You are asking if the Housing Authority can refuse to contract with you. Yes they can.
There is likely a Lis pendense on file with the county.
There is no discrimination. The action you can take is to pay up on the mortgage.“Lis pendens” is latin for “suit pending.” The notice of lis pendens is recorded in the county land records and then a copy is served to the borrower, along with the complaint and summons. The purpose of the notice of lis pendens is to inform the public that a lawsuit involving the property is pending. The notice of lis pendens is typically a one- or two-page document that includes the legal description of the property and states that a foreclosure has been initiated.

