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Quarter 3 2021, Volume 9 Issue 3

Accelerating COVID-19 Recovery Through Housing Counseling

Housing counselors diligently work to help homeowners and tenants understand their rights, locate resources, and keep their homes through the pandemic. They have shown resilience and creativity throughout the national emergency, stretching their capacity and budget to safely deliver services and add new services to respond to the immediate crisis. As more of the U.S. population receives vaccinations, more housing counseling agencies are reopening their physical offices and offering in-person services again.

As we begin the next phase of pandemic recovery, the housing counseling industry must look ahead to what is next. Housing counselors are getting ready to assist vulnerable homeowners who will need assistance to avoid losing their homes. Counselors’ expertise is essential as their clients may seek post-forbearance options and other relief made available by the American Rescue Plan (ARP) signed by President Biden earlier this year.

As of May 2021, nearly 2.1 million homeowners were in forbearance after the national emergency brought widespread mortgage hardships. Communities of color and low-income communities have been disproportionately affected by the pandemic in almost every way. Homeowners in these communities have borne the brunt of unemployment, income instability, and social displacement, as well as the health effects of the pandemic. According to the Consumer Financial Protection Bureau, forbearance and delinquency are more common among borrowers in majority-minority census tracts and tracts with lower relative income. Black and Hispanic borrowers, who together make up 18 percent of all mortgage borrowers and 16 percent of current borrowers, have made up 33 percent of borrowers in forbearance. Counselors are an important resource for affected homeowners to understand the assistance available through their loan servicer during and after forbearance.

Leveraging American Rescue Plan Funding for Mortgage Relief

The ARP Emergency Rental Assistance program (ERAP) continues to be available for tenants behind in payments. Housing counselors are well-positioned to help in this effort because they are the front-line, have strong knowledge and connection to their community, and are natural collaborators. It is a critical time to explore ways to expand outreach efforts and capacity to deliver rental education and counseling.

Many counseling agencies are also focused on how the Homeowner Assistance Fund (HAF), included in the ARP, may meet the needs of struggling homeowners in the months ahead. Under the HAF, the U.S. Treasury will provide states, tribes, and territories with funding to aid homeowners experiencing a financial hardship due to the pandemic. HAF funds may be used to prevent mortgage delinquency, foreclosures, loss of utilities or home energy services, and displacement of homeowners. Aid is prioritized for homeowners at or below 100% of area median income and socially disadvantaged households.

Since counselors understand the range of client needs during the COVID-19 national emergency, they are uniquely positioned to provide feedback to help local programs use HAF and ERAP funds effectively. Counselors also understand that in order to save more homes, federal relief funds can work in tandem with servicer-provided loss mitigation options.

To support HUD-approved housing counseling in these efforts, the ARP allocated $100 million in grants to be administered by NeighborWorks America’s Housing Stability Counseling Program to eligible HUD-approved Intermediaries, State Housing Finance Agencies, or NeighborWorks network organizations. Additionally, many COVID-19 Response and Relief Funding programs, including the ARP, allow housing counseling as an eligible activity.

As the nation works to recover from the pandemic, counselors may continue to help their clients by keeping up to date with funding resources in their jurisdiction. It is also important for counselors to understand how to coordinate with legal services as moratoria lift, legal protections are updated, and court activities and mediation resume. For training and capacity resources, visit the COVID-19 Emergency Information for Housing Counselors page and the Rental Housing Counseling and Eviction Prevention page.

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Challenges for Homeowners during the COVID-19 National Emergency

Counselors often find that missed mortgage payments are not the only financial challenge. A housing counselor from Chhaya Community Development Corporation in Queens New York explained that for her clients, “forbearance will only address one expense. There are still utility bills and taxes.” Counselors are also finding homeowners are coping with increased expenses due to the pandemic and deferred maintenance.