With the rampant spread of Covid-19, many Americans are unable to pay their rents and this impacts the landlord's ability to pay mortgage. We discuss CARES Act for each state.
This pandemic has been a stressful few months for everyone, with people getting sick and losing their loved ones to COVID-19. To add to this, many companies have been downsizing, as markets and malls have been shut down, and business is slow. Along with downsizing, companies have been letting go of their employees. This is because they may not have the money anymore to pay the salaries of so many employees. Of course, from a business point of view, this is understandable and may even be a smart thing to do. However, this has negatively impacted many people, who are now all of a sudden left without a job and a source of income, being forced to dip into their savings for the bare minimum such as buying groceries and paying bills.
It feels as if COVID-19 has completely stopped time, or at least slowed it down. Business is slow for everyone, even those who still have jobs. In this article, we will look at the impact COVID-19 has had on paying rent, eviction from rented houses, and the laws that govern these in the United States.
Losing your job(s) or slow business means you are not earning as much as you were before. For many people, this makes it very hard to make ends meet – this is the case for millions of Americans. The unemployment rate is hovering around 7% at the time of this writing. According to a recent study, the average American’s savings is $3,500. The average monthly rent in the US for apartments is $1,463. With the cost of living expenses, many people cannot afford to pay their rents shortly after losing their jobs. When renters cannot pay their rent, eviction follows. However, we are going through a pandemic with wide implications for everyone.
As a landlord who relies on the rental income to cover mortgage and expenses, rent is important to make their ends meet. Without the rental income, landlords could potentially lose their houses. The struggles of the renters to pay rent has put many landlords in a difficult position of being empathetic to the needs of the renter and at the same time protecting their hard-earned investment properties. To offer buffer coverage, many mortgage lenders are offering mortgage forbearance or deferment to homeowners. This deferment will be reported to the credit bureau under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which does not impact the credit score of the landlord. However, it impacts the ability of the landlord to refinance the property for a year. In addition to that, they still have to pay the accrued mortgage. While the renter is still responsible for the accrued rent to the landlord, many renters struggle with affording several months’ rent even without Covid-19. The landlord does not have to repay the deferred mortgage in lumpsum.
Eviction due to the inability to pay complete rent on time was so widespread, that the National Low Income Housing Coalition announced in August that around 20-40 million Americans would be faced with eviction in the months to follow. The National Low Income Housing Coalition or NLIHC for short is a group that advocates for just public policy regarding low-income households in the United States so that people who do not earn a lot of money can live comfortable and decent lives.
Taking into account how many people were being forced out of their homes for not being able to pay rent as the economy crashed, the President of the United States announced that there would be a temporary ban on evictions in the United States, starting from September 1st. This ban would last the entire rest of the year. This was done after the Centers for Disease Control and Prevention stated that implementing the order was an “emergency action”.
The main challenge with these criteria is that they are all very subjective. It says the renter must have tried their hardest to pay the rent, or done everything they possibly could to get government assistance to pay it. Thus, this can be interpreted by the landlord in any way they want. They could simply state that the renter is not eligible and they are not covered under this order, and forcibly evict them. The tenant will have to leave the premises. The best the renter can do is to fight it out in court, which will take time and money. Thus going to court is not a feasible option for someone who is barely making ends meet as it is. In the courtroom, it is up to the housing judge whether you, as the renter, are eligible to stay in the rented premises, or the landlord can evict you. The landlord can still evict the renter for reasons other than the non-payment of rent. These include any criminal activity or destruction of property.
The ban on evictions and utility shut-offs if one cannot pay rent on time does not apply to all 50 states of America though. We shed some light on each state with the following breakdown:
Check the above list to find your local state, so that you are prepared in case of any emergency situation, such as eviction. In addition to the state-level guidelines, every county and city has local programs in place. Some counties offer emergency rental assistance program. Some cities offer additional support including for homeless people. Neither the renter nor the landlord wants to be in this difficult conundrum. With well over 13 million people impacted, the Covid-19 pandemic is very real and very dangerous. It continues to shape our lives every single day, which is why we need to be prepared beforehand.
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