The latest COVID relief package signed into law by President Joe Biden sets aside billions for homeowners struggling to make their mortgage payments and other bills related to owning a home.

Over 10 million Americans are currently behind on their mortgages and feeling “housing insecurity,” according to census data. If you’re in that group and have been piling up debt, how do you claim some of the money?

It’s likely to take many months for the funds to get into the hands of those who need it largely because of the way it’s being disbursed, experts warn.

How to qualify for the relief
The recent $1.9 trillion pandemic rescue package that’s now paying out stimulus checks of up to $1,400 includes nearly $10 billion of direct financial assistance to help homeowners pay not only their mortgages but also taxes, utilities, insurance and homeowners association dues.

The money, formally called the Homeowners Assistance Fund, will be distributed to states based on a formula that takes into account unemployed residents as well as late mortgage payments and foreclosures, says the National Council of State Housing Agencies.

You’re eligible for relief if you own your home and have a loan with a principal balance at or below the conforming loan limits set by Fannie Mae and Freddie Mac, the government-sponsored mortgage giants that buy or guarantee most U.S. home loans. The 2021 loan limit in most parts of the U.S. is $548,250.

The money will be funneled to cash-strapped borrowers through state housing agencies. At least 60% of the state grants must go to homeowners with incomes that don’t exceed either the local median income or the national median income, whichever is higher.

Russell Graves, executive director of the National Foundation for Debt Management, a multistate housing counseling agency, says he doesn’t expect the funds to be made available until early 2022.

“There are so many other things going through these agencies: rental assistance, different kinds of pandemic assistance,” Graves says. “Frankly, we have never put so much money toward housing in history. The numbers are staggering.”

Homeowners need help. The latest U.S. Census Household Pulse Survey shows 7.4% of adults — an estimated 10.1 million people — are not current on their rent or mortgage payments and have “slight or no confidence” they’ll be able to pay next month’s rent or mortgage on time.

During the wait, forbearance will be key
Graves recommends that homeowners in need call their lenders or servicers — the companies that manage loans and send out statements — to discuss options, including beginning or extending forbearance.

Forbearance allows you to postpone your mortgage payments without getting slammed with late fees or taking a hit to your credit score. (Haven’t seen your score in a while? Today, you can easily check your credit score for free.)

Those with federally backed loans — some 70% of the U.S. mortgage population — have been able to apply for forbearance in the pandemic. The deferred payments are typically tacked onto the end of the mortgage term. The enrollment window for forbearance was recently extended and now ends June 30.

If you’re in the other 30%, you don’t have the same flexibility, Graves says. He suggests calling a housing counseling agency approved by the Department of Housing and Urban Development (HUD). Congress has provided $100 million so those agencies can assist homeowners.

Another possible remedy for overwhelming housing expenses is to refinance your mortgage, if you haven’t already done so.

Mortgage rates remain historically low, so the mortgage technology and data provider Black Knight recently reported that 11.1 million homeowners are still in a good position to refinance — and cut their monthly mortgage payments by an average $277.

But you’d have to determine whether you’re likely to stay in the home long enough for the savings to more than pay off the new loan’s closing costs, which typically run anywhere from 2% to 5% of your loan amount.

If the math wouldn’t work, forbearance and Homeowners Assistance Fund money may provide the relief you need.

Hopes for a smooth mortgage aid process
Graves says the closest example to the new mortgage aid program was an Obama-era plan created in response to the Great Recession. The “Hardest Hit Fund” was designed to assist the states hit hardest by the subprime lending crisis.

The federal government funneled the funds through each state’s housing agency then, too. But there were challenges.

“It was done by the states in fits and starts. There were a lot of states that got a very slow start and tripped over themselves because this was new,” Graves says.

He hopes the rollout will be smoother this time: “Since this is similar, there should be some institutional knowledge in each of these state housing finance agencies so they can take their original programs and tweak them to match the current environment.”