Mortgage Payment Help in Vermont: A Homeowner's Resource for Financial Hardship

For Vermont homeowners facing financial uncertainty, the search for a mortgage relief program can be a source of significant stress. If you are struggling to make your mortgage payments, it is crucial to know that help is available.

While the primary pandemic-era assistance program has concluded, a robust network of support and financial resources remains available across the state. Navigating these options is the first step toward securing your home and regaining financial stability.

A clear path forward exists. This resource is designed to be your roadmap, guiding you through the immediate actions to take and the long-term solutions available to protect your home.

The Status of Vermont's Pandemic-Era Mortgage Relief Program

Understanding the Closed Vermont Homeowner Assistance Program (VHAP)

The Vermont Homeowner Assistance Program (VHAP), a key resource during the pandemic, is now closed to new applications. It's important for homeowners to understand what this program was and why it has ended. This clarifies the current landscape of available assistance.

Administered by the Vermont Housing Finance Agency (VHFA), VHAP was a temporary emergency program funded by the federal American Rescue Plan Act. It was created to help homeowners who experienced financial hardship due to the COVID-19 pandemic, providing grants for overdue mortgage payments, property taxes, and utility bills.

Having successfully distributed its funds, VHAP is no longer an option. However, the conclusion of this program does not mean that help is unavailable. It was one part of a much broader and ongoing support system for homeowners in the state.

Your Immediate Action Plan: First Steps to Protect Your Home

When facing difficulty with mortgage payments, taking immediate, strategic action is the key to preserving your homeownership. The following steps provide a clear, urgent plan to take control of the situation and access the expert help available to you.

Step One: Contact Your Mortgage Servicer Immediately

The single most important first step is to communicate with your mortgage servicer, which is the company you send your monthly payments to. Ignoring letters or calls will severely limit your options.

Proactive communication shows your commitment to finding a solution. Mortgage servicers are typically motivated to work with homeowners to avoid the costly and complex process of foreclosure.

• Identify Your Servicer: Your servicer’s name and contact information are listed on your monthly mortgage statement. It may be your original lender or another company that has taken over the management of your loan. If you bought your home after January 2009 with VHFA benefits, your loan may be serviced by U.S. Bank.
• Discuss "Loss Mitigation" Options: When you call, explain your financial hardship and ask about "loss mitigation" strategies. This is the formal term for options designed to help you avoid foreclosure. These may include:
• Forbearance: A temporary period where your mortgage payments are paused or reduced. This is designed to give you time to resolve a short-term financial issue.
• Loan Modification: A permanent change to one or more terms of your original loan—such as the interest rate or the loan term—to make your monthly payments more affordable.
• Repayment Plan: An agreement that allows you to catch up on delinquent payments over a specified period by adding a portion of the overdue amount to your regular monthly payments.
• Deed-in-Lieu of Foreclosure: An option where you voluntarily transfer ownership of the property to the servicer to satisfy the debt and avoid a foreclosure proceeding.

Step Two: Engage a Free, HUD-Approved Housing Counselor

After contacting your servicer, your next call should be to a HUD-approved housing counseling agency. This is arguably the most critical step in navigating the complex landscape of homeowner assistance. These non-profit agencies are staffed by certified professionals who provide free, expert, and unbiased guidance to homeowners in distress.

A housing counselor acts as your personal navigator and advocate. The support system in Vermont is a network of different agencies—legal, financial, and governmental—and a counselor is the expert who can assess your unique situation and connect you to the right resources at the right time. They serve as a central point of contact, helping you understand all your options and develop a comprehensive plan to save your home.

A HUD-approved housing counselor can provide a range of essential services, including:

• Reviewing your household budget and financial situation.
• Explaining the foreclosure process in Vermont and your rights as a homeowner.
• Helping you understand the loss mitigation options offered by your servicer.
• Assisting you in preparing and submitting a complete loss mitigation application.
• Negotiating directly with your mortgage servicer on your behalf.

The following table lists the HUD-approved housing counseling agencies serving Vermont homeowners. Contacting the agency that serves your county is a free and powerful step toward resolving your mortgage challenges.

Vermont's Foreclosure Prevention Support Network

Beyond housing counseling, Vermont has specialized organizations dedicated to providing direct legal and financial intervention for homeowners at risk of losing their homes.

Vermont Legal Aid: Your Advocate in a Legal Crisis

If your situation has become a legal matter—for instance, if you have received a foreclosure summons from the court—it is imperative to seek legal assistance immediately. Vermont Legal Aid, through its Consumer and Homeowner Rights Project (CHRP), provides free legal services to income-qualified Vermont homeowners facing financial hardship.

CHRP attorneys are experts in homeowner rights and can provide critical assistance in situations such as:

• Foreclosure Defense: Representing homeowners who have received a Summons and Complaint for foreclosure from the court.
• Property Tax Sales: Assisting homeowners who have received a Notice of Sale for their property due to unpaid property taxes.
• Inheritance and Title Issues: Helping heirs secure the legal deed to a home they inherited, which is a crucial step in preventing foreclosure due to what is often called a "tangled title".

Vermont Legal Aid also advocates for systemic changes to protect homeowners, such as their work on Act 106, a law that added significant protections to the property tax collection process to prevent unnecessary home loss.

To see if you qualify for free legal help, call Vermont Legal Aid at 1-800-889-2047 or visit(https://vtlawhelp.org/).

The NeighborWorks Alliance of Vermont: Local Homeownership Centers

The NeighborWorks Alliance of Vermont is a statewide network of the five non-profit housing organizations listed in the table above (Downstreet, Champlain Housing Trust, NeighborWorks of Western Vermont, RuralEdge, and Windham & Windsor Housing Trust). These local homeownership centers are on the front lines of foreclosure prevention, offering a suite of free services designed to promote sustainable homeownership.

Their core services for homeowners in distress include:

• Foreclosure Prevention Counseling: In-depth, one-on-one sessions to address delinquency and explore all available options.
• Financial Education: Courses on budgeting and home credit to help homeowners regain financial control.
• Lender Advocacy: Assisting homeowners in communications and negotiations with their mortgage servicers.
• Home Repair Resources: Connecting homeowners with grants and affordable loans for necessary home repairs, which can prevent a financial crisis that might otherwise lead to a mortgage default.

Active Financial Assistance Programs for Vermont Homeowners

While direct mortgage grants from VHAP have ended, other programs can improve your financial stability. True mortgage relief often comes from addressing other major household expenses. This frees up critical funds to keep your mortgage current.

A major, unexpected home repair can easily derail a tight budget and lead to missed payments. Several state and federal programs are designed to prevent that from happening by offering targeted financial assistance.

Federal Support for Rural Homeowners: The USDA Section 504 Home Repair Program

For homeowners in rural communities, the U.S. Department of Agriculture (USDA) Rural Development's Section 504 Home Repair program is a vital resource. It provides loans and grants to help very-low-income homeowners repair, improve, or modernize their homes, or to remove health and safety hazards. 

• Eligibility Requirements:
• Income: Household income must not exceed the very-low-income limit for your county.
• Location: The home must be located in an eligible rural area. You can verify an address on the USDA's eligibility website.
• Occupancy: You must own and occupy the home as your primary residence.
• Credit: You must be unable to obtain affordable credit from other sources.
• Age for Grants: To qualify for a grant, you must be age 62 or older.
• Types of Financial Assistance:
• Loans: Eligible homeowners can receive loans of up to $40,000. These loans have a fixed interest rate of just 1% and a repayment term of 20 years.
• Grants: Homeowners aged 62 or older can receive grants of up to $10,000 to remove health and safety hazards from their homes. These grants do not need to be repaid unless the property is sold in less than three years.
• Combined Assistance: Loans and grants can be combined for up to $50,000 in assistance.

Applications are accepted year-round through local USDA Rural Development offices. For more information, contact the Vermont office at (603) 223-6035 or Housingvt.nh@usda.gov.

Lowering Household Costs: Weatherization and Energy Efficiency Programs

Reducing recurring monthly expenses like heating and electricity is a powerful strategy for freeing up cash for your mortgage payment. Vermont offers several programs to help homeowners make energy efficiency improvements at little to no upfront cost.

• VHFA Weatherization Repayment Assistance Program (WRAP): This program helps finance home weatherization projects like insulation, air sealing, and new heat pumps.
• How it works: You repay the cost over time through a low-interest charge on your monthly utility bill.
• Key benefits: Eligibility is based on utility payment history, not a credit check. The repayment is tied to the utility meter, not the homeowner.
• Efficiency Vermont Home Energy Loans: This program offers 0% interest financing for low- and moderate-income Vermonters.
• Covered projects: Funds can be used for home weatherization and heating projects.
• Additional coverage: Loans can also cover necessary health and safety repairs related to the project.  

Other Targeted Financial Aid for Home Repairs and Safety

Several other state and local programs offer financial help for specific, critical home repairs that can prevent a financial emergency.

• Healthy Homes On-Site Program: The Vermont Agency of Natural Resources provides assistance to low- and moderate-income homeowners for the repair or replacement of failed or inadequate home water and wastewater systems.
• Lead Hazard Reduction Programs: The Vermont Housing & Conservation Board and the City of Burlington offer programs to help property owners reduce lead-based paint hazards, which is especially important for households with young children.
• NeighborWorks Home Repair Loans: The local NeighborWorks organizations across Vermont provide low-cost loans and grants for a variety of home repairs to eligible homeowners.

Key Principles for Protecting Your Home and Financial Future

Facing mortgage difficulties can feel overwhelming, but it is a challenge that can be overcome with the right strategy and support. The resources available to Vermont homeowners are substantial, but they are most effective when accessed promptly and with expert guidance.

Remember these key principles:

• Act with Urgency: The moment you anticipate having trouble making a payment is the moment to act. The earlier you begin the process, the more options will be available to you.
• Communicate Openly: Stay in consistent communication with your mortgage servicer. They cannot help you if they are not aware of your situation.
• Leverage Free Expertise: You do not have to navigate this alone. Vermont has a dedicated network of free, professional housing counselors and legal aid attorneys whose sole mission is to help homeowners like you. Their expertise is your most powerful tool.

By taking these steps—contacting your servicer, engaging a housing counselor, and exploring the available financial and legal resources—you can build a clear and effective plan to address your mortgage challenges and secure a stable financial future in your home.

Frequently Asked Questions