In the aftermath of the COVID-19 recession, most homeowners are on their way toward a recovery. This is thanks, in part, to federal loss mitigation policies to help homeowners keep their homes. But data indicate some homeowners who are still experiencing financial and economic stress—particularly those with low incomes and homeowners of color—need additional assistance.

Because of structural barriers, including the legacy of discriminatory policies and practices, these groups already faced disproportionate financial distress before the pandemic. The pandemic only magnified these challenges.

To help, the US Department of the Treasury is providing financial assistance through the Homeowner Assistance Fund (HAF) (PDF). The HAF targets homeowners with low incomes and “socially disadvantaged homeowners,” defined as those whose abilities to own a home have been impaired because of diminished access to credit based on circumstances beyond their control, such as belonging to a group that suffers from a history of racial prejudice. The financial assistance can be used to cover monthly mortgage costs, property taxes, and utilities or home energy services.

The Urban Institute recently convened a group of housing experts to explore what it would take to ensure the HAF succeeds. They emphasized that the following will be critical: states will need to identify and reach homeowners at risk of foreclosure; HAF funds must reach homeowners in a timely manner to prevent foreclosures; and measures of success will be needed to gauge progress.

The Urban Institute recently released a data resource to help state and local policymakers identify eligible homeowners and places that face elevated foreclosure risks. It includes information about foreclosure risk by county, income distribution, and the racial composition of homeowners in counties across the country.  

Reaching struggling homeowners is another story. At the event, panelists discussed a couple considerations policymakers should consider when reaching out to homeowners. 

  • Making hard-to-reach groups aware of the HAF is vital. 
  • Ensuring streamlined communication will be key.

Considerations for deploying funds 

Distributing funds presents its own challenges, so panelists discussed several strategies policymakers could pursue to break down barriers.  

  • Apply lessons from other federal programs. 
  • Center communities’ unique needs.  
  • Standardizing infrastructure can help with distributing funds efficiently.  

Read the full article about homeowner assistance fund by Daniel Pang and Michael Neal at Urban Institute.