Help for Homeowners in Crisis: Improving Assistance Programs

The research provides potential solutions as homeownership costs increase nationwide. For example, in a recent survey from Pew Research Center, most U.S. homeowners (71%) said the cost of their homeowners insurance has gone up over the last few years. LendingTree research this spring found that, from 2020 through 2025, regulator-approved home insurance rates rose 45.8% nationally, compared with a 26.1% inflation rate. 

Affected by rising unemployment rates at the onset of the COVID-19 pandemic in 2020, many homeowners avoided foreclosure through public- and private-sector actions that provided immediate mortgage relief. More than one in 10 homeowners received mortgage payment forbearance, or a temporary pause in mortgage payments, following a COVID-related financial hardship. 

By the end of 2021, more than 80 percent of borrowers who entered forbearance had exited and resumed payments or paid off their loans. However, some homeowners continued to face financial challenges and turned to the Homeowner Assistance Fund (HAF), authorized by the federal American Rescue Plan Act, for assistance with mortgage payments as well as non-mortgage expenses such as property taxes, homeowners association fees, insurance and utility payments.  

The fund, which distributed nearly $10 billion nationwide through state housing finance agencies, U.S. territories and tribal governments, is scheduled to end in September; most states have depleted their funding amount.  

“There has been a lot of attention to COVID-era mortgage forbearance policies that are now a permanent part of the loss mitigation waterfall for homeowners with federally backed mortgages,” said Moulton. “This is the first study to examine the $10 billion Homeowner Assistance Fund program and the homeowners who benefited.” 

The report analyzes the distribution and use of HAF assistance nationwide, differences in state implementation and the characteristics of borrowers who received support — highlighting those who required help beyond traditional forbearance and loss mitigation options. Using data from the Ohio Housing Finance Agency, the researchers compared the characteristics of Ohio homeowners who received mortgage payment forbearance during the COVID-19 pandemic and Ohio homeowners who received assistance through HAF, in addition to or instead of forbearance.  

The research uncovered three potential gaps in loss mitigation waterfall that could be addressed through policy changes: 

• Enhancements can target homeowners who hold private loans or loans that are not covered by the loss-mitigation waterfall options included in government-sponsored or Federal Housing Administration mortgages.  
• Enhancements can cover expenses other than mortgage expenses that make homeownership unaffordable, like property taxes and homeowner’s insurance, or even unexpected home repairs, that most HAF programs covered. As property insurance costs continue to increase nationwide, it is important to think about strategies that can assist homeowners with unexpected increases — including homeowners who own their homes without a mortgage. 
• In some cases it may make sense to combine HAF-like subsidies with mortgage forbearance and the standard loss mitigation options to increase homeownership affordability — particularly for homeowners experiencing more lasting income shocks. 

“Pandemic-era housing policy interventions proved highly effective in stabilizing the mortgage market and helping the vast majority of homeowners avoid foreclosure during an unprecedented economic shock,” said Edward Seiler, executive director, Research Institute for Housing America, and Mortgage Bankers Association associate vice president, housing economics.  

“The research highlights not only the success of broad-based relief efforts like forbearance but also the critical role of targeted programs such as the Homeowner Assistance Fund in supporting more vulnerable borrowers,” Seiler said. “As we look ahead, these findings offer important lessons for how policymakers and industry stakeholders can respond to future economic disruptions while promoting sustainable homeownership.” 

Read the report, “Stabilizing Vulnerable Homeowners in a Time of Crisis: Insights from the Homeowner Assistance Fund,” and the associated news release on the Mortgage Bankers Association website.