D.C. homeowners could get loans to avoid foreclosure if Congress approves spending

The Housing Finance Agency would offer loans for overdue housing bills. D.C. homeowners must live in the home, face financial hardship and foreclosure risk, exhaust other financing options, and earn less than 2.5 times the Washington area’s median (middle) income for their household size. Borrowers must be able to afford future housing bills, with total housing costs no higher than half their income. Help would be capped at $40,000 over a lifetime, except in refinancing cases. The agency would record a debt claim against the home, behind existing loans, and borrowers would attend housing counseling each year. Congress must authorize use of the program’s fund. Repayment plans would be reviewed yearly.

Closing agents would collect $100 at closing, and lenders would pay $250 when issuing a notice that a borrower has defaulted. The fees would support foreclosure loans and cover D.C. residential property, including properties with up to four homes whether owners live there or rent them out. Borrowers could pay the closing fee in cash or add it to the loan; reverse mortgages for seniors older than 62 would be exempt. The lender’s fee would apply per property, not per notice, and could not be charged to borrowers. Borrowers would not be liable for someone else’s failure to collect or send fees. Foreclosure-assistance loans for homeowners below the Washington area median income for their household size would be interest-free and due at sale or refinancing. Other eligible borrowers would receive low-interest loans, with no payments or interest for at least the first two years.

The Mayor would pay eligible sellers for the gap between market growth and allowed resale-price growth. Payments would cover second and later sales of homes in D.C.’s Inclusionary Zoning affordable-home program, whether sold to an eligible household or the Mayor. Market growth must exceed the growth allowed under the resale-price rules. The payment would equal the seller’s purchase price multiplied by the gap between those growth rates. Market growth would use appraisals that ignore affordability restrictions. The payment would not raise the next buyer’s price or future price limits, or remove affordability restrictions. For a direct sale to an eligible household, the Mayor would deposit the payment before closing and release it only if the sale closes.

Condo boards would obtain repair-cost studies prepared or approved by qualified professionals. The study requirement would cover condo boards responsible for shared property with total replacement costs over $10,000. Boards would review money set aside for repairs yearly and adjust budgets as they consider necessary. Prospective buyers would receive the study at sale. A study dated on or after January 1, 2023, would need updating within five years. Other covered boards would need a study by January 1, 2028. Updates would then be required at least every five years.

Participating lenders would check applicants’ finances alongside their main mortgage review. These rules would cover D.C. Home Purchase Assistance Program applicants. The Mayor would verify income and make the final eligibility decision. The Mayor could repeat lenders’ reviews only for discrepancies, signs of fraud or misleading information, or funding rules the standard worksheet does not address. Lenders could not charge for the program eligibility review, application, or assistance. Free, self-paced group classes would count toward required education, but would not replace required individual counseling. These rules would take effect after mayoral approval or a Council veto override and a 30-day congressional review.