The Homeowner Assistance Fund was created as a response to the COVID-19 pandemic. This fund helps homeowners stay up to date on financial obligations, including mortgage payments, utility bills, and HOA dues. Understanding how this fund works will allow boards to educate owners and provide them with a much-needed boost.
What is the Homeowner Assistance Fund?
The Homeowner Assistance Fund (HAF) operates under the American Rescue Plan Act of 2021. It was established to help homeowners who were severely affected by the COVID-19 pandemic. Through this fund, homeowners can meet housing-related financial obligations, such as mortgage payments, insurance premiums, and utility expenses.
The American government allocated $10 billion to the Homeowner Assistance Fund. A minimum of $50 million was provided to each state, but access to the funds depended heavily on each state’s plans for the fund. Each state submitted a plan to the U.S. Department of the Treasury, which approved funding.
Mortgage payments and utility bills were among the top priorities of the Homeowner Assistance Fund, but some states have extended the program to cover association dues as well. After all, dues are also a housing-related financial obligation. Failure to pay these dues can result in late fees, liens, and even foreclosure.
Currently, the following states have allowed the HAF to cover HOA dues:
- Alabama
- Arizona
- Georgia
- Hawaii
- Kentucky
- Nebraska
- New York
- North Carolina
- Oklahoma
- Tennessee
- Vermont
- Virginia
Homeowner Assistance Fund Requirements
Homeowners must meet certain qualifications to access the HAF. There are two conditions that they must fulfill:
- Income Eligibility. The household income must be at or less than 150% of the area median income (AMI). The U.S. Department of Housing and Urban Development (HUD) is the agency responsible for determining the AMI.
- Homeowner Financial Hardship. Homeowners must prove they suffered financial hardship as a result of the COVID-19 pandemic after January 21, 2020. For example, a homeowner might have lost their job or had their income severely cut. Medical expenses also count.
The state’s HAF program may request supporting documentation from the homeowner. These can include mortgage statements, insurance billing statements, utility bills, and HOA statements of account or dues invoices.
Which States Have a Homeowner Assistance Program?
Many states already have access to the Homeowner Assistance Fund. The following states have active programs:
- Alabama
- Arizona
- Arkansas
- California
- Georgia
- Hawaii
- Kentucky
- Louisiana
- Maryland
- Nebraska
- New Jersey
- New York
- North Carolina
- Oklahoma
- Pennsylvania
- Rhode Island
- Tennessee
- Vermont
- Virginia
That said, there are also states whose programs are no longer active. These include:
- Alaska
- Connecticut
- Delaware
- Illinois
- Indiana
- Iowa
- Kansas
- Minnesota
- Missouri
- New Hampshire
- New Mexico
- South Carolina
- South Dakota
- Washington
- West Virginia
- Wisconsin
Other states may already have approved programs, but they are still in their initial stages.
How to Apply for the Homeowner Assistance Fund
Before helping homeowners apply for the HAF, board members should first confirm if their state currently has an active program. It is also important to educate owners on the qualifications and requirements of their state. The state’s housing finance agency website should have more information.
For assistance with HOA dues payments, homeowners typically require invoices, account statements, or notices. Board members should prepare these documents in advance. That way, they can respond to any requests promptly.
In addition to dues statements, homeowners should prepare evidence of other forms of financial hardship, such as mortgage payments and utility bills. To apply, homeowners must do so directly through the state’s HAF application website.
Once approved, homeowners can check with their HOA to confirm payment. Most states disburse the funds directly to the association. For mortgages and utilities, the same rule applies. The state agency will distribute the funds directly to the mortgage lender or utility company.
Other Ways to Assist With HOA Payment Hardship
While the Homeowner Assistance Fund provides immediate cash to settle bills, not all homeowners are approved or even eligible. Fortunately, there are other ways the HOA board can help with financial hardship. The board can offer payment plans, waive late fees, reach out to other programs, and even lower dues by cutting back on non-essential costs.
1. Offer Payment Plans
Payment plans restructure debt by allowing owners to settle unpaid balances in increments. Depending on the size of the debt, boards can offer more flexible terms, spreading out payments over multiple months.
In some states, it is even mandatory to offer a payment plan. For instance, in Colorado, Section 38-33.3-316.3 requires associations to make a good-faith effort to offer a payment plan before pursuing other collection methods. Colorado law also requires a minimum payment period of 18 months.
Of course, with payment plans, there is a risk of abuse. Homeowners might intentionally fall behind on their dues, knowing that payment plans are available. To prevent this, HOAs and condos can enact policies that limit payment plans to once per owner or per a number of years. Moreover, failure to abide by the plan can still result in liens and foreclosure.
2. Waive Fees
Another option is to waive late fees and interest. These additional charges serve to deter late payments and encourage debt settlement, but they can also significantly inflate the unpaid balance, making it even harder for owners to pay it off. As a compromise, boards can agree to waive these fees if the homeowner pays their outstanding dues in full.
3. Research Nonprofit Assistance Programs
The Homeowner Assistance Fund is not the only program that can help with dues. Other state or local nonprofit organizations may also have assistance projects or initiatives. These can vary depending on where the HOA is located. Board members should conduct their own research and verify qualifications before educating owners.
4. Consider Cutting Back
A high delinquency rate can indicate that many homeowners are suffering from financial hardship. If the board notices that its delinquency rate has spiked, it might consider adjusting the budget. Cutting back on non-essential spending can significantly lower fees. Association boards can delay beautification projects or postpone building a new amenity until homeowners get back on their feet.
A Cooperative Effort
The Homeowner Assistance Fund provides valuable financial support to owners facing financial struggles as a result of the COVID-19 pandemic. Boards can help residents by conducting thorough research into the HAF and educating owners on their options. If the HAF doesn’t cover dues in the state, alternatives exist.
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