MBA RIHA Report: Stabilizing Vulnerable Homeowners in a Time of Crisis–Insights from the Homeowner Assistance Fund

Following rising unemployment rates at the onset of the COVID-19 pandemic in 2020, many homeowners avoided foreclosure, supported by swift public- and private-sector actions that provided immediate mortgage relief. By the end of 2021, more than 80% of borrowers who entered forbearance had exited and resumed payments or paid off their loans. However, some homeowners continued to face financial challenges and turned to support from the Homeowner Assistance Fund. This is according to a new report released today by the Mortgage Bankers Association’s Research Institute for Housing America examining borrower outcomes following pandemic-era relief programs.

“There has been a lot of attention to COVID-19 era mortgage forbearance policies that are now a permanent part of the loss mitigation waterfall for homeowners with federally backed mortgages,” said Dr. Stephanie Moulton, professor and associate dean for faculty and research at the John Glenn College of Public Affairs at The Ohio State University. “This is the first study to examine the $10 billion HAF program and the homeowners who benefited. The insights from this report help us think about potential gaps in the loss mitigation waterfall and the types of homeowners who may benefit from targeted support when they experience a crisis.”

Stabilizing Vulnerable Homeowners in a Time of Crisis: Insights from the Homeowner Assistance Fund, RIHA’s study, examines the impact of the $10 billion federal program launched in 2021 to support homeowners affected by the COVID-19 pandemic. The report provides analysis of the distribution and use of HAF assistance nationwide, differences in state implementation, and the characteristics of borrowers who received support—highlighting those who required help beyond traditional forbearance and loss mitigation options. The report compares the characteristics of Ohio homeowners who received mortgage payment forbearance during the COVID-19 pandemic and Ohio homeowners who received assistance through HAF, in addition to or instead of forbearance.

“Pandemic-era housing policy interventions proved highly effective in stabilizing the mortgage market and helping the vast majority of homeowners avoid foreclosure during an unprecedented economic shock,” said Edward Seiler, executive director, Research Institute for Housing America, and MBA’s associate vice president, Housing Economics. “The research highlights not only the success of broad-based relief efforts like forbearance, but also the critical role of targeted programs such as the Homeowner Assistance Fund in supporting more vulnerable borrowers. As we look ahead, these findings offer important lessons for how policymakers and industry stakeholders can respond to future economic disruptions while promoting sustainable homeownership.”

Key Findings from Stabilizing Vulnerable Homeowners in a Time of Crisis: Insights from the Homeowner Assistance Fund include:

• HAF programs served vulnerable homeowners, with more than 90% of HAF funds nationwide distributed to homeowners with incomes below the area median.
• HAF beneficiaries were geographically concentrated in areas that were more distressed during the COVID-19 pandemic, as measured by higher rates of unemployment and higher rates of mortgage delinquency.
• While the majority of HAF funds were used to cover past due or future mortgage payments, HAF programs also assisted with a variety of non-mortgage homeowner expenses, such as utility payments and property taxes.
• In addition to traditional mortgages, HAF mortgage assistance helped with payments for non-traditional types of credit instruments securing a principal residence such as reverse mortgages, land contracts, or mortgages with complex titles.
• More than one in ten of the 100,000 Ohio homeowners with mortgages as of the end of 2019 who subsequently received assistance for missed mortgage payments during the COVID-19 pandemic received HAF in addition to or instead of forbearance.
• About 16% of Ohio HAF recipients received mortgage payment forbearance prior to receiving assistance through HAF.
• Ohio homeowners receiving mortgage payment forbearance disproportionately held government backed FHA, VA, or GSE loans.
• About one-third of the Ohio homeowners receiving assistance through HAF did not have evidence of a mortgage on their credit file. 80% of homeowners receiving assistance for non-mortgage expenses did not have evidence of a mortgage.

MBA’s RIHA is a 501(c)(3) trust fund. RIHA’s chief purpose is to encourage and assist – through grants to distinguished scholars and subject matter experts, educational institutions, research facilities, and government organizations – establishment of a broader-based knowledge of mortgage banking and real estate finance. You can find additional studies on RIHA’s website: www.housingamerica.org.