the application is due by December 31 of the tax year.
• Disability renewals: owners under 65 claiming disability usually reapply each year, but service-connected totally disabled veterans and people found totally and permanently disabled by Social Security or Kentucky Retirement Systems do not have to.
• One per home: only one exemption per residential unit, even if two qualifying people live there.

Older owners who also need repairs can look at our guide to government assistance for home repair, which covers USDA repair loans and grants for rural homes.

After a flood or storm

Eastern and western Kentucky have seen repeated flood and storm disasters in recent years. If your county is in a presidentially declared disaster area, the mortgage rules change in your favor for a while:

• Tell the servicer right away that the home was damaged or your income was hit by the disaster, and ask for disaster forbearance. FHA, VA, USDA, Fannie Mae, and Freddie Mac all have disaster relief rules for borrowers in declared areas.
• Register with FEMA through DisasterAssistance.gov or 1-800-621-3362 while registration is open for your county. FEMA grants can cover basic repairs, but not your mortgage payment itself.
• Insurance money for repairs is often paid jointly to you and the lender. Ask the servicer how it releases repair funds so work is not delayed.
• Price gouging and contractor fraud can be reported to the Kentucky Attorney General’s consumer protection hotline at 888-432-9257.

Disaster declarations and FEMA deadlines change, so check the current status for your county before you rely on any of these options.

Legal aid across Kentucky

Kentucky’s civil legal aid is split among four nonprofit programs. Together they cover every county, and foreclosure defense is one of the services they offer to people who qualify by income. Call the one that serves your area, or start at KYJustice.org, the statewide legal information site the programs share.

Bring the summons, complaint, every servicer letter, and your recent statements to your first appointment. Legal aid can spot problems such as missing notices or a servicer that skipped a pending application, and can sometimes get a sale delayed.

Kentucky mortgage relief program scams

Foreclosure scams follow the news. When a real program closes, fake ones pop up using its name. The CFPB’s foreclosure scam guide lists the classic signs. Here is how they tend to look in Kentucky:

• A caller says they are “with Team Kentucky” or “the state HAF” and can still get you a grant for a fee. HAF is over.
• A company asks for money before it does anything. Kentucky’s debt adjusting law bars charging fees in advance on mortgage-related work.
• Someone tells you to stop talking to your servicer or to send your payments to them instead.
• Someone asks you to sign over the deed so they can “save” the house and rent it back to you.
• A person shows up after a commissioner sale notice appears in the paper with an urgent offer to “stop the auction.”

Report these to the Kentucky Attorney General at 888-432-9257. Real counselors and legal aid lawyers never charge to help you apply for a workout.

A two-week plan if you are behind

1. Day 1: Find your latest statement and any letters. Note how many payments you have missed and whether a lawsuit has been filed.
2. Day 2: Call your servicer’s loss mitigation line and ask for an application. Ask whether your loan is FHA, VA, USDA, Fannie Mae, Freddie Mac, or KHC.
3. Day 3: Book a free HUD-approved counselor (800-569-4287).
4. Days 4 to 7: Gather pay stubs, bank statements, tax returns, and a short hardship letter. Send the package and get a receipt.
5. Day 8: If you were served with a lawsuit, call your regional legal aid program the same day and calendar the answer deadline.
6. Days 9 to 14: If you are 65 or older or totally disabled, file for the homestead exemption with your PVA. Look for other bills you can lower so the house payment is easier to keep.

Related guides

• Kentucky rent relief
• Kentucky debt relief programs
• Government assistance for homeowners
• Alaska mortgage relief

Frequently asked questions

This guide is general information, not legal advice. Program rules, deadlines, and court procedures can change, so confirm details with the agency, your servicer, or a lawyer. National Relief Program is an independent website and is not affiliated with Kentucky Housing Corporation or any government agency.