Still can’t pay your rent or mortgage? Here’s how the new incentive plan will help

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The plan includes a $ 27 billion rent reduction, a $ 10 billion reduction in mortgage payments and a $ 5 billion reduction to address homelessness.

Although this unprecedented amount of aid will help millions, it will still not be enough to cover the continuing need for housing assistance, said Diane Yentel, president and chief executive of the National Coalition for Low-Income Housing.

At the end of February, 13.5 million people said they were behind rent – almost 1 in 5 of all tenants – according to an analysis by the Center for Budget and Political Priorities in a Census Bureau survey. Tenants have estimated debt of $ 57 billion, according to a report by Moody’s Analytics.

Currently, 2.6 million homeowners are in a tolerance program that allows them to delay or defer payments under the Black Knight. At the end of January, an estimated $ 19 billion in principal and interest payments were due due to the pandemic, the mortgage company said.

“The combined funding from this bill and the previous bill could address most, if not all, of the arrears,” Yentel said. “But more will be needed for the ongoing challenges.”

Rent relief

The main source of rent exemption in the new law is $ 21.55 billion in emergency rental assistance. This funding will add to the $ 25 billion in aid already given to states and localities in December to help families pay rent and utilities and stay in their homes.
Yentel said that according to the database of its aid organization, most of the funds in December have not yet reached tenants or their owners. (Direct links to programs offering state and local rental assistance programs throughout the country can be found on the NLIHC website and other information about rental assistance programs can be found on the Office of financial protection of consumers.)

But there are other sources of rent exemption in the new package, which are better targeted. For example, $ 100 million has been allocated to people living on USDA-subsidized rural property who are struggling to pay rent.

For the homeless, the act includes $ 5 billion in housing emergency vouchers. Another $ 5 billion is allocated to create socially remote housing and non-group shelters.

To address the growing housing challenges of the past year, the plan provides $ 100 million for housing counseling and $ 20 million for fair housing organizations.

For those struggling to cover their utility costs, the incentive package includes $ 4.5 billion for the low-income home energy assistance program and $ 500 million for low-income water assistance.

Owner assistance

Unlike previous incentive and aid packages, which provided protection to homeowners but no direct aid, the American Rescue Plan provides $ 10 billion in direct financial assistance to struggling homeowners.

These funds are designed to help homeowners avoid foreclosure and recover mortgage payments, utilities, property tax and insurance, said David M. Dworkin, president and CEO of the National Housing Conference.

While the percentage of mortgages is falling – it is now below 5% for the first time since April last year, according to Black Knight – there are about 800,000 tolerance plans that will expire by the end of the month.

Together with their loan administrators, these homeowners will have to decide whether to break out of tolerance and make a plan to repay the deferred amount or request an extension. Most pandemic tolerance relief programs are due to expire in June. Federal bans on enforcement will also expire in June.

The American Rescue Plan Act also provides $ 39 million in assistance to low-income households that have become homeowners through certain USDA mortgage programs and are lagging behind on their payments during the pandemic.

What’s not on the bill

The tenants who are fighting and who have given the landlord a statement that they cannot pay the rent and will make every effort to pay what they can, being protected from eviction by the national ban ordered by the Centers for Disease Control and Prevention. But this protection is currently set to expire at the end of the month.
The order was first introduced in September and has been extended twice, most recently by President Biden on his first day in office.

Yentel said the eviction moratorium needs to be extended so that the billions of money that are still spread have the intended effect of supporting tenants who owe rent back.

“There are landlords who refuse to participate in the program and watch the clock for another three weeks until they can evacuate their tenants,” she said.

Yentel said it would like to see the ban strengthened and enforced.
Unpaid rent accumulates. The owners can't last forever

“The order is erroneous in that there is an alarming number of evictions while it is in force,” she said. “Currently, protections are not automatic, we would like to see this change. ‘

But homeowners’ groups say the eviction moratorium continues to place an excessive burden on property owners, some of whom have been without rent for a year.
There are currently a number of legal challenges in the CDC evacuation moratorium. This week, an Ohio federal judge ruled that the CDC had exceeded its authority in issuing a nationwide evacuation ban, according to court documents. The Justice Department is appealing a Texas federal judge’s ruling that the federal moratorium on evictions is unconstitutional.

“While the stimulus will go a long way toward addressing the economic hardship caused by the pandemic, continuing the moratorium on evictions will have serious and negative consequences for the millions of ‘mother and pop’ homeowners who make up 95% of the single-family rental industry. they fought under long-term government restrictions and mandates on renting, “said David Howard, executive director of the National House Rental Council, which represents the single-family rental industry.

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