Biden’s COVID-19 Relief Bill Includes $10 Billion for States to Help Homeowners Cope With the Pandemic

The latest coronavirus–relief package includes money to help people keep their homes during the pandemic.

By , Attorney

The most recent COVID-19 relief bill, officially called the American Rescue Plan Act of 2021, which President Joe Biden signed into law on March 11, 2021, includes approximately $10 billion for a Homeowner Assistance Fund. (See § 3206). This fund will provide money to the states to establish foreclosure-avoidance and other homeowner-relief programs. Once the state programs are set up, homeowners suffering a financial hardship due to the coronavirus pandemic can get financial assistance for mortgage relief, utility and Internet payments, and other expenses needed to prevent eviction, mortgage delinquency, default, or foreclosure.

The Homeowner Assistance Fund follows the success of the Hardest Hit Fund, established in 2010, which provided millions of dollars to 18 states and the District of Columbia to help struggling homeowners avoid foreclosure during the Great Recession and related mortgage crisis. These states, and Washington, D.C., each developed programs administered by the state's housing finance agency to distribute the funds and assist distressed homeowners. The programs offered various home-retention options to homeowners, like mortgage-payment assistance, reinstatement assistance, and second-mortgage payoffs. While the states had until the end of 2020 to utilize their Hardest Hit funds, some states ended their programs early because their allocated money ran out. In other states, programs remained open or reopened to help homeowners affected by COVID-19.

The Homeowner Assistance Fund expands this model by providing federal aid to potentially all states to help homeowners stay in their homes. Though, states have to apply for the funds and the amount each state gets will be based on the average number of unemployed individuals in the state measured over a period of not fewer than three months and not more than 12 months, as well as the total number of mortgagors with mortgage payments that are more than 30 days past due or mortgages in foreclosure.

The state programs will provide homeowners experiencing a financial hardship due to COVID-19 after January 21, 2020, money to pay for qualified expenses related to mortgages and housing, including:

  • mortgage payments
  • mortgage reinstatements or other housing-related costs connected to periods of forbearance, delinquency, or default
  • principal reductions
  • interest rate reductions
  • utilities (including electric, gas, home energy, water, and Internet service)
  • homeowners' insurance, flood insurance, and mortgage insurance
  • homeowners' association dues, condominium owners' association fees, or other common charges, and
  • other expenses necessary to promote housing stability for homeowners.

The states have until September 30, 2026, to distribute the money allocated to them from this fund. To find out about homeowner-relief programs in your area, read our article Get Mortgage Relief From Your State's Homeowner Assistance Fund Program and check our 2021 Foreclosure Legal Updates and 2022 Foreclosure Legal Updates pages.

Homeowners won't be able to get assistance until the states determine eligibility criteria and set up programs to distribute the funds. This process will take some time, with most programs likely to get rolling in early 2022.

Effective date: March 11, 2021