Update from NCHSA

4 min read

Another New Role For State HFAs

State housing finance agencies (HFA), for more than a generation the primary delivery system for federally-funded affordable construction, rehab and preservation, are playing a newer role in the continuing recovery from the pandemic: emergency assistance provider.

The biggest new responsibility for many is the Emergency Rental Assistance Program (ERAP), which Congress created to avert mass evictions by covering back rent and utilities that have accrued for millions since COVID-19’s onset (and offering them some additional assistance for current and future costs). The latest national estimates of aggregate unpaid rent range from $20 to $35 billion, while total past-due utilities may be approaching $30 billion.

ERAP is funded at $46 billion, with formula amounts allocated to the states and territories, plus hundreds of counties, cities and Indian tribes. Twenty seven state HFAs are serving as their state’s ERAP administrator, responsible for a combined $17 billion.

Launching state ERAP has been a demanding exercise for the HFAs, requiring rapid staffing-up and development of new program guidelines and technology systems. Now that every state program is up and running, the biggest challenge is getting the assistance as quickly as possible to the renters who need it most—many of whom live, the agencies are finding—in smaller, unsubsidized properties whose owner has never worked with the HFA.

Mom and pop owners with ten or fewer units control more than half of all rental properties in the U.S. and their renters are more likely to be behind on their rent due to COVID hardship than those in professionally managed apartments, according to the Urban Institute. A recent survey by Avail found only about 60 percent of small owners and 44 percent of their renters were even aware of government emergency rental assistance.

State HFAs are developing targeted strategies to reach smaller landlords and their renters with ERAP. Of the 8,000 landlords the Alaska Housing Finance Corporation has helped, 75 percent are mom and pops; the agency’s ERAP has paid more than 24,000 renters so far.

Oregon Housing and Community Services has developed a parallel program that prioritizes funds for small owners.

State HFAs running ERAP are also contending with the reality that housing and energy insecurity are concurrent hardships. Research published by the National Bureau of Economic Research found that utility moratoria, like eviction moratoria, significantly reduced COVID infections and deaths. Several HFAs are exploring innovative ways to bundle payments to utility providers on behalf of large numbers of their renter customers as a means to move more money quickly.

Another federal COVID relief program state HFAs are administering could lay a foundation for more lasting solutions to homelessness. Forty three of the agencies will administer their state’s share of the special $5 billion in HOME block grant funds targeted by Congress specifically for that purpose. Many expect to use funds to support the creation and operation of permanent supportive housing. State-led efforts last year in California, Oregon and Vermont to convert obsolete hotels could become a more common strategy, depending on the details in the program rules the Department of Housing and Urban Development is expected to publish in a few months.

State HFAs have also been thrust into the role of emergency responder on behalf of at-risk homeowners. While nobody is predicting anything like a repeat of the last foreclosure crisis, more borrowers are behind on their mortgages than at any time since the Great Recession, according the Consumer Financial Protection Bureau. With the end of federal mortgage forbearance policies looming, it’s increasingly clear millions of owners will need targeted assistance to stay in their homes. Congress created the $10 billion Homeowner Assistance Fund, which HFAs will run in 43 states, to meet some of that need. State programs will launch in the next several months.

Prior to the pandemic, state HFA disaster response mostly meant financing the rebuilding of affordable housing after natural storms. COVID-19 has put the agencies in more direct contact with owners, renters, landlords and unhoused people confronting devastating financial (and health) challenges. For many HFAs, the experiences, still unfolding, are spurring deep thinking about longer term transformation. Knitting affordable housing assistance and other state HFA assets more deeply into the social safety net could help it support more of the most vulnerable.

Stockton Williams is executive director of the National Council of State Housing Agencies.