As homeowners and tenants continue grappling with the economic uncertainty of the pandemic, the federal government has promised aid to those struggling to meet their mortgage payments or rent. Getting that money into the hands of distressed folks quickly appears to be the challenge now.
The coronavirus relief package president Biden signed last month includes $10 billion in aid for homeowners to pay housing-related expenses including their mortgage, insurance and HOA dues. Another $46 billion has been set aside to assist renters, with two allocations in December and March.
But, as with most government programs, there’s a lot of bureaucracy and gray areas to navigate in order to receive the funds.
Who qualifies for aid?
Unfortunately, this question has a less-than-clear answer. The $10 billion will be distributed to states based on a number of variables including the number of unemployed residents and late mortgage payment data. It will be up to states to distribute the money to homeowners through their state housing agencies.
In order to qualify for the aid, you will need to own your home and have a principal mortgage balance at or below the conforming loan limit, which is $548,250 in most of the country or $822,375 in more expensive areas.
Beyond that, states are required to distribute at least 60 percent of the funds to homeowners with incomes that don’t exceed either the local median income or the national median income — whichever is higher.
That said, states will have considerable leeway in determining exactly who qualifies and how the aid is distributed.
Help available for renters affected by COVID-19
The latest CARES Act update also included billions of dollars in assistance for renters, but the rollout has been uneven, and that doesn’t bode particularly well for the homeowner assistance, either.
Similar to the homeowner aid, rental assistance is being distributed by state and local housing authorities, which has required setting up sweeping new programs to connect residents with the relief they need. The New York Times reports it has not gone especially smoothly so far, with many renters struggling to navigate ad hoc the application processes and receive their funds.
“The rental relief component hasn’t gotten as much attention as mortgage forbearance but is incredibly important to tenants and landlords alike. The accumulated back rent over the past 13 months is more than tenants can realistically repay and has put mom-and-pop landlords between a rock and a hard place,” said Greg McBride, Bankrate’s chief financial analyst. “Payments that cover back rent ease the strain on tenants and landlords alike, avoiding future evictions.”
Because rental relief programs are administered locally, there’s no single path for tenants to follow. Your best bet may be to start with the HUD page for renters.
When will the homeowner mortgage payment help be available?
It’s unclear. Much like the rental assistance programs, state and local governments will have to stand up new frameworks to process and distribute this homeowner aid. It will likely take time for the details to be worked out, and may happen unevenly as different local authorities go through their own processes.
What should I do in the meantime?
The best thing to do if you haven’t already is to be in touch with your lender.
If you’re struggling to meet your mortgage payments, you are much more likely to avoid foreclosure by working with your loan administrator than dodging them.
If you have a federally-backed mortgage, you almost certainly qualify for forbearance and should pursue that option immediately if you haven’t already. You may be able to skip payments for up to 18 months under the federal rules.
If you’re already in forbearance and the grace period is about to end, or if you do not qualify, you should still be in touch with your lender. They may be able to help you modify your loan term, adjust your repayment plan, or find other options that can help you stay financially secure.
The government has approved billions of dollars in aid for homeowners and renters struggling as a result of the COVID pandemic. The rollout and distribution of those funds has been a little uneven, but if you’re struggling to meet your mortgage payments, you should get in touch with your lender as soon as possible to discuss your options, regardless of any aid that may be available.