AHFC ramps up housing assistance in distressed economy

Alaska’s housing finance agency has ramped up assistance to homeowners and renters experiencing financial distress due to COVID-19 impacts on the state’s economy.

For home mortgage holders with Alaska Housing Finance Corp. mortgages, the state corporation have been able to give homeowners a break, if they need it. “We have authorized forbearance relief on 996 loans, with 747 utilizing the forbearance,” as of Aug. 21, Stacy Barnes, AHFC spokeperson said.

In a new program, about 7,786 low-to-moderate income households have been identified as eligible for an AHFC grants for home loan and rent assistance. “The vast majority of those who applied reported loss of income due to COVID-19 in March and April 2020, and the average annual income loss reported was approximately $22,000 per household,” Barnes said.

“As of Friday, August 14, more than 6,400 applying households had been contacted to request certain personal information to verify and route payment. More than $2.6 million had been paid to landlords and mortgage providers (on behalf of homeowners or renters) and payment for 1,100 is pending receipt of required documentation.

Efforts continue to contact applicants and distribute payment,” Barnes said. Applicants have to be below certain income thresholds to qualify.

In help for renters, mainly those who receive AHFC’s lower-income public housing support, “as of Aug. 20 we processed 610 Safety Net (rental hardship) requests, which provides $772,564 in additional federally-funded rental subsidy,” Barnes said. Most of this goes to private sector landlords who provide rental units which are subsidized by the state housing corporation.

“Through federal funding from HUD, AHFC supports approximately 5,000 housing vouchers in the private rental market and passes through almost $3 million each month to private sector landlords,” Barnes said. There are also AHFC-owned public housing that is rented to low-income Alaskans with subsidized rates.

“In April we established an Emergency COVID-19 Safety Net program for families with vouchers or in AHFC’s public housing who lost income due to COVID-19 with additional housing subsidy for at least three months,” she said.

“That timing has run out for some so extensions may be applied that provide an additional 90 days of subsidy to landlords, based on current income reported by participating residents,” she said.

Alaskans facing financial distress related to COVID-19 are encouraged to talk with their landlord or mortgage servicer,” Barnes said. AHFC holds about 20 percent of the Alaska home loan market but its actions are similar to what many other financial institutions that issue home loans are doing.

On another level, historically low interest rates have led many homeowners to refinance, which frees up cash for other obligations and consumer spending. “Last year, average interest rates across AHFC’s portfolio were 4.5%. This year, they’re 3.5%,” Barnes said.

“AHFC’s streamline refinance programs allow our borrowers to refinance an existing loan with less documentation. Total purchase activity (including refinance) is up at the end of the fiscal year (June 30, 2020) from $503 million to $509 million,” she said.

Despite current stress in the economy, mortgage delinquency rates in AHFC’s portfolio of home loans of 7.25 percent are lower than the national average at 7.5 percent, Barnes said. However, the 7.25 percent rate is higher than the long-term historical average of about 5 percent. However, AHFC’s delinquencies were at 8.28 percent in May but dropped to 7.5 percent at the end of June, a significant improvement.

In another, long-established AHFC program, $2 million is available this year for grants to build housing in small rural communities for teachers or other professionals like heath or public safety workers.

Applications for the current year grants closed Aug. 21. Communities must provide matching funds for the state grant, which are a minimum 15 percent. The local match could be higher, however, and that improves the scoring on the application and chances of success.

Last year, Kivalina, Nome, Brevig Mission, Shaktoolik and Nulato were recipients of the program funding.

At current costs of housing in rural Alaska $2 million would build about eight units, depending on the location and site conditions, but the local match of 15 percent can increase this, said Daniel Delfino, planning director of AHFC’s housing programs. Some communities have provided matches up to 30 percent, in which case 15 or 16 units could be possibly be built. Last year 18 units were built, he said.

Proposals for construction have to meet AHFC’s five-star energy conservation rating standard, and while renewable energy can help scoring in the evaluation it should only be done if it is economical and does not add unusual cost, said Regan Mattingly, an AHFC planner for the program.

Some rural communities are cash-strapped, so in-kind resources can be considered in a local match, Delfino said. For example, as part of the community match some local village corporations, formed under the 1971 Alaska Native Claims Settlement Act, have contributed land owned by the corporation for the building, he said.

Housing construction can be twice as expensive in small rural communities as in the state’s more populated areas. For example, a housing unit that costs $230,000 to $240,000 to build in a populated community like Anchorage could cost $450,000 to $500,000 in a rural area.

In its announcement for this year’s round of grants, AHFC said: “Criteria for the grants include community need, number of units to be developed or renovated, and other funding and project costs, including consideration of renewable or efficient energy sources.”

“To incentivize participation across the state, communities not previously funded are automatically awarded up to 10 points in the competitive review,” the agency said.

The program was developed in 2004 to address the shortage of safe and affordable housing in rural Alaska that has historically been an obstacle in recruiting teachers and professionals in health care and public safety. Since the start, AHFC has funded construction and rehabilitation of about 500 units in 85 communities across Alaska, with a total economic impact of more than $147 million.

“Non-profits, state or local government entities, tribal entities, health corporations, school districts and public safety entities are often the lead developers, who best understand which housing solutions are right for their community,” AHFC said in the announcement.

The professional housing program meets a critical need in rural communities where there is typically no local rental market and housing is tight.

“Housing is the most basic need across the state,” AHFC CEO and executive director Bryan Butcher said. “In rural Alaska, overcrowding due to insufficient or a void of housing detrimentally impacts families. Those families are further challenged when communities struggle to recruit and retain teachers, public safety officers and nurses,” he said.