Renters May Be in Line for $53 Million in Stimulus Aid -- but at One State's Expense

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  • The federal government is reallocating rent relief funds for the states that need aid money the most.
  • In doing so, it's taking funds away from states that haven't spent enough of their rent relief dollars.

There's still funding for rent relief available. But that's partly because some states are having their aid pulled.

When the COVID-19 outbreak first erupted, it resulted in a massive wave of unemployment claims. In the absence of healthy savings accounts, many Americans quickly fell behind on essential bills, including housing payments.

Protections were put into place early on in the pandemic to prevent people from losing their homes. Homeowners were allowed to put their mortgages into forbearance, while an eviction ban stopped landlords from removing tenants on the basis of the non-payment of rent.

At this point, both protections have largely expired. But thankfully, there are still rent relief funds available for tenants who have yet to get current on their housing payments.

In fact, the federal government may soon be allocating an additional $53 million in rent relief funds to those states that need aid money the most. But that money is being taken back from a state that was too slow to give that aid out.

Montana residents could be losing out

Montana has, to date, been awarded $352 million in rental assistance funds across two rounds of funding. But the state has only distributed a little under $46 million, averaging $7,300 in assistance per household that's received aid so far.

Since Montana has been slow to disburse that aid, it's now having a large chunk of it taken back by the federal government. And it's not the only state where that's happening. Rather, Montana is one of 11 states that are losing aid due to having what's being called "excess" funding.

Montana received an award of $200 million for rent relief purposes under its initial round of funding. But the state was required to allocate 65% of that money by last September to avoid having some of those funds taken back. Since Montana didn't meet that requirement, it was forced to return $7.6 million in rent relief funds in December, and another $45.3 million in February.

Thankfully, the state has until 2025 to spend the $152 million it was awarded in its second round of funding. But the state is not happy about losing that $53 million, especially as it works through its backlog of rent relief applications.

One state's loss is other states' gain

While it's unfortunate that Montana is losing out on rent relief funds, the good news is that those dollars are being reallocated to states with a heavy need for assistance due to having a large percentage of renters. These include New York, New Jersey, California, and Illinois.

But still, Montana officials say the state's rent relief program is helping a lot of residents. Also, the state is aiming to launch an awareness campaign in an effort to encourage qualified tenants to apply for aid.

Montana has also directed some of its existing aid to the state health department for housing stability services. And it's actively working with the Montana Legal Services Association to identify tenants who are at risk of eviction.

Still, the state maintains that rent relief funds will only resolve a portion of its current housing crisis -- and a lack of affordable housing is an issue it continues to grapple with. Unfortunately, the rent relief funds Montana received cannot be used to build affordable housing. But the state's Commerce department is working on several projects that could help.

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