Amid record unemployment, millions of Americans are expected to struggle to pay their rent or mortgage in June.
Already, more than 8 percent of U.S. homeowners, about 4.7 million households, have signed up for mortgage relief programs, according to the Mortgage Bankers Association. That is up more than 2,000 percent since early March.
The crisis facing the country’s 40 million renters is even more dire, sparking calls for rent strikes across the country and a $100 billion bailout. The number of tenants not paying their rent on time has doubled since the crisis, industry officials say. Amherst, a data and analytics real estate firm, estimates up to 28 million renters, or 22.5 percent of all U.S. households, are at risk of eviction or foreclosure because of the coronavirus.
Here are some answers to common questions about moratoriums on evictions and foreclosures passed due to the pandemic.
I’m a renter. Can I be evicted?
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The $2 trillion economic rescue legislation passed by Congress, the Cares Act, prohibits rental evictions for 120 days on certain properties. Once that ban expires on July 25, landlords must give tenants 30 days notice before eviction, according to the law.
Among those covered by that moratorium are properties that receive federal assistance or have loans backed by the government-controlled mortgage companies, Fannie Mae and Freddie Mac. About 30 percent of renters fall into those groups, according to the Urban Institute.
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Renters’ level of protection can vary widely by state, with some people covered by overlapping eviction bans established by governors, state legislators or the courts, said Emily A. Benfer, director of the Health Justice Advocacy Clinic at Columbia Law School. In some states landlords are still allowed to file eviction notices even if the courts are closed, and in others late fees can continue to accumulate through the moratoriums, said Benfer, who has been maintaining a database of eviction policies during the coronavirus crisis.
Seven states, including Arkansas, Oklahoma and Ohio, never enacted state-level eviction bans, and the majority of moratoriums, including in Colorado, Rhode Island and several other states, are set to expire in a few weeks, she said.
How can I determine whether my home is covered by the federal moratorium?
Fannie Mae and Freddie Mac have created new online tools for renters to determine whether they live in properties covered by the Cares Act moratorium.
The site for Fannie Mae can be found here. The site for Freddie Mac can be found here.
How can I determine whether I am covered by a state-level eviction moratorium?
Ask local officials whether there are any eviction bans in place and when they expire. The National Consumer Law Center is also maintaining a list of what states are doing to help local residents, including protection from eviction. It can be found here.
Is there a federal program to help renters?
Some Democrats have called for a $100 billion national rental assistance program, but it is unclear whether it will gain enough support among Republicans to make it into the next stimulus bill.
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Housing advocates say they are hopeful, arguing it is the only way to avoid a major crisis in the rental market. Either Congress gets ahead of the problem and establishes a rental assistance program now or it waits until an emergency emerges, said David M. Dworkin, who was a senior adviser in the Treasury Department on housing finance during the Obama and Trump administrations. If Congress waits, “the resulting crisis costs us much more money as well as the personal and community-wide devastation that comes with it,” said Dworkin, chief executive of the National Housing Conference.
In the meantime, renters who have lost their jobs or are sick because of the virus should immediately contact their landlord and alert them — in writing — of their hardships.
Many states have also established local rental assistance programs. Utah launched a $4 million program to help tenants cover their rent payments, for example. Nevada is using $2 million from a state settlement with Wells Fargo for a renter assistance program, while the city of Austin is determining who is eligible for its $1.2 million program through a lottery.
What if I am a homeowner facing foreclosure?
The U.S. Department of Housing and Urban Development and 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.
The HUD order applies to single-family homeowners unable to pay their Federal Housing Administration-backed mortgages. There are 8.1 million active FHA loans.
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The moratorium also applies to loans backed by Fannie Mae and Freddie Mac, which covers about half of the country’s mortgages, or about 28 million borrowers. (The government seized control of Fannie Mae and Freddie Mac in 2008 as the housing market unraveled, and the firms’ losses piled up. The companies, which play a critical part in the housing market, remain under federal oversight.)
The moratoriums were recently extended and now don’t expire until June 30.
How do I figure out if my mortgage is backed by Fannie Mae or Freddie Mac?
Homeowners can look up whether their loans are backed by the mortgage companies through Fannie Mae and Freddie Mac’s websites.
Fannie Mae’s online form can be found here, and Freddie Mac can be found here.
What if I don’t have an FHA loan or one backed by Fannie Mae and Freddie Mac?
About 5 million homeowners with loans valued at $3.7 trillion are not covered by the HUD or FHFA moratoriums, according to Inside Mortgage Finance, an industry research group.
These homeowners should ask their mortgage servicer, the company that collects their loan payments, who owns their mortgage and what options are available to borrowers.
“Document every conversation and follow up in a letter or email noting what was discussed in your phone call. This will help you and the next person you talk to when you call back or they call you,” said Dworkin of the National Housing Conference.
I haven’t missed a mortgage payment yet but just lost my job. What are my options?
While it can take months or years for someone to lose their home through the foreclosure process, many Americans fell behind as companies shuttered their doors to guard against the spread of the coronavirus and laid off workers.
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If you fear falling behind on your payments, don’t ignore the problem, said Andrea Bopp Stark, an attorney at the National Consumer Law Center. “It is easy to get overwhelmed right now with everything that is going on but a borrower having trouble paying their mortgage must be proactive in trying to resolve the delinquency,” Stark said. “There is most likely help available.”
For borrowers with loans backed by Fannie Mae and Freddie Mac, mortgage servicers have been ordered to offer generous forbearance programs allowing borrowers to skip their mortgage payments for as long as a year. Many people in forbearance programs will not have to make another mortgage payment until 2021, according to industry analysts.
Borrowers must apply for the mortgage relief through their mortgage servicer, which collects monthly payments, and will decide how long the assistance will last.
But, again, the level of relief a homeowner receives depends on who owns their loan. A borrower having trouble navigating the process could contact a nonprofit housing counselor. HUD-certified housing counselors can be found here.
If my lender allows me to temporarily skip my mortgage payments, do I have to repay the payments I skip?
Mortgage servicers are expected to allow millions of borrowers affected by the crisis to skip some mortgage payments. But the money will have to be paid back. Think of it as a loan rather than a gift.
Some borrowers will be told to repay the entire past due amount all at once, while others will be given several months to catch up. But regulators are encouraging banks to simply extend the length of the borrower’s mortgage rather than forcing them to catch up in a short amount of time.
Mortgage deferral is the “gold standard,” Dworkin said. That means the borrower doesn’t pay it back until they sell their house or at the end of their mortgage term, he said.
“The tricky part is that they can’t offer it to you until you are able to pay your mortgage again, so stay in touch while you are out of work, and be assertive about deferral when you are ready to resume your mortgage payments,” Dworkin said.
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