The American Rescue Plan Act: Homeowner Assistance Fund

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The American Rescue Plan Act: Homeowner Assistance Fund

Categories: Homes Planning Property Management Real Estate

Published 04/22/2021

The recently enacted COVID-19 relief legislation, the American Rescue Plan Act, included $9.9 billion in relief for homeowners to be administered through a new Homeowner Assistance Fund. These funds, which will soon be made available to eligible homeowners through their states, may be used for assistance with mortgage payments, homeowner’s insurance, utility payments, and other specified purposes.

The creation of the Homeowner Assistance Fund was to prevent mortgage delinquencies and defaults, foreclosures, loss of utilities or home energy services, and displacement of homeowners experiencing financial hardship after January 21, 2020. The law prioritizes funds for homeowners who have experienced challenging difficulties, limits eligibility based on need, and only used for certain qualified expenses, outlined in more detail below.

  • Eligible homeowners must have experienced financial hardship after January 21, 2020, and have incomes no more than 150% of the area median income.
  • Homeowner assistance only applies to qualified expenses for the homeowner’s primary residence. Eligible participants must attest to the experienced financial hardship. Financial hardship: defined as a material reduction in income or a material increase in living expenses associated with the coronavirus pandemic that has created or increased risk of mortgage delinquency, mortgage default, foreclosure, loss of utilities or home energy services, or displacement for a homeowner (for example, job loss, reduction in income, or increased costs due to health care or the need to care for a family member);
  • Income determinations: This is based on either HUD’s definition of “annual income” or “adjusted gross income,” as reported to the Internal Revenue Service for federal annual income tax purposes. Homeowners do not have to provide income tax returns to qualify. Instead, a written statement by the homeowner with supporting documents such as pay stubs, bank deposit records, or a letter from the employer is eligible for income verification.
  • Alternatively, the homeowner may provide a written statement of income — and the State or other eligible Homeowner Assistance Fund entity may then rely on data regarding average incomes in the homeowner’s neighborhood as verification.
  • States and other eligible jurisdictions may grant waivers for income documentation requirements if necessary to accommodate special situations, including disabilities, any practical challenges resulting from the pandemic, or a lack of technological access. The homeowner would still be required to attest to their income.

For more information on how much money is available to states, the qualified expenses that the Homeowner Assistance Fund will cover for eligible homeowners, and the priority among eligible homeowners, visit nar.realtor for details!

If you have any questions, please contact Darryl Glass today at (510) 500-7531 or click here to schedule a phone call in the next few days.

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