Millions of Homeowners Threatened by Pandemic Instability Are Eligible for Relief

The legislation that established the federal Homeowner Assistance Fund (HAF) in 2021 as part of the nation’s pandemic response created new opportunities to help vulnerable homeowners who do not have traditional mortgages. At a recent webinar conducted by The Pew Charitable Trusts, experts from federal and state government and housing organizations discussed the particular economic difficulties facing these borrowers and what policymakers at all levels of government can do to make sure that Americans who use mortgage alternatives can get access to assistance.

The American Rescue Plan Act of 2021 included almost $10 billion to provide relief to homeowners experiencing financial hardships linked to the COVID-19 pandemic. The legislation tasked the U.S. Treasury Department with overseeing HAF and determining eligibility. The department decided to include homeowners using alternative financing on site-built homes and those with loans on their manufactured homes in the definition of who could receive HAF money.

Treasury then tasked eligible states, territories, and Indigenous lands with creating programs to provide financial assistance to these homeowners. Aid will be available until Sept. 30, 2025, or until the allocated funds have been distributed. Although plans vary across jurisdictions, most state programs include homeowners using alternative financing, such as land contracts—financial agreements directly between buyers and sellers without the involvement of traditional lenders. The broad definition of homeowner in Treasury’s guidance enabled this approach, which represents one of the first times that many homeowners using alternative financing arrangements have been eligible for federal housing assistance.

And their numbers are not small. In 2022, Pew published a first-of-its-kind survey that found 36 million Americans have used alternative financing at some point to purchase a home, and 7 million are currently using these arrangements. Furthermore, 17.5 million Americans currently live in a mobile or manufactured home. In addition, some communities are more likely to use alternative financing than others: For example, research by Pew shows that use is more common among Black and Hispanic home borrowers than White borrowers (see Figure 1), and among those with annual household incomes below $50,000. The findings highlight how important these arrangements are for tens of millions of Americans who are often overlooked in policy decisions affecting home borrowers—especially those in predominantly Black, Hispanic, and low-income communities.

To explore the need for and impact of this assistance, Pew brought together experts for a discussion of the HAF guidance—with an emphasis on the inclusion of homeowners with land contracts and those with loans on manufactured homes. Housing experts from Pew, Treasury, the Arizona Department of Housing, the Pennsylvania Housing Finance Agency, the Texas Department of Housing and Community Affairs, and the National Housing Law Project highlighted the challenges, opportunities, and lessons learned in implementing state HAF programs and getting assistance to eligible homeowners.

Key lessons learned

The experts shared important takeaways based on their experiences working on HAF programs. At this point, funds continue to be distributed, and the final results have yet to be determined. However, the takeaways so far can help promote positive outcomes for homeowners. Among the general conclusions:

1. Broadly defining eligibility in the guidance is important. The federal government’s use of inclusionary language that would enable program funds to reach as many homeowners as possible proved important in the development and implementation of state HAF plans. “One major goal that Treasury had was fulfilling the intent of the legislation—to make sure that this was not just simply a mortgage assistance program but a homeowner assistance program—and that the assistance that went out was not just to homeowners who have traditional mortgages but [also that] homeowners who might have manufactured housing or contracts for deed could be covered as well,” said Will Corbett, director of the Homeowner Assistance Fund in the Office of Recovery Programs at Treasury.
2. States welcomed federal flexibility in the implementation process. The HAF guidance allowed state, District of Columbia, U.S. territory, and Tribal administrators greater leeway in implementation than for previous assistance programs. For example, it allowed for the expansion of services for eligible homeowners to cover monthly housing and utility payments. The flexibility to adjust state programs as needed would prove crucial in delivering aid, the experts said.
3. Policymakers lack adequate data on homeowners using alternative financing. There is no comprehensive state-level data on the prevalence of alternative financing nationwide. The gaps in data about homeowners using these arrangements have presented challenges for policymakers implementing HAF. “What we found in looking at [plans] is that there was just a lack of uniformity of data. So many states had to rely on information from nonprofit organizations, researchers, academic institutions, industry groups, private data providers, and many others,” said Stacey Tutt, homeowner assistance fund coordinator and senior staff attorney with the National Housing Law Project. “They were working hard to gather all of this information to paint this clear picture of what the need was, but they really had difficulties obtaining data on specific products or financing that was there.”
   
   To account for this, the Treasury guidance allowed administrators to gather information throughout the implementation process and use it to adjust their plans along the way. This process has not been clear cut, however, and a lack of data led some states to exclude homeowners using alternative financing entirely because they could not demonstrate a need for assistance.
4. The importance of broad outreach. Working closely with community-based organizations that understand the specific needs of homeowners across jurisdictions was a key element in the implementation process. States have partnered with housing, counseling, legal service providers, and others to deliver assistance. These partnerships can help homeowners navigate the application process and identify available resources. State program administrators have used a broad scope of media resources to reach communities that can often be overlooked to let homeowners know that assistance is available.
   
   Local and state-level administrations relied on local resources, such as community newspapers and local radio in addition to larger outlets and social media, to get their message out. “Most of our very low-income and disproportionately affected residents were in the rural communities, so we made a concerted effort to concentrate paid media outreach in our rural communities,” said Cindy Stotler, deputy director of the Arizona Department of Housing. “That involved a lot of outreach to local radio stations, local newspapers, and local organizations that were already well-versed in reaching out and communicating with the community in those counties and small towns.”
5. State officials rely on third-party vendors for important services. States and other government entities use these companies to implement and administer programs, including management of consumer-facing software and logistics. State program administrators intended to streamline the application process for eligible homeowners and help ensure that their goals are carried out. Ongoing communication between administrators, vendors, servicers, and applicants is critical for an effective application and assistance distribution process.

The panel discussion continued the exploration by Pew’s home financing project into alternative financing arrangements and how they are used to obtain homeownership for millions of Americans. The insights provided by the participating experts will inform the broader dialogue around homeowners using these arrangements.

Chase Hatchett is a senior associate and Tara Roche is the project director with The Pew Charitable Trusts’ home financing project.