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    Paying Your Rent or Mortgage Amidst the COVID-19 Pandemic

    Since the outbreak of COVID-19, businesses have been shut down, thousands have been laid off from their jobs, millions have applied for unemployment, and people have been asked to stay at home until the pandemic is under control. With all of this being said, homeowners and renters are now faced with the challenge of paying rent, even if they do not have the income to pay. In this article we will outline government initiatives that are protecting homeowners and renters, as well as solutions both can take if they are facing financial difficulty.

     

    Polices Impacting Homeowners

    The U.S. Department of Housing and Urban Development in conjunction with the Federal Housing Finance Agency (the regulator for Fannie Mae and Freddie Mac) have directed mortgage servicers to halt all new foreclosure actions and suspend those already in progress. This suspension applies to all homeowners with a single-family mortgage, backed by either company. To request forbearance (suspension), you will have to directly contact your lender and determine if you qualify.

     

    Additionally, the Federal Housing Administration (FHA) will be placing a sixty-day moratorium on foreclosures and evictions of single family homeowners. According to a statement made by Ben Carson, the Department of Housing and Urban Development Secretary:

     

    “Today’s actions will allow households who have an FHA-insured mortgage to meet the challenges of COVID-19 without fear of losing their homes, and help steady market concerns… The halting of all foreclosure actions and evictions for the next 60 days will provide homeowners with some peace of mind during these trying times.”

     

    If you are a homeowner and do not qualify for either of the above, then your lender may have created their own policy to assist. Here is a resourceful link that provides information on how some lenders are offering additional mortgage relief programs to borrowers during the crisis.

     

    Policies Impacting Renters

     

    For renter’s nationwide, there have been different policies put in place to help relieve their financial stress. Under the Coronavirus Aid, Relief, and Economy Security Act, or CARES Act, which became a law on March 27th, some tenants are protected from eviction for 120 days. According to the National Housing Law Project, those that meet one of following conditions qualify:

     

    • If you live in a property that is financed with a federally backed mortgage loan.
    • If you receive rental housing assistance through one of many federal voucher programs including Housing Choice vouchers.
    • If you receive rental housing assistance through the rural housing voucher program.

     

    “The law project says that if you or your rental meets any of those conditions, your landlord can’t initiate a new eviction notice until July 25, 2020, and you must be given an additional 30 days — or until August 24 — to leave the property. During that time, according to the law project, you cannot be charged late fees, penalties or other charges for late rent payments.”

     

    For renters specifically in California, you are provided a bit more protection. On April 27th Governor Gavin Newsom took executive action and established a statewide moratorium on evictions.

    “Governor Gavin Newsom today issued an executive order banning the enforcement of eviction orders for renters affected by COVID-19 through May 31, 2020. The order prohibits landlords from evicting tenants for nonpayment of rent and prohibits enforcement of evictions by law enforcement or courts. It also requires tenants to declare in writing, no more than seven days after the rent comes due, that the tenant cannot pay all or part of their rent due to COVID-19.

    The tenant would be required to retain documentation but not required to submit it to the landlord in advance. And the tenant would remain obligated to repay full rent in a timely manner and could still face eviction after the enforcement moratorium is lifted. The order takes effect immediately, and provides immediate relief to tenants for whom rent is due on April 1st.”

    This does not mean that tenants are forgiven for their rent, but instead will need to work with their landlords on how they will approach the situation to ensure that they have a secure place to live starting June 1st.

     

    What to Do If You Cannot Make Rent or Pay Your Mortgage

     

    There is no absolute solution for how renters and homeowners will make their payments – there are too many variables impacting individual situations. However, if you are struggling to make a payment, consider the following:

     

    1. Talk to your landlord and/or lender and see how they can help. Both parties understand that now is a trying time, and some are waiting for tenants or borrowers to approach them regarding rent deferment.
    2. Apply for unemployment benefits, if you qualify. In the past, freelancers, those who left their job, part-time workers, and self-employed individuals did not qualify for unemployment. However, the new stimulus package provides relief for these individuals. Those who were impacted by COVID-19 can apply; and, depending on the state in which you reside, benefits will vary.
    3. Use your stimulus payment for your rent or mortgage. The CARES Act is providing U.S. residents with one-time payments from the IRS. Here is a breakdown of who will receive a payment and how much they will receive:

     

    • Tax filers with adjusted gross income up to $75,000 for individuals and up to $150,000 for married couples filing joint returns will receive the full payment, or $1,200 per individual.
    • For filers with income above those amounts, the payment amount is reduced by $5 for each $100 above the $75,000/$150,000 thresholds.
    • Single filers with income exceeding $99,000 and for joint filers exceeding $198,000 and with no children are not eligible.
    • Social Security recipients and railroad retirees who are otherwise not required to file a tax return are also eligible and will not be required to file a return.

     

    Payments will be based off of the latter of their 2018 or 2019 tax returns.

     

    Moving Forward in 2020

     

    The authorities are continuing to implement new policies to help both homeowners and renters. Depending how the pandemic shifts over the next 60 days will drastically impact the solutions that are being provided. In the meantime, for those struggling, the first step is always to open a line of communication with the party that can immediately assist them – their landlord or their lender.

     

     

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