How long should small-business, mortgage aid last?

WASHINGTON — Despite calls from the Biden administration for bipartisan action on coronavirus relief, lawmakers remain sharply divided over the scope of stimulus funds for mortgage borrowers, renters and small businesses.

At the center of the partisan disagreement is whether funding for programs like the State Small Business Credit Initiative and Homeowner Assistance Fund would be cut off when the public health emergency is declared over, or would remain in place to mitigate lingering economic effects.

“The fact is the economic crisis will last many, many months perhaps after the health crisis is over,” Rep. Brad Sherman, D-Calif., said Wednesday at a House Financial Services Committee markup of the $1.9 trillion stimulus plan championed by the White House.

Several Republicans on the panel questioned allowing funding for programs that predated the pandemic and proposed amendments to set a deadline on certain appropriations, warning that Democrats shouldn’t take advantage of the crisis to boost government programs. Yet all of their amendments were rejected.

“Bottom line, we need to deliver temporary, targeted, and COVID-related relief to the people who need it most,” McHenry said. “Despite my colleagues’ claims, it is possible to do too much. In fact, there is bipartisan agreement that this additional $1.9 trillion package could overheat the economy.”

“Millions of individuals and families are on the brink of eviction or foreclosure as back rent or mortgage payments pile up through no fault of their own,” said Chairwoman Maxine Waters, D-Calif.

“Millions of individuals and families are on the brink of eviction or foreclosure as back rent or mortgage payments pile up through no fault of their own,” said Chairwoman Maxine Waters, D-Calif.

Bloomberg News

The debate indicated that House Democrats are on track to pass the legislation with little to no GOP support. (Congress has yet to act on the stimulus plan despite a Senate vote enabling lawmakers to advance the relief package through the budget reconciliation process.)

The stimulus legislation would provide roughly $25 billion for emergency rental assistance, $5 billion to support people experiencing homelessness, $10 billion for struggling homeowners to make their mortgage payments, and $10 billion to support small businesses, including minority-owned businesses.

The $10 billion in mortgage aid would deliver relief to states and local tribes in the form of direct assistance with mortgage payments, property taxes, property insurance and other housing costs.

Democrats on the committee called for a sweeping approach to ensure that Congress is supporting the economic aftermath of the pandemic.

“Millions of individuals and families are on the brink of eviction or foreclosure as back rent or mortgage payments pile up through no fault of their own,” said Chairwoman Maxine Waters, D-Calif. “Across the nation people are struggling to make ends meet, and hunger is growing. Communities of color continue to be the hardest hit.”

Republicans on the committee warned that the legislation would authorize funds to be used well after the pandemic is over.

“If we are going to provide emergency relief, it should be provided through the national pandemic emergency, not out through 2025 and 2030,” said Rep. Ann Wagner, R-Mo.

Another sticking point is whether Congress should allocate funds for programs that were established outside of the pandemic. Democrats’ proposal includes a reauthorization of an Obama-era program to help states support small businesses, known as the State Small Business Credit Initiative.

“This would codify numerous partisan priorities, including duplicative rental assistance to funnel money toward non-COVID purposes and restarts the ineffective Obama-era State Small Business Credit Initiative,” McHenry said.

Rep. Al Green, D-Texas, said the program could leverage government funds to spur small-business growth.

“This would help our small businesses, it would help us to leverage money,” Green said. “We can have $1 billion in and it leverages $10 billion. As a matter of fact, when we had the downturn in 2008 we put in $1.5 billion into this program and it leveraged $15 billion.”

Rep. Blaine Luetkemeyer, R-Mo., attempted to amend the State Small Business Credit Initiative reauthorization, requiring all funding to be used within six months after the end of the national health emergency. But the amendment was rejected by Democrats.

“The SSBCI provision of the bill is clearly written to give states money well into the future with little immediate benefit to workers and job creators,” Leutkemeyer said. “This program is being touted as helping small businesses make it through the pandemic yet does not require all the funding to go out for five years and allows states to sit on that funding for up to 10 years.”


Housing, civil rights groups ask Congress for $25B

A large partnership of housing and civil rights organizations reached out on Monday to congressional leaders advocating for further relief for homeowners in the next COVID-19 stimulus package.  

The letter was signed by representatives of more than 350 housing and civil rights organizations, including American Bankers Association, Mortgage Bankers Association, National Association of Realtors, National Association of Home Builders and the Housing Policy Council, the NAACP, National Urban League, National Fair Housing Alliance and National Consumer Law Center.

The letter calls for $25 billion in direct assistance to homeowners facing hardships as a result of the COVID-19 pandemic, at least $100 million for housing counseling, and just under $40 million for the Fair Housing Initiatives Program.

Of the approximately 3.8 million homeowners past due on their mortgages, over half of them are persons of color, according to Census Bureau.

Recent homebuyers that relied on low- or no-down payment loans from FHA, VA or the Rural Housing Service are at particular risk, the group contends, noting that even six months of forbearance can put borrowers underwater on their mortgages, owing more than their home is worth.

“Moreover, these borrowers are predominantly Black and Latinx families, first-time buyers and low to moderate-income families,” the letter says. “Mortgage payments assistance will be critically important to the nearly 3 million borrowers that remain in long-term forbearance plans from their mortgage servicers. We cannot begin to tackle the racial homeownership and wealth gaps if we do not take steps to prevent a wave of COVID-induced foreclosures and loss of home equity.”

The group is hoping the bulk of the requested $25 billion comes through the recently reintroduced Homeowner Assistance Fund, which can be used by state housing finance agencies. In the letter to Congress, the group states that the HAF can help homeowners by providing direct assistance with mortgage payments and get into affordable loan modifications, while assisting with utility payments, property tax and insurance payments, homeowner association dues and other support to prevent the loss of home equity.

The outreach from housing and civil rights groups comes at a pivotal time for the American housing industry. Recently appointed Treasury Secretary Janet Yellen has said she will play a key role in pushing the Biden administration’s economic agenda on Capitol Hill – which includes aggressive aid distribution in order to avoid an even longer recession.

President Joe Biden has repeatedly said his administration is focused on providing aid for those in need of affordable housing, and his $1.9 trillion American Rescue Plan was recently voted into the budget reconciliation process in order to speed up passage. The plan calls for an additional $30 billion in funding for emergency rental, energy and water assistance for hard-hit households, plus $5 billion in emergency assistance to people experiencing or at risk of homelessness.

All of this at a time in the country where Black homeownership has declined year-over-year, according to a recent Census Bureau report, and the percentage of Americans experiencing housing insecurity has risen to 9.5% – up from 7.2% in late 2020.

“A critical lesson of the Great Recession is that the communities most impacted need targeted, early intervention,” the group wrote in the letter. “Acting now to include these key provisions in the pending COVID-19 relief package will help stem what could be a damaging housing crisis in the U.S. concentrated in low income communities and communities of color.”