Frustrated With Delays, Treasury Will Claw Back Rental Assistance Funds

Chris Gaetano
Published Date:
Oct 5, 2021

The federal government plans to claw back rental assistance funds from organizations that are seen as dragging their feet on distributing the funds to those who need it, the Wall Street Journal reported.

Through various pandemic aid packages that were passed over the past year or so, Congress appropriated $46.5 billion to help struggling renters make their monthly payments. Some of these funds were also intended to help the landlords of these struggling renters. However, as of this past August, only $5.1 billion of these funds had actually reached those they were intended for ($1.7 billion of that amount was distributed only in July). That represents only 11 percent of the funds, with 89 percent yet to be disbursed.

The aid has been held up by the myriad state and local agencies that were meant to partner with the federal government to distribute the money. These agencies have previously said that moving too fast on applications risks fraud, errors and audits, but the White House has since apparently told them that this risk is insignificant next to the wave of evictions that will come if the aid is not doled out faster. 

Believe that its warnings have since gone unheeded, the White House now plans to claw back the funding from those that are taking too long. Grantees that haven’t obligated at least 65 percent of the funds received under the pandemic Emergency Rental Assistance program by Sept. 30 must submit an improvement plan to the Treasury Department laying out steps they plan to take to get more funds out the door, the agency said. If they fail to submit a plan, the Treasury Department could determine that 10 percent of their funds are “excess” and could be redistributed to other groups. The lowest-performing groups—those that haven't spent or distributed at least 30 percent of the funds received—could see the relief money redistributed to other communities.

It is believed that this plan will prod organizations and agencies to speed up aid distribution. A survey last month found that 45 percent of renters behind on their payments say they face possible eviction. 

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