After long delays, backlogged applications, and administrative headaches, a $350 million program to help Pennsylvania homeowners catch up on mortgage payments has now distributed almost all the money.
But the legal dispute over who was to blame for those problems continues.
Innovative Emergency Management, Inc., the company originally hired to run the program, says the state owes it more than $4 million for work it was never paid for.
The Pennsylvania Housing Finance Agency, which oversees the program, argues that it was justified in withholding payment because the company breached the terms of the contract and because IEM’s invoices contained “various errors and inconsistencies.” In legal filings, the agency says the company owes it $1.17 million.
The case before the state Board of Claims offers another window into how a federally-funded program to help Pennsylvania homeowners left many applicants waiting for months with no answers while tensions between state officials and IEM executives mounted.
After the program opened in early 2022, problems quickly emerged. The software used to process applications crashed almost immediately. Some applicants with overdue utility bills had their service shut off while waiting. Others watched their credit scores plummet as they fell months behind on mortgage payments because of the delays.
IEM argues that many of the problems stemmed from an “excessive” number of changes PHFA officials wanted to make to the program, which created “inefficiencies and delays,” and that the agency resisted some of the company’s suggestions to streamline the process, legal filings show.
PHFA contends that IEM was not prepared to deliver what it had promised when bidding on the contract and that the changes were necessary because of issues with IEM’s processing of applications, as well as software and staffing problems.
In early 2023, the agency ended its contract with IEM and took over the program itself.
That March, as the agency and company worked on the handover, the relationship became so strained that a project manager at PHFA told a colleague that company executives had blocked his emails, records from the case show.
“This is the second undeliverable message that I’ve received from the IEM team,” the project manager wrote. “Not sure if this is an Outlook thing or if I’ve been unfriended.”
“You have been unfriended,” his colleague responded. “Their legal counsel claims we are harassing them.”
A spokesperson for IEM denied that the company ever blocked emails from PHFA.
An “investigatory review” done for PHFA by consulting firm Deloitte in July 2023 found that, among other problems, almost $350,000 had been paid to applicants who “appear to be ineligible” and that a handful of applicants had received funding even though their incomes were too high to qualify.
A spokesperson for IEM told Spotlight PA that the company was not given a chance to address the findings of the Deloitte audit, but noted that the reported amount of improper payments comprised only a tiny fraction of the funding it paid out.
The case is ongoing.
