When Deborah Torzone saw the Arizona Department of Housing was launching a mortgage assistance program late last year, she thought she finally had found reprieve from her pandemic employment struggles.

Torzone applied for about $20,000 in mortgage assistance on Nov. 5, days after the application portal opened. Months passed with no assistance.

Meanwhile, her mortgage lender, Chase Bank, told her it would move to foreclose on her home unless she entered into a 40-year loan modification.

She was only five years away from paying off her loan before the pandemic hit.

The Arizona Department of Housing said Chase Bank actually was responsible for the holdup in disbursing funds to Torzone. A spokesperson for the agency said it had tried to contact the bank since September to sign an agreement to participate in the program.

Homeowners cannot receive funds until their lender agrees to participate.

Many lenders, including big ones like Chase, did not agree before the $200 million program began in January, causing application backlogs, according to the Arizona Department of Housing.

Director Tom Simplot and Department of Insurance and Financial Institutions Director Evan Daniels issued a joint letter to mortgage lenders in February asking them to immediately complete an agreement to participate in the Arizona Homeowner Assistance Fund.

Still, even at the end of April, dozens have not submitted the paperwork, leaving homeowners in limbo and on the verge of foreclosure.

Chase Bank agreed to participate in the program on March 1, days after The Arizona Republic contacted the bank about Torzone's situation.

But it took more than a month for Chase to provide all the information needed for the Arizona Department of Housing to move forward with providing Torozone assistance.

"I'm in limbo here. I'm not comfortable here," Torozone said in mid-March.

Big lenders participate after Republic gets involved

About 50 lenders that the Arizona Department of Housing had asked to participate in the Homeowner Assistance Fund had not provided necessary paperwork to the state by mid-March.

The Department of Housing said the majority of those lenders, including two of the biggest, Chase and Bank of the West, agreed to participate only after The Republic contacted them.

A spokesperson for the Arizona Department of Housing said the department began reaching out to large lenders in September — two months before applications opened — to encourage them to sign a participation agreement.

“Chase is pleased to participate in the Arizona HAF program. After being approached by the program administrator for enrollment, Chase worked with the administrator to obtain clarification about the program and enrolled promptly once that clarification was obtained," Chase said in a statement in March.

A spokesperson for Bank of the West said in an email that the bank wasn't asked to participate in the program until Feb. 17, but the Arizona Department of Housing provided information showing it reached out on Sept. 7. The bank spokesperson did not respond to questions about why it took so long for Bank of the West to agree to participate.

"Bank of the West has formally agreed to participate in Arizona's Homeowner Assistance Fund program and has delivered our Servicer Participation Agreement to the Arizona Department of Insurance & Financial Institutions," Bank of the West said in a March 4 statement.

Even with more lenders coming on board, homeowners are still waiting.

As of the end of April, about 1,600 homeowners had been conditionally approved for assistance but had not received it because their lenders had not provided the department with necessary paperwork showing how much the homeowners owe.

Confusion over logistics of loan payments

The Republic also discovered that several banks the Arizona Department of Housing had reached out to actually use a "subservicer" to handle their loans.

That company, Cenlar, signed an agreement to participate in the Homeowner Assistance Fund months ago.

A spokesperson for the Arizona Department of Housing said the department contacts whomever homeowners say their lenders are, but many homeowners may not know their banks use a subservicer, which has led to confusion.

For instance, some homeowners said they had loans from Baxter Credit Union, Loan Depot or Ally Bank, but those institutions use Cenlar to handle their loans.

The Arizona Department of Housing reached out to the lenders, but the lenders didn't tell the department to reach out to Cenlar instead, a department spokesperson said.

When The Republic contacted those three lenders, they then got in touch with the housing department and sorted out the confusion. Homeowners were then immediately able to receive funds because Cenlar was already on board, according to the department.

Hiccups getting programs off the ground

The U.S. Treasury launched the Homeowner Assistance Fund last year, which has led to each state, territory and tribal entity setting up its own program with federal money.

Eligible homeowners can get up to $25,000 to pay 12 months of past-due mortgage, utility, internet, insurance and tax bills from the Arizona Homeowner Assistance Fund. Money is also available to make future mortgage payments for households still struggling because of COVID-19.

Leadership at the Housing Policy Council, the national trade group that represents servicers that manage about 58% of U.S. mortgages, said the challenges in Arizona and around the country are a result of lenders trying to navigate more than 50 brand new programs.

"We all need to recognize that each state has their own set of challenges that they're dealing with and then we've got these national servicers, and lots of them, who are trying to operate the program across all the states," Housing Policy Council Executive Vice President Meg Burns said.

Burns said the Housing Policy Council hosts frequent calls with every state housing administrator and representatives from mortgage companies to try to iron out wrinkles and get money to homeowners as quickly as possible.

Burns said Housing Policy Council has offered to help Arizona or any other state if lenders are not communicating adequately. She said many mortgage companies have worked quickly with Arizona.

The Arizona Housing Assistance Fund disbursed $7.4 million in the first 3½ months of 2022.

"The collaboration ... at the state level in Arizona has been truly exceptional," Burns said.

A 'roller coaster' of emotions as weeks pass

Once Chase agreed to participate in the Housing Assistance Fund, Torzone thought everything else would fall into place.

That wasn't the case.

"I feel like I'm on a roller coaster. It's flat for a little while and then 'bam,' you're rolling down a hill," Torzone said in March.

The Department of Housing said Chase chose to use its own secure transfer system to provide information about Torzone's mortgage instead of using the one set up by the department. It took several weeks to sync the bank's and department's systems.

During this time, Torzone said she kept getting conflicting answers from the bank and the department about who was responsible for the holdup. And then she started getting calls from Chase's collections department warning of foreclosure.

Representatives from Chase told her not to worry about the automated calls, but she did and wondered what effect they would have on her credit score.

"Everybody keeps changing the rules. Meanwhile, I'm dropping down a big deep hole," Torzone said.

It wasn't until the beginning of April — after The Republic followed up with Chase and the Department of Housing multiple times — that Torzone's assistance came through. She received a little more than $20,000 in mortgage assistance, including funds to cover April, May and part of June. She also received utility assistance.

"There's no way, even with as persistent as I am ... that I would have gotten this far (without The Republic)," Torzone said.

Torzone said she worries that other people who've applied and are eligible for assistance are still in limbo — or worse, have already lost their homes.

"I'm sure not everyone was able to hang in there like I did," she said.

How to apply for mortgage aid

There is still nearly $190 million available to Arizona residents for housing assistance, and the Department of Housing is hoping the program's speed will pick up as more lenders come on board.

Homeowners must be in arrears to qualify.

Homeowners can apply for mortgage aid on the Housing Department's website at https://haf.azhousing.gov.

Coverage of housing insecurity on azcentral.com and in The Arizona Republic is supported by a grant from the Arizona Community Foundation.

Reach the reporter at jessica.boehm@gannett.com or 480-694-1823. Follow her on Twitter @jboehm_NEWS.

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This article originally appeared on Arizona Republic: Banks held up aid for Arizona homeowners until the Republic took action