Vermont Mortgage Relief Program: Help for Homeowners After VT HAF

How VT HAF worked and why it closed

Vermont used its HAF allocation to create the Vermont Homeowner Assistance Program, usually shortened to VHAP. The Vermont Housing Finance Agency (VHFA) ran it. According to VHFA’s program page, it opened in January 2022 with $50 million from the American Rescue Plan Act and gave grants of up to $40,000 per household. The money went toward overdue mortgage payments, property taxes, and certain utility bills for owners with a pandemic hardship.

Demand was high, and VHFA announced that it would stop taking new applications on June 12, 2023, well before many other states closed their programs. VHFA’s page now states plainly that VHAP is closed. Treasury’s Homeowner Assistance Fund page confirms the federal program’s period of performance ended September 30, 2026, so there is no path to reopen it. Questions about an old VHAP file go to VHFA at 802-864-5743.

Vermont mortgage relief program alternatives

Vermont has no replacement grant, but it does have something many states lack: a court mediation program that requires the lender to review you for a modification. Here is how the main options line up.

If heating bills or other costs are part of the problem, the Vermont hardship program guide covers fuel help and emergency aid that can make room for the mortgage.

If VHFA financed your home

Many Vermont first-time buyers got their loan through VHFA. Its homeowner page lists who services those loans:

• VHFA-serviced loans: 1-855-582-0226.
• Loans with VHFA benefits made from January 2009 on: usually serviced by U.S. Bank, 1-800-365-7772.
• VHFA main line: 1-800-339-5866, 8 a.m. to 4 p.m.

VHFA’s advice is simple: tell your servicer early, because it cannot help if it does not know you are struggling. The agency also notes that some federal workout programs do not apply to its loans, so ask the servicer exactly which options your loan allows. For a counselor, VHFA points to the nonprofit NeighborWorks Alliance of Vermont, whose member HomeOwnership Centers serve different regions of the state.

Loss mitigation rules your servicer follows

Most Vermont mortgages are covered by the federal servicing rules in 12 CFR 1024.41. In plain terms:

• The servicer generally has to wait until you are over 120 days late before it files a foreclosure complaint.
• Send a complete application during that window and it cannot file until it has decided and any appeal is over.
• Once a case is pending, an application completed more than 37 days before a sale must still be decided before the servicer asks for judgment or a sale.
• The answer comes in writing, with the reasons for any denial.

Typical outcomes are a repayment plan, a forbearance period, a loan modification, a deferral of missed payments to the end of the loan, or a graceful exit through a short sale or deed in lieu. Most modifications begin with a three-month trial. Make every trial payment on time, because that is what turns the trial into a permanent change.

Government-backed loans: VA, FHA, USDA

Rural Vermont has many USDA and VA loans, and both programs have their own workout tools.

VA. The VA partial claim lets VA cover your arrears, which you pay back only when the loan ends or the home is sold. It is not instant: you must finish a three-month trial payment plan first, and servicers have until November 28, 2026, to begin offering it. See the VA’s guidance for homeowners in trouble, or call a VA loan technician at 877-827-3702.

FHA. FHA servicers must check you for HUD’s home retention tools, including an FHA partial claim, which places missed amounts in a no-interest second lien. The menu changed in 2025, so ask for a fresh review.

USDA. A Rural Development direct loan is handled by USDA itself; a guaranteed loan is handled by the bank that made it. Ask either one about payment assistance or a moratorium.

Service members and veterans can read our foreclosure assistance for veterans guide for more.

The Vermont foreclosure process step by step

Vermont foreclosures happen under 12 V.S.A. chapter 172. The law allows strict foreclosure, where the court gives the lender title after the redemption period ends; foreclosure by judicial sale (12 V.S.A. 4945); and, for mortgages that contain a power of sale, a nonjudicial sale (12 V.S.A. 4961 and following). The steps below follow VtLawHelp’s guide to the court process, which is the route most homeowners see.

1. Notice of default. The lender mails a letter stating what you owe and a date to cure. Paying by that date stops the process.
2. Summons and complaint. If you do not cure, the lender sues in the Civil Division of the Superior Court. The papers include a Request for Mediation form.
3. Your answer. File a written answer within 21 calendar days. It must be verified, meaning you sign a statement under penalty of perjury that it is true. Respond to each numbered paragraph and list your defenses.
4. Mediation. If you qualify and ask for it, the case pauses while you and the lender meet with a neutral mediator.
5. Summary judgment or trial. If there is no agreement, the lender usually asks for summary judgment. You have 30 days to respond in writing.
6. Judgment and decree. If the lender wins, the court issues a Final Judgment Order and Decree of Foreclosure with the amount owed and the last day to redeem.

Even if you miss the answer deadline, VtLawHelp notes that the home cannot be sold for at least eight months after you receive the papers, and you can still ask for mediation. Free answer forms are on the VtLawHelp site.

Foreclosure mediation in Superior Court

Vermont’s mediation program, set up in 12 V.S.A. 4631 and the sections after it, is one of the most useful protections in the state. VtLawHelp’s mediation page explains how it works:

• Cost: free for the homeowner. The bank pays the mediator.
• Choosing a mediator: the court sends a list of three. You and the bank have seven days to agree, or the court picks.
• Documents: you send updated financial papers, such as pay stubs, bank statements, tax returns, and benefit letters. Once you do, the bank must review you for modification programs, including Fannie Mae or Freddie Mac options if your loan is owned by one of them.
• Good faith: the mediator reports to the judge whether the bank acted in good faith. Long delays on a complete file, wrongful denials, or not showing up can lead to sanctions, such as a fine or a stop on interest charges.

If the bank will not set a date or review your file after you sent everything, contact the mediator first. If that does not work, you can file a motion asking the court to order the bank to cooperate.

Redemption, sale, and deficiency

The decree sets your redemption deadline. VtLawHelp says it is usually about six months, and can be shorter if the home is not your main residence. You can stay in the home during that time without making mortgage payments, but unpaid amounts are added to what you must pay to redeem.

If there is a sale and the high bid is less than the debt, the lender must ask for a deficiency judgment at the confirmation hearing. If it does not ask then, it cannot seek one later. VtLawHelp notes that many lenders do not pursue deficiencies, and that exempt income may protect you even if one is entered.

Vermont property tax credit on HS-122

The Vermont Department of Taxes runs a property tax credit that lowers the bill on your homestead. You claim it on Form HS-122 (Section A is the homestead declaration, Section B is the credit claim) together with Schedule HI-144 for household income.

• Maximum credit: $5,600 toward the state education property tax and $2,400 toward the municipal tax.
• Income cap: household income of $115,400 or less for claims based on 2025 income.
• Who qualifies: you were domiciled in Vermont all year, owned and lived in the home as your homestead on April 1, filed a homestead declaration, and were not claimed as someone else’s dependent.
• Deadline: generally April 15. If the homestead declaration is filed by October 15, a late credit claim can still be filed until March 15 of the next year, with a $150 processing fee taken out.

The department posts a calculator and fact sheets for the current year, including one for veterans. The credit is applied to your town tax bill, which can shrink your escrow payment once the servicer recalculates it.

Vermont Legal Aid and Legal Services Vermont

The state’s two civil legal aid groups share one intake system, described on VtLawHelp’s How We Can Help page:

• Helpline: 1-800-889-2047. Leave one message Monday, Wednesday, or Friday from 8 to 1, or Tuesday and Thursday from 12:30 to 7. Callbacks happen weekdays from 8:30 a.m. to 4:30 p.m.
• Online: the Legal Help Request Form usually gets the fastest reply. Most people hear back in about 5 to 10 days.
• Quick questions: Vermont Free Legal Answers lets you post a civil legal question online for volunteer lawyers.

Because the answer deadline is only 21 days, contact legal aid the day the papers arrive and mention the deadline. You can also visit Vermont Legal Aid or Legal Services Vermont directly. For credit cards, medical bills, or collection suits on top of the mortgage, see our Vermont debt relief programs guide.

Spotting foreclosure rescue scams

Foreclosure cases are public court records. Some people use them to find homeowners to target. Be careful with anyone who:

• Asks for money before they have done any work on your loan.
• Claims VHAP has reopened or that they can get you a federal grant.
• Tells you to skip mediation or stop paying your servicer and pay them instead.
• Wants you to sign over the deed in exchange for a lease.
• Rushes you or refuses to put promises in writing.

The CFPB explains common foreclosure relief scams. Mediation, HUD-approved counselors, and legal aid cost you nothing.

Related guides

• Vermont rent relief
• Mortgage relief programs
• Government assistance for homeowners
• Foreclosure assistance grants for seniors

Frequently asked questions

This guide is general information, not legal advice. Court procedures, tax credit limits, and program rules can change, so confirm them with the Department of Taxes, your servicer, the Superior Court, or a lawyer. National Relief Program is an independent website and is not affiliated with the Vermont Housing Finance Agency, the Vermont Department of Taxes, the Vermont Judiciary, or any government agency.