Government Stimulus Package For Homeowners

Stimulus Check Update: Homeowners Could Be Entitled To More Money

by Christy Bieber | Updated July 25, 2021 – First published on June 15, 2021

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If you’re a homeowner, you may not have to wait for a fourth stimulus check to get your hands on more government money.

The American Rescue Plan Act was signed into law by President Joe Biden in March and is best known for the $1,400 stimulus checks that it provided.

Unfortunately, many Americans have long since spent this money and are now left hoping for a fourth stimulus check that will likely never come as Congress and the Biden administration have moved on to other priorities.

But for homeowners, there’s actually a possibility of more stimulus money coming even if lawmakers do not pass any further COVID-19 relief legislation. That’s because the American Rescue Plan also provided $10 billion to a Homeowners Assistance Fund.

Unlike the $1,400 stimulus checks, though, you will need to take action to get your part of this money if you’re eligible for it. As a result, homeowners need to understand how the HAF works and what criteria they must meet in order to be eligible for additional stimulus money from it.

Here’s what you need to know.

Guidelines For Mortgage Rates And Fha Cash

An FHA cash-out refinance allows you to tap into your homes equity, and its more accessible than conventional loans. This is a great option for many homeowners, especially those who may not qualify for conventional loans but still want to take advantage of a lower interest rate.

But how does it work? Read on to learn more about FHA cash-out refinance, find out if you qualify, and discover the pros and cons of refinancing your home.

Primary Dealer Credit Facility And Money Market Mutual Fund Liquidity Facility

On March 20, 2020, the Fed relaunched a Great Recession-era program: the Primary Dealer Credit Facility , which has given loans to primary dealers backed by a wide variety of securities as collateral. There was no set limit to the amount of credit issued. The program ran until March 31, 2021.

To add more liquidity to money markets, the Fed announced the Money Market Mutual Fund Liquidity Facility on March 18, 2020. This program lent money to financial institutions so they can buy money market mutual funds.

This program was similar to the AMLF program launched in 2008 after the collapse of Lehman Brothers caused a major money market fund to fail. It did not have a specific lending limit but ended on March 31, 2021.

The Treasury Department gave the MMLF $10 billion of debt credit protection for the program. On May 5, 2020, the central bank said that participation in the MMLF wouldnt affect the liquidity coverage ratio of participating banks.

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New Biden Legislation Offers Homeowners Additional Coronavirus Mortgage Relief

• The Bottom Line

The Coronavirus, Aid, Relief, and Economic Security Act directed lenders holding federally backed single-family mortgages to suspend borrowers payments for up to a maximum of 360 days if they experienced financial hardship due to the coronavirus outbreak. Similar but shorter forbearance was available to owners of multifamily units with federally backed mortgages.

Subsequent legislation, including the Consolidated Appropriations Act, 2021 and the American Rescue Plan Act of 2021, as well as presidential executive actions, have resulted in additional mortgage relief in the wake of the 2020 financial crisis.

Food Stamps And Meal Programs During The Covid

Because of the COVID-19 pandemic, it may be easier for you and your family to get food stamps and take part in meal programs. Contact your state’s social services agency to see if you’re eligible.

During the pandemic:

• Food stamp recipients may receive additional funding. More people may be eligible to receive SNAP during the pandemic than normally.

• Parents whose kids’ schools are closed can pick up school meals for their kids to eat at home.

• People can enroll in food programs remotely rather than in person. This applies to programs for pregnant women, families, seniors, and people with disabilities.

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How Much Can I Take Out With An Fha Loan

To figure out how much you can take out with an FHA cash-out refinance, you must be aware of your maximum loan-to-value ratio for an FHA cash-out loan, which is 80% for most homeowners.

This means that you can borrow as much as 80% of what your home is worth as long as you have at least 20% equity remaining.

Therefore, the amount of cash that you can take out depends on your equity. To get an estimate of how much you can take out, determine your equity, then subtract 20%. Factor in closing costs to get the best estimate.

Below is an example of an FHA cash-out refinance calculation:

Current Home Value: $400,000

Paying off Current Loan: -$250,000

Max FHA Cash Out: $70,000

In this example, the homeowners maximum FHA cash out is $70,000, minus closing costs.

This is the maximum in an ideal scenario, not factoring in credit scores or debt-to-income ratio, which could greatly affect the maximum amount you qualify to borrow.

Stimulus And Relief Package : The Cares Act

The thirdand largestrelief package was signed into law on March 27, 2020. By nominal dollar amount, it is the largest single relief package in U.S. history. This law, which is called the Coronavirus Aid, Relief, and Economic Security Act and nicknamed the CARES Act or Phase Three, appropriated $2.3 trillion for many different efforts:

• One-time, direct cash payment of $1,200 per person, plus $500 per child
• Expansion of unemployment benefits to include furloughed people, gig workers, and freelancers until Dec. 31, 2020
• Additional $600 of unemployment per week until July 31, 2020
• Waived early withdrawal penalties for 401s for amounts of up to $100,000 until Dec. 31, 2020
• Mortgage forbearance and a moratorium on foreclosures on federally-backed mortgages for 180 days
• $500 billion in government lending to companies affected by the pandemic
• $367 billion in loans and grants to small businesses through the PPP and the expanded Economic Injury Disaster Loan program
• More than $130 billion for hospitals and healthcare providers
• $150 billion in grants to state and local governments
• $40 billion for schools and universities

Benefits provided to unemployed individuals under the CARES Act expired on Sept. 5, 2021. These programs include the Pandemic Unemployment Assistance , the Pandemic Emergency Unemployment Compensation , and the Federal Pandemic Unemployment Compensation .

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Is There A Congress Mortgage Stimulus Program

With Covid-era relief efforts winding down, some Congress mortgage stimulus programs are coming to a close.

Fortunately, homeowners who need to lower their mortgage payments are not out of options.

Millions of homeowners are still refinance eligible. And with a wide variety of mortgage programs available, even those with little or no equity might qualify for a lower rate and cheaper monthly payment.

> Related: The best way to refinance your mortgage

Streamline Refinance Eligibility: Lower Your Interest Rate Quickly And Affordably

You may be eligible for a Streamline Refinance if:

• You have an FHA, VA or USDA loan
• You will benefit demonstrably from the refinance, such as by a lower mortgage rate or monthly payment
• No missed payments in the last 6 months

If you meet these conditions you are very likely to have access to lower rates but you need to act now before rates go up. Speak with your mortgage lender about your personal finances and relief options.

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Pros And Cons Of Refinancing

Like with any loan, there are some pros and cons when it comes to an FHA cash-out refinance. This type of loan may benefit some, but it could be the wrong option for others.

Pros:

• Using an FHA cash-out refinance, your home equity can be turned into cash that can be used to put you in a competitive financial position.
• An FHA cash-out refinance is a great option if you plan to reinvest it into your home by doing renovations or making improvements.
• It can be a great way to consolidate your high-interest debts, such as credit card debt, student debt, or car loans.

• Since FHA cash-out refinance requirements are more lenient than those of conventional loans, FHA loans are more accessible, especially to those with low credit. The official minimum credit score to qualify for an FHA cash-out refinance is 500. However, be aware that lenders may look for a higher credit score. These loans also provide a higher maximum LTV than conventional loans.
• FHA loans are assumable, meaning that they can be transferred from an existing owner to another buyer after evaluation by the lender.

Cons:

Ensuring Businesses Have Access To Credit

The Business Credit Availability Program will allow the Business Development Bank of Canada and Export Development Canada to provide more than $10 billion of additional support, largely targeted to small and medium-sized businesses. This will be an effective tool for helping viable Canadian businesses remain resilient during these very uncertain times. BDC and EDC are cooperating with private sector lenders to coordinate on credit solutions for individual businesses, including in sectors such as oil and gas, air transportation and tourism. The near term credit available to farmers and the agri-food sector will also be increased through Farm Credit Canada.

The Office of the Superintendent of Financial Institutions announced it is lowering the Domestic Stability Buffer by 1.25% of risk-weighted assets, effective immediately. This action will allow Canadas large banks to inject $300 billion of additional lending in to the economy.

The Bank of Canada also took a series of actions to support the Canadian economy during this period of economic stress, enhance the resilience of the Canadian financial system, and help ensure that financial institutions can continue to extend credit to both households and businesses. This included cutting the interest rate to 0.75% as a proactive measure in light of the negative shocks to Canadas economy arising from the COVID-19 pandemic and the recent sharp drop in oil prices.

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Stimulus And Relief Package 1

The first relief package, the Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020, since nicknamed Phase One, was signed into law on March 6, 2020, by then-President Trump. It allocated $8.3 billion to do the following:

• Fund research for a vaccine
• Give money to state and local governments to fight the spread of the virus
• Allocate money to help with efforts to stop the spread of the virus overseas

The Nearly Secret Stimulus Payment For Homeowners: Here Are The Details

The March 2021 package set aside $10 billion specifically for homeowners relief. This means that homeowners who are having trouble paying basic bills can request emergency funds from the government. These funds can be used towards any home-related expenses, including paying the mortgage, property taxes, homeowners insurance, utility bills, and other related fees.

Homeowners Assistance Fund: Another Stimulus Payment for Homeowners

Are you a homeowner struggling to pay your bills? If so, the Biden administration might have a lifeline for you.

The American Rescue Plan, President Bidens signature COVID-19 recovery bill, was passed in March. The bill, altogether nearly two hundred and fifty pages long, laid out funding requests for many different government COVID relief programs. One of those programs, the Homeowners Assistance Fund, was specifically targeted towards imperiled homeowners in need of temporary low-interest loans and other relief.

How It Works

The March 2021 package set aside $10 billion specifically for homeowners relief. This means that homeowners who are having trouble paying basic bills can request emergency funds from the government. These funds can be used towards any home-related expenses, including paying the mortgage, property taxes, homeowners insurance, utility bills, and other related fees.

To clarify the status of your states benefits, or for additional information, you can contact your states housing agency.

The Caveat

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How Homeowner Assistance Funding Works

Treasury is authorized under the American Rescue Plan to provide a HAF award to:

• States,
• Tribes or their TDHEs
• Department of Hawaiian Home Lands

HAF programs distribute assistance to eligible homeowners to cover qualified expenses related to mortgages and housing.

Depending on the program, homeowners may use the HAF assistance for expenses such as, mortgage payments , property taxes, homeowners insurance, homeowners association fees, utilities , internet service, and certain home repairs.

Find out more information about how HAF programs work on the interagency housing portal hosted by the Consumer Financial Protection Bureau .

How To Request Emergency Rental Assistance

Because the Treasury disburses ERA funds to states and other entities, you must apply for ERA assistance through the appropriate state or entity. To help with this, the Treasury has created a webpage to help tenants and landlords find rental assistance programs in their local area. Use it to direct yourself to the appropriate state or other authority to determine how to apply to receive assistance or to help your tenants do so.

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Stimulus And Relief Package 2

The second relief package, the Families First Coronavirus Response Act , or Phase Two, was signed into law on March 18, 2020. The Act allocated a budget for relief that included the following provisions:

• Providing money for families who rely on free school lunches in light of widespread school closures
• Mandating that companies with fewer than 500 employees provide paid sick leave for those suffering from COVID-19, as well as providing a tax credit to help employers cover those costs
• Providing nearly $1 billion in additional unemployment insurance money for states, as well as loans to states to fund unemployment insurance
• Funding and cost waivers to make COVID-19 testing free for everyone

Separately, on March 18, 2020, the Federal Housing Administration and Federal Housing Finance Agency implemented foreclosure and eviction moratoriums for single-family homeowners whose mortgages are FHA-insured or backed by Fannie Mae or Freddie Mac. The eviction moratorium on FHA and other government-backed loans was extended to Sept. 30, 2021. Additionally, the FHFA announced on September 24, 2021, that Fannie Mae and Freddie Mac would continue to offer COVID-19 forbearance to multifamily property owners who experience a financial hardship due to the COVID-19 emergency.

What Has President Biden Been Doing To Offer Mortgage Relief

According to a White House press release: “Shortly after taking office, the Biden-Harris Administration extended the foreclosure moratorium and mortgage forbearance enrollment period for homeowners with government-backed mortgages to provide relief to struggling homeowners.” Additionally, as part of President Biden’s American Rescue Plan $9.961 has been provided for the Homeowner Assistance Fund, encouraging loan modifications and payment reduction options on all federally backed mortgages.

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Supporting Financial Market Liquidity

As a further proactive and coordinated measure to bolster the financial system and the Canadian economy, the government announced on March 16 that it is launching an Insured Mortgage Purchase Program . Under this program, the government will purchase up to $50 billion of insured mortgage pools through the Canada Mortgage and Housing Corporation . This action will provide long-term stable funding to banks and mortgage lenders, help facilitate continued lending to Canadian consumers and businesses, and add liquidity to Canadas mortgage market. Details of the terms of the purchase operations will be provided to lenders by CMHC later this week.

The IMPP enhances the already substantial set of measures announced on March 13 to support the economy and the financial system. CMHC stands ready to further support liquidity and the stability of the financial markets through its mortgage funding programs as necessary.

Further, the Bank of Canada has announced that it will adjust its market liquidity operations to maintain market functioning and credit availability during the current period of uncertainty in which conditions are evolving rapidly.

Advance Child Tax Credit

Even if you dont pay any taxes, you may qualify for a refund of the CTC.

The CTC was expanded under the American Rescue Plan Act of 2021 for tax year 2021 only. If you are eligible, you should have begun receiving advance Child Tax Credit payments on July 15. The payments will continue monthly through December 2021. Under ARPA, families are eligible to receive:

• Up to $3,000 per qualifying child between ages 6 and 17
• Up to $3,600 per qualifying child under age 6

The Internal Revenue Service began sending out letters in early June to more than 36 million families who may be eligible for the monthly payments. Most families do not need to do anything to get their payments, as long as theyve filed their 2020 or 2019 tax return. Learn more about the letter and how it can help you determine your eligibility.

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Understanding The Cares Act

The stimulus checks issued by the U.S. Treasury Department were meant to provide monies to Americans who earn less than $75,000, who have filed 2019 income tax returns and have a Social Security number, according to Equifax. Understanding that the stimulus checks were barely enough to cover mortgage payments, Congress also approved a federal stimulus for homeowners consisting of two protections for those who faced foreclosure due to missed payments. The CARES Act allowed forbearance, a pause in the mortgage payment schedule for a limited amount of time until payments can be resumed, without penalty, as outlined by the Consumer Financial Protection Bureau.

Forbearance doesnt exclude homeowners from forever making mortgage payments. It simply pauses your obligation until you gain your financial footing or for up to 180 days. The missed payments are to be repaid over time, and the company servicing your loan will work with you to determine that payment schedule when it resumes.