Understanding Biden’s Homeowner Assistance Fund
A portion of Biden’s American Rescue Plan, which was enacted in March 2021, to support American families and businesses through the coronavirus pandemic, has been allocated to the Homeowner Assistance Fund (HAF). Millions of Americans are still at risk for the foreclosure of their homes due to economic implications of the pandemic. The Homeowner Assistance Fund is designed to prevent mortgage delinquencies and defaults, foreclosures, and the displacement of homeowners.
The fund allocates a minimum of $50 million to each state, as well as The District of Columbia and Puerto Rico, to create payment assistance programs to help homeowners who were negatively impacted by the coronavirus pandemic. Allocation is determined by homeowner need, specifically (1) the average number of unemployed individuals and (2) the number of homeowners with mortgage payments that are more than 30 days past due or mortgages in foreclosure.
Anyone who began experiencing financial hardship after January 1st, 2020 can apply for HAF, according to the National Consumer Law Center. Homeowners can use the funds to pay for several qualified expenses, including mortgage payments, housing costs due to forbearance, principal reduction, and expenses such as utilities. States will request the funds based on their residents’ needs, then the Treasury Department must begin fulfilling payments within 45 days. States will then decide when homeowners can begin applying for financial assistance. There is still little clarity on exactly how homeowners will apply. Community organizations will likely be given the responsibility of helping with the applications.
If you can’t wait for a HAF payment and need relief sooner, there are other ways to get it. One option is to refinance your mortgage. National average rates for a 30-year mortgage as of June 2021, are currently around 3.1%, and 2.4% for a 15-year mortgage. If you want to lower your payments, refinancing can be a great option. However, individuals must carefully weight the costs and benefits of this option as refinancing can be costly upfront.
If you have already missed several mortgage payments, you can reach out to your lender and request loan forbearance. Forbearance allows individuals to lower or even halt their monthly payments for a specified period of time. Homeowners can request forbearance citing financial implications from the pandemic for up to a year (extensions are available). The Biden Administration recently extended the window to apply for forbearance with these pandemic conditions to June 30th. It is important to keep in mind that these reduced payments must be repaid in full, so individuals should evaluate if the reduced payments outweighs potentially extending the period in which they are making payments (or increasing their future monthly payment).
Additionally, if your loan is owned by Fannie Mae or Freddie Mac, or is another form of a government loan, you qualify for 18 months of forbearance. All of the penalties will be waived, and this information will not appear on your credit report. The deadline to apply in order to receive these special conditions is June 30th.
To further explore options visit Credible.com, a financial technology company that specials in student loan and mortgage support. No homeowner should have to struggle alone, and financial experts can help you explore your options and get back on track.
Sources: https://www.foxbusiness.com/money/bidens-homeowner-assistance-fund & https://home.treasury.gov/policy-issues/coronavirus/assistance-for-state-local-and-tribal-governments/homeowner-assistance-fund, www.bankrate.com/mortgages/mortgage-rates