The Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020 appropriates $300 million for Native American Housing to prevent, prepare for, and respond to COVID-19. The Act appropriates $200 million for Indian Housing Block Grants (IHBG) under title I of the Native American Housing Assistance and Self-Determination Act of 1996 (NAHASDA) and $100 million available for grants to tribes through the Indian Community Development Block Grant (ICDBG) program under title I of the Housing and Community Development Act of 1974. NAHASDA funds were allocated using the FY2020 funding formula and ICDBG funds are available on a first-come, first-serve basis. Additionally, the Act protects borrowers with government-backed, Section 184 loans in the form of a foreclosure moratorium, and mortgage relief.
The $200 million allocated for IHBG-CARES Act funding is being administered by Housing and Urban Development (HUD) on a formula basis and requires a new Abbreviated Indian Housing Plan (IHP). HUD has attempted to speed up the application and distribution process by cutting red tape and acknowledging that the COVID-19 crisis has made everything more challenging. As such, HUD has stressed its desire to reduce the administrative burden on tribes and TDHEs in the application process by making regulatory changes and providing waivers. The regulatory changes and waivers seek to streamline the application process, reduce the amount of required information from applicants, speed up HUD response and distribution times, and allow for more flexible use of both IHBG-CARES Act and FY2020 funds. Some notable examples of newly allowed fund uses include:
This opportunity presents Tribes and TDHEs with a new source of funding which is accessible with minimal administrative burden, dynamic, and flexible. Most importantly however, these funds may prove critically import in preparing for, preventing, and responding to the ravages of the COVID-19 pandemic in tribal housing communities. Further, despite the funding allocation being based on NAHASDA data, HUD grant managers are reporting that funding will indeed run out so it is critical that Tribes and TDHEs submit their Abbreviated IHPs as soon as possible to secure their funding.
The $100 million allocated for ICDBG-CARES Act grants are being administered by HUD on a first-come, first-serve basis. ICDBG-CARES funding, while largely based on the standard ICDBG program, is a very different program. Similar to IHBG funding, HUD has reduced the administrative burden on tribes and Tribally Designated Housing Entities (TDHEs), effectively creating a new program, the DNA of which is based upon ICDBG. Furthermore, the ICDBG-CARES Act funding is non-competitive, which differs substantially from the standard competitive ICDBG program. HUD has reduced the amount of required information in the applications by waiving numerous regulatory requirements and expediting HUD response times to ensure faster delivery of funds.
The National American Indian Housing Council (NAIHC) reports that, as of the time of writing and almost two months after applications opened on June 1st, more than $49 million has been disbursed. According to HUD data, the highest award amount was $3 million and the average award amount was approximately $1 million. The state with the highest award total is Alaska, both in the amount of award distribution and in the number of successful tribal applicants. $15.4 million has been distributed to fifteen Alaska tribes with an average award of just over $1 million per recipient. The state with the next highest award total is California with $8.2 million awarded to ten successful applicants and an average award of just over $800,000. The third highest state is Washington with nearly $6.5 million awarded to six successful applicants and an average award amount of nearly $1.1 million. The remainder of the awards have been distributed to seventeen tribes in eleven states for a total of approximately $30 million with an average award of approximately $1.8 million.
The CARES Act provides protections to borrowers under the Section 184 loan guarantees program in two ways. First, no lender may take any foreclosure actions for 60-days starting March 18, 2020. Prohibited foreclosure actions include initiating any foreclosure process, moving for foreclosure judgment, ordering sale, or executing a foreclosure-related eviction foreclosure sale within the 60-day period. Second, borrowers are offered temporary mortgage relief forbearance for up to 360 days from the day of request. Two 180-day forbearances may be requested regardless of the borrower’s default status and lenders may not assess any fees, penalties, or interest beyond the amounts schedules or calculated as if the borrower had made all payments on time and in full. Further, the process for borrowers to request forbearances has been streamlined and lenders are required to grant forbearances upon receiving a request from the borrower which states that they are experiencing financial hardship. It remains unclear, however, how mortgage relief might impact borrowers once their mortgage relief expires. Therefore, absent future HUD guidance to the contrary, lenders may require that borrowers immediately pay back the full mortgage amount in a so-called “balloon payment.”