The Biden administration is preparing to take new action Friday, aimed at reducing monthly mortgage payments for some people by up to 25% in order to avoid a 2008-style crash in the housing market.
The changes, applicable only to federally backed loans, are meant to streamline the federal government’s loan guidance with changes previously made by Fannie Mae and Freddie Mac. Currently, emergency pandemic guidance allows borrowers to miss 18 months of payments on federally backed mortgages, but those provisions are set to expire this fall.
BIDEN RUSHING TO STAND UP ‘NATIONAL INFRASTRUCTURE’ PREVENTING EVICTIONS AFTER MORATORIUM EXPIRES
“Thanks in part to President Biden’s strategy to get Americans vaccinated and the economy back on track, the number of American households in forbearance has fallen by more than 50% from its pandemic peak. Today, approximately 1.75 million Americans remain in forbearance,” the White House wrote in announcing the changes. “In order to ensure a stable and equitable recovery from the disruptions of the COVID-19 pandemic and prepare for homeowners to exit mortgage forbearance, the Biden-Harris Administration is taking action to keep Americans in their homes and support a return to a more stable housing market.”
Friday’s action comes just days before the federal moratorium on evictions is set to expire on July 31, but the government already put aside more than $45 billion in aid that states and local governments may provide to at-risk renters and landlords that will be available for years to come.
A first tranche of $25 billion was included in December 2020’s Consolidated Appropriations Act, which, according to the Treasury Department, will not expire until Sept. 30, 2022, while the $1.9 trillion American Rescue Plan made a second round of funding, worth $21.55 billion, available through Sept. 30, 2025.
The Treasury announced Wednesday morning that ERA grantees were delivered $1.5 billion in relief in June, more than was disbursed across the prior three months combined. That sum marks an 85% increase in participating grantees compared to May, yet members of both parties have criticized the White House for not getting more of that money out the door sooner.
“This report confirms my concerns,” North Carolina Republican Rep. Patrick McHenry, the ranking member on the House Financial Services Committee, said of the Treasury’s Wednesday report in a statement given to the Washington Examiner. “The Biden Administration is failing to provide Emergency Rental Assistance to Americans in need. With millions of families worried they’ll lose their homes in 10 days, we need to act now to correct this gross mismanagement. Republicans have a solution, the Renter Protection Act, to get this aid out the door. But instead of working with us, Democrats are more focused on their progressive agenda — leaving renters twisting in the wind.”
Furthermore, California’s Democratic Sens. Alex Padilla and Diane Feinstein knocked the administration for restricting aid from going to renters who have gone into debt to avoid missing payments.
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“This practice of renters incurring debt to avoid eviction is exactly the type of housing insecurity Congress intended to curb with the funds appropriated for the Emergency Rental Assistance Program,” they wrote in a letter to Treasury Secretary Janet Yellen. “To assist these households, we request that you update the Emergency Rental Assistance Program guidance to allow households to receive federal rental assistance for rent paid for with credit cards or other loans.”
