We Finally Have Some Mortgage Assistance On the Way

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Via nevadacurrent.com

Mortgage assistance may be coming soon for Nevada homeowners who have been impacted by the covid-19 pandemic.

Nevada is set to receive $121 million in Homeowner Assistance Funds, approved as part of the American Rescue Plan.

On Tuesday, the state Legislature’s Interim Finance Committee accepted the first 10% of those funds. Lawmakers welcomed the additional assistance for struggling homeowners but raised concerns about the percentage of federal funds being used for administrative costs.

According to Nevada Affordable Housing Assistance Corporation CEO Verise Campbell, 15% of the $121 million total will be spent on administrative costs. An additional 3% will be spent on partnering agencies that help promote the homeowner assistance programs and assist people in signing up.

The remaining 82% will directly benefit homeowners across the state. NAHAC estimates approximately 6,800 households will be assisted.

After doing some quick back-of-the-napkin math, Assemblyman Glen Leavitt (R-Boulder City) noted this works out to roughly $2,600 per household in administrative costs and $14,500 per household in assistance.

“This seems a little inefficient,” he said.

Campbell in response emphasized “arduous” guidelines set at the federal level regarding allowable administrative expenses. The U.S. Treasury allows up to 15% of the total amount awarded to a state to be used on administrative costs.

“The Treasury is extremely strict about that,” she said.

Campbell also defended the administrative costs, saying NAHAC needs to set up the technological infrastructure and staff appropriately.

“In order to ramp up, you have to have a system that can handle it,” she added.

Campbell told lawmakers the organization plans to move “very aggressively” with the implementation of additional assistance for homeowners, but she also noted that the system updates would need to be contracted out through a request-for-proposal process that could take up to 90 days.

NAHAC is not currently accepting applications for assistance, according to its website.

In the meantime, homeowners may be finding financial relief from mortgage forbearance, which was included as part of last year’s CARES Act and is available for federally backed loans. According to the Consumer Finance Protection Bureau, a June 30 deadline for initially applying for forbearance applies to some federally backed loans. Forbearance puts a loan on temporary pause during a time of hardship, but it does not cover any costs the way the NAHAC-administered programs do.

NAHAC says the amount of assistance awarded to households will vary widely depending on need. Some homeowners went through last year’s pandemic programs multiple times, according to Campbell.

Campbell added that NAHAC is planning on instituting a $100,000 lifetime cap on the total assistance a household can receive. Individual programs will also have maximum award caps.

According to Campbell, approximately 8,000 households have already received assistance during the pandemic through NAHAC’s Unemployment Mortgage Assistance Program, which pays current or past-due mortgages for people currently experiencing unemployment, and Mortgage Reinstatement Assistance Program, which helps homeowners who experienced pandemic hardship catch back up.

An estimated 5.93% of homes in the Las Vegas area were at least 90 days past due in January, reported the Review-Journal in April. In August 2020, an estimated 6.58% were.

While NAHAC is currently focused on its Unemployment Mortgage Assistance and Mortgage Reinstatement Assistance programs, Campbell noted that the needs may change as the state’s recovery evolves.

“We may have to come back and change to a principal reduction program,” she said, “or if things are really great and we don’t have as many people out of work, in three years we might want to do a downpayment assistance program.”

Campbell noted that more specific details on the implementation of the housing assistance funds would be available once the draft budget for the entire $121 million was completed.

Per federal guidelines, Tuesday’s meeting only moved the first 10% of that amount. The additional 90% will be released after Nevada submits its program and budget plans to the U.S. Treasury for approval. The official deadline for those plans is June 30, but Nevada Housing Division administrator Steve Aichroth told lawmakers the federal department is expected to extend that deadline because it doesn’t yet have the submission process figured out on its end.

Unlike emergency rental assistance, which was divided between municipalities and states, the homeowner assistance funds are only being distributed to states.

The assistance is being funnelled through the U.S. Treasury’s Hardest Hit Fund, which was created during the Obama era as part of the Troubled Asset Relief Program (TARP) for the states with high foreclosure rates during the Great Recession. NAHAC was the administrator for the state at that time too.

In 2016, TARP identified “waste and abuse” during an audit of Nevada’s Hardest Hit Fund. A subsequent report in 2018 found NAHAC had only assisted a little over half of the number of households it was supposed to.