BREAKING NEWS: Paying Rent During Coronavirus Pandemic For Unemployed Tenants
Paying Rent During Coronavirus Pandemic For Unemployed Tenants may be challenging.
- The U.S. economy was booming like never before prior to the coronavirus pandemic
- Just in February 2020, the Dow Jones Industrial Average peaked to an all-time high at 29,000
- Most Americans 401ks were up more than 60% since President Donald Trump took office in January 2017
- The housing market was on fire
- Home prices were skyrocketing that both HUD and the Federal Housing Finance Agency has increased FHA and Conventional loan limits for four years in a row
- HUD increased 2020 FHA loan limits to $336,760
- The Federal Housing Finance Agency (FHFA) has increased the 2020 Conventional loan limits to $510,400
- Many renters jumped in the housing market bandwagon and applied for a mortgage
Pre-approved homebuyers were having trouble finding properties to enter into a purchase contract. There were more homebuyers than inventory for homes.
Coronavirus Pandemic Crippling The U.S. Economy
Then the coronavirus pandemic hit the United States crippling the U.S. economy and turning the housing and mortgage markets upside down.
- Over 50% of pre-approved home buyers have suspended their home purchase plans until further notice
- Mainly due to their job stability concerns and the economy
- The whole country was shut down
- The Dow Jones Industrial Average tanked more than 40% from its February 2020 high of 29,000
- Other stock market indices have followed the Dow and lost over 40% of its value
- The Dow and other equity markets have been recovering but the U.S. economy is uncertain
- Over 30 million Americans have filed for unemployment claims in the past 5 weeks
- Unemployment claims are supposed to skyrocket
- The federal government has offered a mortgage forbearance program for homeowners to skip their mortgage payments up to one year to avoid a housing crisis with floods of foreclosures
- How about renters?
- How can they pay rent if they are unemployed?
- Many states have implemented eviction moratoriums for up to 90 days
In this breaking news article, we will discuss and cover Paying Rent During Coronavirus Pandemic For Unemployed Tenants.
Hurdles With Paying Rent During Coronavirus Pandemic Due To Being Out Of Work
On April 1st, 2020, over 35% of renters could not pay their rent on time.
- It is estimated over 45% of the renters will not by paying May’s rent due on time due to being out of work
- Over 30 million Americans have filed for unemployment in the past 6 weeks
- An estimated 4 to 5 million Americans are filing unemployment every week
- These numbers are concerning
- Numbers are expected to increase in the coming weeks
- The U.S. Department of Labor is expecting unemployment rates to hit a historic 20% this year due to the coronavirus economic shutdown
- All essential businesses were ordered to shut down until further notice
- Millions of closed businesses are not expected to reopen due to the major financial damage
- This means that many furloughed workers will not be returning to work
- 36% of all U.S. households are renters. Most states issued a moratorium on evictions through federal, state, county, or local mandates
- Landlords are expected to be hard hit due to tenants not paying rent
- This holds true for property owners who own residential and commercial properties
- The Cheesecake Factory and other large restaurant chains announced they will not be paying rent for all of its stores due to the pandemic
Many commercial lenders will work with hard-hit real estate investors and may offer forbearance as well on loans that are not federally backed mortgages.
Getting Evicted By The Landlord Due To Rent Nonpayment
In general, landlords and/or property management companies will start eviction proceedings for renters who do not pay rent.
- Every city, county, state has its own eviction laws and tenant/landlord rights
- Included in President Trump’s $2.2 trillion coronavirus economic stimulus package is a moratorium on all evictions from properties that have been financed with a federally-backed mortgage
- Federally -backed mortgages are FHA, VA, USDA, Fannie Mae, and Freddie Mac
- This covers approximately 40% of all investment rental single-family homes, condos, townhomes, and multi-family buildings
- Besides the federal moratorium on evictions, many states, counties, and cities have launched their own moratorium on evictions favoring renters
- Many lenders of investment properties that are not federally-backed are working with their borrowers as well to help the non-paying tenants
- Over 34 states and countless local government agencies have issued more extensive moratoriums on evictions surpassing the federal eviction moratorium guidelines
- In general, there is a 30 to a 90-day moratorium on evictions
- This moratorium covers most renters
- However, there are many businesses that are not expected to reopen due to the severe financial hardship due to the pandemic
- Thousands of courthouses are furloughed so even if landlords want to proceed with eviction proceedings may not be able to
- However, lawsuits can still be filed online
- There are 12 states that have not taken any steps in halting evictions or implemented any moratoriums
Most landlords and/or property management companies are sympathetic for renters not being able to pay rent due to unemployment.
Documentation Required From Paying Rent During Coronavirus Pandemic By Unemployed Tenants
Over 30 million Americans have filed for unemployment claims in the past six weeks.
- Most landlords and/or property management companies will not require too much documentation to grant you a forbearance from paying rent during coronavirus pandemic
- Under the $2.2 trillion stimulus package, there is no mention for tenants to provide any documentation to landlords to take advantage of the moratorium
- However, some states like Arizona due require renters to provide documentation of substantial loss of income
- The moratorium does not forgive the missed rental payments
- It means that the missed rent payments are deferred and need to be paid back when the tenant returns back to work
- So if the tenant has missed six months of rent payment, the full amount is due when the moratorium period is over
- Not too many renters will be able to come up with the missed rental payments all at once
- Most landlords will spread out the missed rent over the course of six months to one year
The federal government is working on new legislation where renters may possibly get forgiveness on missed rents.
Hurdles With Payment Rent During Coronavirus Pandemic Being Unemployed
Over 30 million Americans have filed unemployment claims in the past six weeks.
- Unemployment claims are expected to skyrocket in the coming weeks
- However, over 30 states have initiated some form of reopening strategy
- Reopening the economy will be the first step for people to return back to work
- It is not a matter if the economy will recover but the key question is when will it reopen
- As the economy reopens, more and more Americans will return to work
Payment rent during coronavirus pandemic for unemployed workers is a major challenge.
Challenges In Paying Rent During Coronavirus Pandemic
Massimo Ressa of Gustan Cho Associates Mortgage Group said the following:
The stimulus provides enhanced unemployment insurance benefits to furloughed or laid-off workers that include a $600 weekly supplement on top of the average $300 to $400 check from the state for up to 39 weeks. Most Americans will also receive tax rebates of up to $1,200 in the coming weeks. The hope is that these benefits help most affected workers pay their monthly bills. Your credit rating would be affected if a court eventually issues an eviction notice against you, Roller says. In some cities, eviction cases may be processed but police departments aren’t enforcing them during the emergency, he says. So your credit could be affected even if you aren’t evicted.
- If you get relief from creditors, they may not report you late on the credit bureaus for the term of forbearance
- Work things out with your landlord that you do not get sued
- All landlords should understand the financial difficulties during the coronavirus pandemic
- Landlords are eligible to get forbearance up to one year on federally-backed loans
- However, most lenders will offer forbearance on non-federally backed loans to landlords
- However, both forbearance for landlords and rent relief to renters are not payment forgiveness
May 2, 2020 - 6 min read