On April 1, 2020, at the height of the coronavirus emergency, rent and mortgage payments became due for millions of Americans. Many people haven’t worked since the middle of March. While the beginning of the month would normally be a payday for American workers, those can’t go to work, can’t work from home and don’t receive sick leave may not have gotten get a paycheck.
Just a few days prior, the U.S. Senate approved a $2 trillion aid package — the Coronavirus Aid, Relief and Economic Security Act, or CARES Act. The stimulus package offers financial assistance and relief for Americans affected by the coronavirus and outlines plans for mortgage payment forbearance, the halting of evictions, and foreclosures suspensions on properties obtained with federally backed loans.
The bill comes as several cities and states have already instituted their own mandates on housing relief, and regulations by the Department of Housing and Urban Development and the Federal Housing Finance Agency are already in place.
As the novel coronavirus crisis has prompted the government to halt evictions and provide mortgage relief, renters and property owners have questions: Do we need to pay rent or my mortgage payment? Will I make things worse for myself if I can’t pay? What resources are available for workers laid off, unable to work or otherwise financially impacted by the COVID-19 pandemic?
How the CARES Act Helps Renters
What happens when a renter is affected by the coronavirus? Perhaps they've had their work hours slashed, their job eliminated or they've become sick with COVID-19. If you’re renting your home, you probably have questions.
Do I Still Owe Rent?
As of April 1, there has been no state or federal suspension of rent payments. Technically, unless your landlord has told you otherwise, you’re still responsible for paying your rent in full. If you can’t pay rent, it’s best to speak to your landlord right away and let them know, because there’s a good chance that they can’t evict you while this crisis continues.
Can I Be Evicted If I Don’t Pay Rent Because I Don’t Have the Money?
Probably not. The Department of Housing and Urban Development announced that it is suspending all evictions and foreclosures in FHA-financed properties through the end of April. The Federal Housing Finance Agency directed Fannie Mae and Freddie Mac to do the same for Fannie Mae- and Freddie Mac-backed multifamily properties for a minimum of 60 days. The CARES Act places a national 120-day eviction moratorium for tenants in properties that are part of government programs or that have a federally-backed mortgage loan.
On March 22, the National Multifamily Housing Council (NMHC) called for apartment owners and landlords to halt evictions for renters experiencing job loss or income reduction due to COVID-19. The NMHC further requested a 90-day pause on all rent increases.
Once the order is lifted, however, landlords will be able to move forward with eviction cases filed during the crisis — meaning tenants could be forced from their homes at a later time if they don’t pay rent now.
How the CARES Act Helps Landlords
What happens to landlords when a coronavirus-impacted tenant has trouble making a full rent payment, is unable to pay on time, or, worse, stops paying entirely? For landlords with mortgages to pay and property taxes to cover, the circumstances could mean serious financial trouble. But landlords aren’t without options.
What If I Can’t Make the Payments on My Rental Property?
Both Fannie Mae and Freddie Mac have advised servicers to provide up to 12 months of forbearance for borrowers suffering financial hardship as a result of the pandemic, and that multifamily operators with a Fannie or Freddie loan can assume deferrals up to 90 days.
In addition, there are also lender-specific deferral programs via Bank of America, Ally Bank, SunTrust and BB&T. Mortgages serviced by any of these companies are entitled to pause payments for up to 120 days. Payments are then simply added to the end of your loan term.
If your lender is not among these banks, call your mortgage loan servicer and ask about their deferral, forbearance, and financial hardship programs. Most will be open to working with you during this challenging economic time.
Can I Access the Equity in My Property?
Mortgage holders who have paid down a healthy amount of their loan balance should be eligible for some form of home equity product, including a home equity line of credit, home equity loan or cash-out refinance. These offers give landlords more liquidity during rough times, optimally buying landlords (and renters) several more months to weather the storm.
How the CARES Act Helps Homeowners
You might have been able to barely make that mortgage payment in April, but what happens in May? People with mortgage loans have several options, and that include people who may have been in the process of a foreclosure prior to the coronavirus pandemic.
What If I Was in the Process of Being Evicted?
Fannie Mae and Freddie Mac have stated that they have suspended all foreclosure sales and evictions of borrowers in single-family homes owned by the companies. In addition, they have expanded their forbearance program, offering borrowers relief for up to one year and suspending late charges and penalties. This is a significant announcement because Fannie Mae and Freddie Mac guarantee approximately half of the mortgage loans in the U.S. Following suit, the federal government suspended foreclosures and evictions for FHA-insured mortgages.
I’ve Never Been Late With a Mortgage Payment: What If I Can’t Pay Now?
For homeowners worried about missing a mortgage payment, numerous lenders have said they are willing to work with distressed borrowers and have several programs to offer, including potential suspension of payments or reduced mortgage payments for the short term. Lenders may have the option to add those payments onto the end of the loan, so homeowners won’t necessarily have to make up the difference by making larger payments down the road. For a longer-term solution, refinancing your mortgage could help lower your monthly payments.
Fannie Mae offers the following relief measures to homeowners with mortgages backed by the organization:
- Homeowners impacted by COVID-19 are eligible for a mortgage forbearance plan to reduce or suspend their mortgage payments for up to 12 months.
- Late fees will not incur for homeowners in a mortgage forbearance plan.
- Credit bureau reporting of overdue payments are suspended for borrowers in a mortgage forbearance plan as a result of hardships experienced due to the pandemic.
- Post-forbearance, a servicer must work with the homeowner on a permanent arrangement to help maintain or reduce monthly payment amounts as needed, including a loan modification.
American Homeowners and Renters Have Options
The coronavirus public health emergency has thrown the entire world into a state of uncertainty and anxiety, and most of us are feeling a sense of insecurity by not knowing what tomorrow holds. As of the beginning of April 2020, Americans are being told to plan for another month of staying at home, which means no work and no paycheck for millions of people.
Tracy Collins Ortlieb is an award-winning journalist and copywriter. Ortlieb specializes in parenting and family, travel and hospitality, and legal topics for such outlets as Parents, SheKnows, and Avvo. She lives in Chicago with her husband and daughters.
Federal Housing Finance Agency. “FHFA Moves to Provide Eviction Suspension Relief for Renters in Multifamily Properties.” Accessed March 31, 2020.
Federal Housing Finance Agency. “Mortgage Help for Homeowners Impacted by the Coronavirus.” Accessed March 31, 2020.
National Multifamily Housing Council. “Apartment Industry Committed to Supporting Residents Impacted by COVID-19.” Accessed March 31, 2020.
US Department of Housing and Development. “HUD Provides Immediate Relief for Homeowners Amid Nationwide Coronavirus Response.” Accessed March 31, 2020.