If you can't pay your rent as a result of the coronavirus catastrophe, the federal government may have your back.
Then again, it may not.
The bill that Congress passed days ago to rescue Americans from economic devastation imposes a moratorium on evictions, but the moratorium has gaps, limits, and pitfalls. It also could spell trouble for landlords.
Unless your landlord volunteers the information, you may be hard-pressed to figure out whether you qualify for the moratorium.
The moratorium protects only those renters whose homes are involved in certain federal housing programs or have federally backed mortgage loans.
Does your landlord have a federally backed mortgage loan? Or, to cite one example, does your home fall under “a covered housing program (as defined in section 41411(a) of the Violence Against Women Act of 1994)”?
What, you say? You have no idea?
Didn’t think so.
Though the struggles Americans now face may be straightforward and severe, the relief the government has offered may be far from simple or effective.
In our ongoing examination of the $2 trillion relief bill, known as the Coronavirus Aid, Relief, and Economic Security Act or CARES Act (because difficult-to-decipher acts of Congress benefit from friendly acronyms), the protection for renters stood out as problematic.
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We asked the Department of Housing and Urban Development (HUD) how renters would know whether they qualify for the eviction moratorium. Matt Schuck, HUD's director of strategic communications, sent a one-sentence quote “from a senior HUD official” that did not answer that or other questions for this story.
“The CARES Act provides authority granted by Congress for FHA to implement specific actions relative to FHA-insured single family, multifamily, and healthcare-insured mortgages, and for residents in FHA-assisted properties that would otherwise have required lengthy rulemaking,” the statement said.
(The FHA or Federal Housing Administration is part of HUD.)
Whether a landlord has a federally backed loan “is nearly impossible for renters to figure out,” Ira Rheingold, executive director of the National Association of Consumer Advocates and chairman of the board of the Center for Responsible Lending, told the Project On Government Oversight (POGO).
The eviction moratorium is a “half-measure,” and calling it a half-measure “may be kind,” Rheingold said. “There’s so much more that needs to be done.”
With millions of workers losing their jobs, the eviction moratorium is supposed to keep people from being kicked to the curb and left homeless at a time when officials are urging them to shelter in place for the safety of all.
Landlords covered by the moratorium are barred from initiating eviction proceedings for 120 days from the law’s March 27 enactment. They are also prohibited from charging fees or penalties during the moratorium.
Federally backed mortgage loans include, for example, those that have been purchased or securitized by Fannie Mae or Freddie Mac, the government-sponsored housing finance companies. Other examples include mortgages backed by the Federal Housing Administration or Department of Veterans Affairs (VA).
Landlords trying to determine whether any mortgages they have are federally backed might find the answer in documents such as mortgage instruments, records from real estate closings, loan servicing notices, account statements, or other correspondence, the National Housing Law Project said in a summary of the CARES Act eviction moratorium.
But “tenants will often not have access to that information,” the group said.
The moratorium excludes “a significant percentage of the rental housing stock,” Eric Dunn, director of litigation at the National Housing Law Project, said in an interview.
The group describes itself as an advocate for “housing justice for poor people and communities,” including tenants’ rights.
“If necessary, an advocate [for the renter] might be able to determine if a property has a federally-backed mortgage loan by reviewing the contents of any mortgages, deeds of trust, or other instruments recorded for a property,” the National Housing Law Project said in its summary. “However, not all federally-related loans will have a public filing that identifies the loan as federally-backed. In many communities, only some—if any—land records may be available on line, and records offices may be closed to the public for reasons related to the pandemic.”
“Even if available to the public, such records may not be up-to-date,” the group added.
Fannie Mae and Freddie Mac have websites that allow borrowers to check whether those companies own their mortgages. However, to use their lookup tools, you must check a box saying that you own the property or you have the consent of the owner to look up the information. You also need the last four digits of the owner’s social security number, among other details, and checking the box falsely could get you in legal trouble.
In some cases, it may be obvious that your apartment is connected to a federal housing program—for example, if you live in public housing or receive a government voucher to help pay your rent. In other cases, you could have no way of knowing—for instance, if you live in an apartment complex where some but not all of the residents receive subsidies.
To figure out whether your property is covered by the eviction moratorium, even your landlord or property manager might have to do some digging.
What's more, the eviction moratorium could merely postpone the reckoning because it’s not rent forgiveness. If you take advantage of it, you'll still owe the delayed rent. Several months from now, it might have ballooned to even more unmanageable proportions—unless your landlord is willing to settle for less.
Still, if you have to choose between buying food and medicine or paying the rent, the moratorium gives you an option.
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In fact, even if you're able to pay your rent and cover the rest of your expenses, the CARES Act appears to give you the option of suspending your rent payments without penalty.
We asked the National Apartment Association, a group that represents landlords, what if anything prevents tenants from suspending rent and mortgage payments during the moratorium even if they can afford to pay.
“We urge those of our nation’s 40 million renters who’ve been financially unaffected by COVID-19 to make their rent payments in full and on time,” Greg Brown, the National Apartment Association’s senior vice president of government affairs, said in written answers to POGO.
Owners have financial obligations, too, Brown said.
“They rely on rental income to pay their employees, their mortgage and taxes, and to provide essential services to the community like keeping the lights and the water on,” he said.
The industry group would like the government to clarify the moratorium “to ensure it applies only to those affected by COVID-19,” Brown said.
If tenants are struggling financially, the National Apartment Association encourages them to try to work out a payment plan with their landlord, Brown said.
The CARES Act also includes relief for property owners—if they qualify.
For example, they can seek forbearance on their mortgage payments. That’s if they assert that they are “experiencing a financial hardship during the COVID-19 emergency.” And if they have a federally backed mortgage.
To the extent that the eviction moratorium temporarily relieves tenants of a burden, it could shift the burden to owners, and from owners to lenders.
Rheingold said the moratorium does little unless the government puts more cash into people's hands.
A key question, he said, is whether there will be some other program in place months from now, when landlords begin evicting people for all the accumulated back rent.
In the meantime, renters who don't qualify for the federal eviction moratorium may find protection under a patchwork of emergency measures at the state and local level.
Could Congress have extended the federal eviction moratorium to all renters? Democrats in the House seemed to think so. A bill they proposed “would have protected substantially all renter households against eviction,” said the National Housing Law Project’s Dunn, who reviewed the bill at POGO’s request.
“Congress has that authority because leasing housing affects interstate commerce and because judicial eviction processes cannot consistently assure due process of law to tenants facing eviction during pandemic conditions,” Dunn said.
There is precedent, he noted. The federal Fair Housing Act, which addresses housing discrimination, applies to properties that are not involved in federal housing programs and are not financed with federally backed mortgages, he said.
The broader version of the eviction moratorium proposed in the House would have covered “all housing, including the 40% of mortgages that aren’t federally-backed and housing that is owned outright and not covered by a mortgage,” said a spokesperson for Representative Jesύs G. “Chuy” García (D-IL), who had introduced a bill to that effect in the House.
“We believe that the federal government does have the power to extend such a moratorium to all rental properties, but since our provision was not included in the CARES Act we may not have an opportunity to find out,” the spokesperson, Fabiola Rodriguez, said by email.
POGO sent questions about the eviction moratorium to Senate offices, including spokespersons for the chairman and ranking member of the Senate Committee on Banking, Housing, and Urban Affairs, Mike Crapo (R-ID) and Sherrod Brown (D-OH). (The CARES Act emerged from the Senate.)
As of this writing, we have received no answers.