President Joe Biden signed the American Rescue Plan Thursday, freeing up $1.9 trillion aimed at invigorating the economy following the COVID-19 pandemic.
The bill will send $1,400 direct payments to individuals making up to $75,000 annually, and allocates $350 billion in aid to state and local governments and $14 billion for vaccine distribution. Over $50 billion will be distributed to small businesses — including $7 billion for the Paycheck Protection Program — and $25 billion for small and mid-sized restaurants.
Per White House Press Secretary Jen Psaki, direct deposits could be hitting Americans’ bank accounts as early as this weekend.
For the housing industry, Biden’s American Rescue Plan is an enormous buoy at a time when home prices are sky-high, inventory is low, and millions are struggling to make rent and mortgage payments.
Specifically, the bill allocates $22 billion for emergency rental assistance, replenishing the Coronavirus Relief Fund.
Among the unknowns servicers face in 2021 are changes that could affect lender-placed insurance (LPI). Servicers must have the flexibilities in place to keep up with the latest changes to remain compliant and efficient while still providing an optimal borrower experience.
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To receive financial assistance for rent, utilities and other house-related expenses, households must meet several requirements: total household income cannot exceed 80% of the area median income; at least one household member must be at risk of homelessness or housing instability; and individuals in the household must qualify for unemployment because of the pandemic.
Priority relief will be given to low-income families that have been unemployed for three months or more, according to White House officials.
Approximately $10 billion will go toward helping homeowners struggling with mortgage payments, and $100 million of the bill will be dedicated to housing counseling.
White House officials also said $5 billion will be set aside to fight homelessness through the conversion of certain properties into shelters. Another $5 billion will be used for emergency housing vouchers.
Treasury Secretary Janet Yellen will now begin the giant task of overseeing the distribution of the bill, which was passed quickly through Congress via the budget reconciliation process. Yellen said that while the numbers may not immediately reflect it, Thursday was a “pivotal day” for the American economy.
“With the passage of the American Rescue Plan, I believe Americans will emerge from the pandemic with the foundations of their lives intact,” Yellen said. “Our Treasury team will be doing everything we can to accelerate the recovery. We are ready to get to work implementing the measures in the Rescue Plan, including economic impact payments, expanded child tax credits, help for struggling renters and homeowners, and support for state, local and tribal governments.”
The Mortgage Bankers Association released a statement commending the passage of the bill, saying it will strengthen the overall rental and housing market.
“Specifically, we appreciate the bill’s provisions that provide additional assistance to tenants, homeowners, and businesses — particularly those in the retail and hospitality sectors,” said MBA CEO Robert Broeksmit.
Sunia Zaterman, executive director of the Council of Large Public Housing Authorities, said: “The law is also historic in nature as it represents the largest federal investment since the creation of the Great Society programs more than 55 years ago, which launched what is now known as the Housing Choice Voucher program. Estimates show that the American Rescue Plan Act’s war on poverty will reduce the projected poverty rate this year by half. This historic investment in alleviating poverty and expanding housing opportunities constitutes one of the most significant steps towards ending racial inequity since the legislation passed during the Civil Rights Era.”