CU Trades, Consumer Groups Endorse Senate Homeowner Assistance Bill

Senior Senate Democrats last week introduced legislation that would create a $75 billion Homeowner Assistance Fund to help protect homeowners affected by the coronavirus crisis from avoidable foreclosures, evictions and utility shutoffs.

CUNA, NAFCU and several consumer groups endorsed the legislation, introduced by Sen. Jack Reed (D-R.I.), Senate Banking Chairman Sherrod Brown (D-Ohio) and Senate Appropriations Chairman Patrick Leahy (D-Vt.). The legislation is similar to measures Democrats introduced in the past, but with Democrats in control of both houses of Congress and the White House, it could have a better chance of being enacted this year.

Supporters said the legislation would build on the Hardest Hit Fund, which, during the last financial crisis, provided funds to state housing finance agencies to direct targeted foreclosure prevention assistance to households in states hit by the economic downturn.

The Homeowner Assistance Fund would expand that model to provide a flexible source of aid to state housing finance agencies to allow homeowners hurt by the coronavirus crisis to continue to make payments. Funding would be provided based on a formula that takes into account a state’s unemployment claims.

“If communities allow missed mortgage payments to build up and lead to a tidal wave of foreclosures, it could wipe out neighborhoods and delay economic recovery across the board,” Reed said.

“Millions of homeowners have fallen behind on their mortgages because of this pandemic, and the burden has fallen most heavily on families of color who have been disproportionately harmed during this crisis,” Brown said.

CUNA President/CEO Jim Nussle endorsed the effort. “This bill will help prevent mortgage defaults, foreclosures and displacements of Americans who are still feeling the economic impact of this pandemic,” he said. “We strongly support this bill and look forward to working with legislators to move it forward.”

“NAFCU applauds Senators Jack Reed, Sherrod Brown and Patrick Leahy for introducing legislation creating a $75 billion homeowner assistance fund to help struggling homeowners and communities amid the coronavirus pandemic,” NAFCU President/CEO B. Dan Berger said. “This bill will help prevent undue economic hardships for Americans during this difficult time, and we look forward to supporting this legislation in our advocacy efforts.

Consumer groups also voiced support for the measure.

“A critical lesson of the Great Recession is that the communities most impacted need aggressive, targeted, early intervention,” Nikitra Bailey, EVP at the Center for Responsible Lending, said. “Acting now is the most cost-effective way to avoid a foreclosure crisis that is totally avoidable.”

“Facing the most economic distress and illness, low-income families and communities of color are most at risk of losing their homes to foreclosure without relief,” Linda Jun, senior policy counsel at Americans for Financial Reform, said.