These 8 States Were Forced to Return Stimulus Funds

A failure to use up rent relief funds has caused some states to lose that money.

Job loss was rampant early on in the COVID-19 pandemic, when nonessential businesses were forced to shutter. That caused a lot of people to fall behind on their housing payments.

Protections were put into place to prevent countless Americans from losing their homes. Homeowners were allowed to put their mortgages into forbearance, and an eviction ban was implemented that barred landlords from kicking tenants out on the basis of not paying rent.

At this point, those protections have largely expired, but mortgage loan servicers have been working with struggling homeowners to get current on their payments. Meanwhile, the last two stimulus bills that were signed into law allocated a combined $46 billion in federal rent relief funds.

That money was then distributed to states, who were tasked with rolling out their own rent relief programs to get those funds into the hands of the people who needed it. Some states have acted more quickly than others in that regard. And recently, states that failed to distribute enough rent relief money in time had those funds clawed back by the federal government.

Reallocating a limited pool of resources

These days, the cost of rent is up on a national level, and many tenants are struggling to catch up on past-due rent and stay current on their ongoing housing payment obligations. As such, there's a clear need to dish out rent relief funds to those who need it. Some states, however, didn't move quickly enough in that regard -- and have lost out on funding as a result.

Montana, for example, had to return $54.6 million in federal rent relief funds, while West Virginia returned more than $42.4 million. North Dakota lost out on $150 million in rent relief dollars, and South Dakota was forced to return more than $81 million.

In some cases, losing that money wasn't such a hard blow. North Dakota, for example, believes it has enough remaining rent relief funds to give out aid to those who still require it. And South Dakota Governor Kristi Noem said that the money the state returned wasn't really necessary.

Wyoming, meanwhile, has given back $164 million in federal rent relief funds, but in that state, 70% of homes are owner-occupied. And although Vermont had to return $31 million in rental assistance funds, the state acknowledged that other states might need that money more.

In Nebraska, though, it's a bit of a different story, as housing advocates argue that residents in the state's rural areas could suffer from a lack of funding. Now Nebraska hasn't returned federal rent relief funds so much as passed on $120 million in funding. But the end result is still the same.

Some states are getting a lifeline

The rent relief funds being clawed back by the federal government aren't disappearing. Rather, they're being redistributed to states that need that money the most. All told, those funds are being used for their intended purpose, but let's hope that the states that gave back money didn't deprive too many needy residents of it.