But the federal moratoriums do not cover more than 40 million renters or 5 million homeowners with mortgage loans not backed by the government. And while the halt to foreclosures and evictions will keep many people in their homes temporarily, a bigger financial shock is brewing as people fall behind on their payments, industry analysts say.
Mortgage servicers, which collect homeowners’ monthly loan payments, say they have already begun to see an uptick in borrowers seeking help and could quickly become swamped.
“Servicers are laboring under the same constraints as everyone else, telecommuting and practicing social distancing,” said Bob Broeksmit, president of the Mortgage Bankers Association. “This is hitting at a time when their capacity is already constrained because of the pandemic.”
Renters face an even more precarious position. Some states and cities are offering temporary protection from evictions, but it is not universal.
Both Maryland and Virginia, as well as the District of Columbia, have banned evictions at least through the end of April, but renters will still have to pay their bills when the bans are lifted, and they may have to pay additional fees.
The Renters Alliance in Montgomery County, Md., is already being flooded with queries from nervous renters who are concerned they will not be able to pay their rent soon, said Matt Losak, executive director of the nonprofit advocacy group. About half of renters in the country are “rent burdened,” spending more than 30 percent of their income on rent, he said. “If you’re in that category and one of many workers who has a reduction of hours because of the crisis, you’re going to be pushed over the edge in your ability to pay rent,” he said.
Here is what you need to know about who is eligible for rent or mortgage relief.
I’m a renter. Can I be evicted?
The $2 trillion economic rescue legislation passed by Congress last week prohibits rental evictions for 120 days on properties secured with a government-backed mortgage. That covers about half the market for multifamily properties, according to the National Multifamily Housing Council.
Many states and cities have also halted evictions.
The Los Angeles City Council has approved an emergency plan to temporarily halt evictions and create a citywide rental assistance fund. In Oregon, Home Forward, which provides affordable housing, is offering renters affected by the coronavirus outbreak a rental break until at least May 31. The renters will be able to repay their skipped payments over 12 months, according to Home Forward. In Mountain View, Calif., the City Council has approved a $500,000 rental assistance program for people affected by the coronavirus.
Has my city or state passed a ban on evictions of renters?
You can contact your city government to ask about local moratoriums or check your state government website for information about statewide laws.
The National Consumer Law Center is also keeping an updated list of places that have passed bans on evictions. The center also has advice for all renters and homeowners who are having trouble paying mortgage and rent.
Here’s a blog that is also compiling information about such moratoriums and other advice for renters who are not covered by them.
Is there a federal program to help renters?
There has been a call for a national rental assistance program, but it has yet to emerge.
Rep. Maxine Waters (D-Calif.), chairwoman of the Financial Services Committee, has proposed spending $100 billion to cover peoples’ rent and utilities. Democratic New York state Sen. Mike Gianaris of Queens has introduced legislation that would forgive three months of rent and mortgage payments for people and small businesses affected by the coronavirus.
Renters who lost their job or are sick because of the virus should immediately contact their landlord and alert them — in writing — of their hardships, said David Dworkin, president of the National Housing Conference. Most landlords will be sympathetic and willing to offer help, Dworkin said. “That communication is incredibly important,” he said.
What if I am a homeowner facing foreclosure or eviction?
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.
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, buy mortgages from lenders and then package them into securities to sell to investors, remain under federal oversight.)
The moratoriums will last until mid-May but could be extended, according to regulators.
How do I figure out if my loan 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 do not 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. Some states, including California and New York, have paused foreclosure and eviction that would also apply to those borrowers.
But without a blanket moratorium, these homeowners must negotiate arrangements with their mortgage servicer one by one.
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 may soon fall behind as companies shutter their doors to guard against the spread of the coronavirus and lay off workers.
For borrowers with loans backed by Fannie Mae and Freddie Mac, mortgage servicers have been ordered to offer generous forbearance programs allowing borrowers affected by the coronavirus to skip their mortgage payments for as long as a year.
Borrowers must apply for the mortgage relief through their mortgage servicer, which collects monthly payments and will decide how long the assistance will last.
“The government is essentially offering a year-long payment holiday so those who lose their jobs from COVID-19 can stay in their homes without worrying about mortgage payments or foreclosure,” Jaret Seiberg, financial services analyst at Cowen Washington Research Group, said in a research note.
Many people in forbearance programs will not have to make another mortgage payment until May 2021, Seiberg said.
But, again, the level of relief a homeowner receives will depend on who owns their loan.
California Gov. Gavin Newsom (D) recently announced that the nation’s largest banks, including JPMorgan Chase and Wells Fargo, had agreed to temporarily suspend residential mortgage payments for people affected by the coronavirus in the state for 90 days. But one bank, Bank of America, declined to sign on, saying it would offer mortgage relief on a case-by-base, month-by-month basis instead.
How long will it take to arrange a deal with my mortgage servicer?
Some borrowers may have trouble reaching their servicer quickly as the industry is grappling with the same issues as the rest of the country, including employees working from home and practicing social distancing.
Borrowers should not panic, said Broeksmit, the Mortgage Bankers Association president. While mortgage payments are typically due the first of the month, borrowers are not likely to be considered late until the 15th, he said. “You have a little bit of time before you need to make arrangement with your servicer,” he said.
A forbearance program can typically be approved within a few days, and unlike during the 2008 housing crisis, borrowers will not be required to submit tons of paperwork, Broeksmit said.
If given mortgage relief, 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 also 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.
Repayment arrangements must also be arranged through mortgage servicers.
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