Using State Data to Target Homeowner Assistance Fund Dollars Where Owners Are at Risk of Foreclosure

To alleviate some of the economic stressors brought on by the COVID-19 pandemic, federal policymakers have enacted several measures to protect struggling homeowners and help them stay in their homes, but these policies are scheduled to sunset soon. Although ongoing economic improvement and strong home price appreciation should limit foreclosures nationwide, some homeowners may still have to sell their homes, while others will face significant risk of foreclosure.

The Homeowner Assistance Fund (HAF), which received nearly $10 billion under the American Rescue Plan Act, offers financial relief to these homeowners in need. We created new estimates that use existing economic and housing market conditions to predict where owners may face the greatest risk of foreclosure to help policymakers better target HAF dollars.

Under the HAF, states that receive funding must develop a plan to identify and assist eligible at-risk homeowners, including those with past-due principal, interest, tax, and insurance payments. Homeowners can qualify for assistance if they have experienced financial hardship after January 21, 2020, and have incomes up to 150 percent of the area median income or 100 percent of the US median income, whichever is greater. Consideration is also given to delinquent owners who fall into “socially disadvantaged” groups, including people who have been subjected to racial or ethnic prejudice or cultural bias within American society.

We’ve created a dataset that includes homeowners’ demographic and income characteristics and that assesses foreclosure risk in counties across the country. With these data, policymakers can better target HAF dollars to the homeowners most in need.