Mortgage relief may soon be coming for Nevada homeowners who have been impacted by the covid-19 pandemic.
Nevada is set to receive $121 million in homeowner relief funds approved under the U.S. bailout.
On Tuesday, the state legislature’s interim finance committee accepted the first 10% of those funds. Lawmakers welcomed the additional help for struggling homeowners, but raised concerns about the percentage of federal funds used for administrative costs.
According to Verise Campbell, CEO of the Nevada Affordable Housing Assistance Corporation, 15% of the total $121 million will be spent on administrative costs. An additional 3% will go to partner organizations that help promote homeowner assistance programs and help people enroll.
The remaining 82% will directly benefit homeowners statewide. NAHAC estimates that approximately 6,800 households will be assisted.
After doing some quick math on the back of the napkin, Assemblyman Glen Leavitt (R-Boulder City) noted that this equates to about $2,600 per household in administrative costs and $14,500 per household in assistance.
“It seems a bit inefficient,” he said.
Campbell in response emphasized the “tough” guidelines set at the federal level regarding allowable administrative expenses. The US Treasury allows up to 15% of the total amount granted to a state to be used for administrative costs.
“The Treasury is extremely strict about this,” she said.
Campbell also defended administrative costs, saying NAHAC needs to set up the technology infrastructure and staff appropriately.
“To scale up, you need to have a system that can handle it,” she added.
Campbell told lawmakers the organization plans to move “very aggressively” with implementing additional support for owners, but she also noted that system updates would have to be outsourced. via an RFP process that could take up to 90 days. .
NAHAC is not currently accepting requests for assistance, according to its website.
In the meantime, homeowners can find financial relief through mortgage forbearance, which was included in last year’s CARES Act and is available for federally guaranteed loans. According to the Consumer Finance Protection Bureau, the June 30 deadline for the initial forbearance request applies to certain federally guaranteed loans. Forbearance puts a loan on temporary pause during a difficult time, but it does not cover any costs like NAHAC-administered programs do.
NAHAC says the amount of assistance given to households will vary widely depending on need. Some owners went through last year’s pandemic programs multiple times, according to Campbell.
Campbell added that NAHAC plans to institute a lifetime cap of $100,000 on the total assistance a household can receive. Individual programs will also have maximum reward caps.
According to Campbell, about 8,000 households have already received help during the pandemic through NAHAC’s Unemployed Mortgage Relief Program, which pays off outstanding or outstanding mortgages for those currently unemployed, and the Mortgage Recovery Assistance Program, which helps homeowners who have experienced pandemic hardship to catch up. at the top.
An estimated 5.93% of Las Vegas-area homes were overdue by at least 90 days in January, the Review-Journal reported in April. In August 2020, about 6.58% were.
While NAHAC is currently focused on its unemployed mortgage relief and mortgage recovery assistance programs, Campbell noted that needs may change as the state’s recovery evolves.
“We may have to come back and move to a principal reduction program,” she said, “or if things are going really well and we don’t have that many unemployed, three years from now we want to maybe help with the down payment program.”
Campbell noted that more specific details on the implementation of housing assistance funds would be available once the draft budget for the full $121 million is complete.
According to federal guidelines, Tuesday’s meeting only moved the first 10% of that amount. The additional 90% will be released after Nevada submits its program and budget plans to the US Treasury for approval. The official deadline for those plans is June 30, but Nevada Housing Division Administrator Steve Aichroth told lawmakers the federal department should extend that deadline because the submission process has not yet been defined.
Unlike emergency housing assistance, which was split between municipalities and states, homeowner assistance funds are only distributed to states.
Aid is channeled through the US Treasury’s Hardest Hit Fund, which was created during the Obama era as part of the Troubled Asset Relief Program (TARP) for states with high foreclosure rates during the Great Recession. NAHAC was also the state administrator at this time.
In 2016, TARP identified “waste and abuse” in an audit of Nevada’s Hardest Hit Fund. A later report in 2018 found that NAHAC had helped just over half the number of households it was supposed to help.