Financial Aid Accessible for Millions of Homeowners Facing Threats from Pandemic Instability
In 2021, the federal Homeowner Assistance Fund (HAF) was established through legislation as a part of the nation’s response to the COVID-19 pandemic. This groundbreaking initiative aimed to extend assistance to vulnerable homeowners who don’t engage in traditional mortgages. During a recent webinar hosted by The Pew Charitable Trusts, experts from governmental bodies and housing organizations explored the unique economic challenges confronting these homeowners. They discussed strategies that policymakers across the government spectrum could implement to ensure that those relying on alternative mortgage arrangements can access assistance.
The American Rescue Plan Act of 2021 earmarked nearly $10 billion to alleviate homeowners experiencing financial difficulties due to the pandemic. The U.S. Treasury Department was assigned the task of overseeing the HAF, determining eligibility criteria, and ensuring the Fund’s implementation. In an inclusive move, the Department expanded the definition of eligible homeowners to encompass those relying on alternative financing for site-built homes, and those who took out loans on manufactured homes.
Subsequently, the Treasury delegated the task of formulating programs to dispense financial assistance to qualifying homeowners in eligible states, territories, and Indigenous lands. The aid will be available until the end of September 2025 or until the allocated funds have been fully distributed. While plans differ across jurisdictions, most state programs encompass homeowners who use alternative financing options, such as land contracts. These are agreements directly between buyers and sellers, bypassing the involvement of traditional lenders. The Treasury’s broad definition of ‘homeowner’ facilitated this approach, marking one of the first instances where homeowners using alternative financing were eligible for federal housing aid.
The number of individuals using these alternative arrangements is substantial. According to a pioneering survey conducted by Pew in 2022, approximately 36 million Americans have, at some point, relied on alternative financing to buy a home, and currently, 7 million are utilizing these arrangements. Additionally, it was found that 17.5 million Americans reside in mobile or manufactured homes. Certain communities are more inclined towards alternative financing: Pew’s research indicates that Black and Hispanic homeowners, as well as those with household incomes under $50,000 per year, are more likely to use such arrangements (see Figure 1). These findings underscore the significance of these non-traditional arrangements for tens of millions of Americans, who are frequently overlooked in policy decisions impacting home borrowers—particularly those in predominantly Black, Hispanic, and low-income communities.
