On May 12, House Democrats released the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act, which would provide more than $3 trillion for coronavirus relief in programs across government agencies, including significant funding for affordable housing. Republicans rejected the proposal immediately, which they view as more of a Democratic wish list than the opening bid in negotiations for a fifth coronavirus relief package.
The HEROES Act includes two of NCSHA’s top COVID-19 priorities: $100 billion for emergency rental assistance run through the Emergency Solutions Grant (ESG) program and $75 billion for a Homeowner Assistance Fund providing resources directly to state HFAs to help homeowners make mortgage payments.
The bill also directs the Secretary of the Treasury and the Federal Reserve System to provide liquidity to servicers of single-family and multifamily loans covered under the CARES Act (as amended by the HEROES Act), which is a top NCSHA priority. We are still analyzing the bill to determine how the legislation’s liquidity provisions would work in practice.
The legislation does not include a minimum 4 percent credit rate for multifamily bond-financed Housing Credit properties, a lowering of the 50 percent “financed-by” test, additional HOME block grant funding, or modifications to the Mortgage Revenue Bond and Mortgage Credit Certificate programs, all of which are also NCSHA priorities we will continue to advocate.
The bill provides more than $24 billion for other HUD programs, including $11.5 billion for ESG above and beyond the $100 billion in rental assistance, $5 billion for the Community Development Fund, $4 billion for tenant-based rental assistance, $2 billion for the Public Housing Operating Fund, $750 million for project-based rental assistance, $500 million for Section 202 Housing for the Elderly, $200 million for Section 811 Housing for Persons with Disabilities, and $100 million for Housing Counseling. It also provides $1 billion to Community Development Financial Institutions for economic support and recovery in distressed communities and $100 million for Violence Against Women Act programs, which include transitional housing. The bill also authorizes appropriations of $309 million for USDA’s rental assistance programs, including $25 million for rural vouchers, and $700 million for NeighborWorks to support housing counseling services.
The bill extends and expands both the eviction moratorium and multifamily forbearance protections originally enacted March 27 in the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The HEROES Act eviction moratorium would apply to all renters, regardless of whether they live in an assisted property or one with a federally backed mortgage and would apply for the 12-month period following the enactment of the CARES Act. Owners of multifamily properties would be eligible for forbearance for the same 12-month period.
The bill also would revise substantially the CARES Act provisions pertaining to homeowner forbearance and extend the foreclosure moratorium, currently scheduled to expire on May 18, until six months after the enactment of the CARES Act. Most notably, the bill would extend forbearance and foreclosure protections to any mortgage or deed of trust for a one- to four-unit dwelling, whereas the CARES Act covered only those with federally backed mortgage loans. It also would clarify that owners may request forbearance if impacted by COVID-19 regardless of delinquency status.
The bill would establish a number of additional requirements relating to the forbearance provisions, including requiring servicers to provide a borrower receiving forbearance with a written description that includes when the forbearance starts and expires and the loss mitigation options available to the borrower and to offer to borrowers who resume making their regular mortgage payments the ability to defer repayment of the forborne amounts and escrow funds advanced until the end of their existing loans or extend the mortgage loan term and capitalize, defer, or have all escrow advances and other arrearages forgiven.
The bill includes safe harbor protections for servicers of both single-family and multifamily mortgage loans, specifying that servicers are not liable to investors for implementing the forbearance policies under the Act and not in violation of any duty or contractual obligation owed to investors relating to loans in forbearance during the covered period.
Additionally, the bill extends from January 10, 2021, to June 1, 2022, at the earliest, the “Qualified Mortgage patch,” which exempts mortgages purchased by Fannie Mae or Freddie Mac from the 43 percent debt-to-income ratio cap established as part of the Qualified Mortgage definition in the Consumer Financial Protection Bureau’s Ability to Repay rule.
The HEROES Act would provide $540 billion to states, territories, and tribal governments to “mitigate the fiscal effects” of COVID-19 that were not projected as of January 31, 2020; $500 billion would be designated for the 50 states and the District of Columbia. An additional $375 billion would be provided for cities, counties, and other units of local government.
The House could vote on the legislation as early as Friday. However, Senate leaders have indicated the Senate is evaluating the impacts of previous coronavirus relief legislation, is unlikely to act quickly on additional legislation, and will have different priorities than the House. When and if the Senate does consider further coronavirus relief, it is unlikely to be as comprehensive or increase federal spending as much as the House bill released yesterday. NCSHA is continuing to analyze the House bill and will publish more details about it once the House votes.