Eviction Bans and Mortgage Relief Legally Available During COVID-19
In addition to the staggering public health effects of the coronavirus pandemic, the economic impacts left many people across the US suddenly facing a significant or total loss of income. This led to a severe degree of potential housing insecurity for both renters and homeowners, many of whom worried about their ability to continue paying their rent or mortgage. In response, the federal government enacted the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which provided many individuals with direct cash assistance as well as expanded access to unemployment benefits. The CARES Act and its successor, the Consolidated Appropriations Act of 2021 (CAA), along with a variety of state and local government programs and policies, also contained protections for renters and homeowners by prohibiting many evictions and requiring assistance for qualifying mortgages.
Eviction Bans and Emergency Protections for Renters
On September 1, 2020, the Centers for Disease Control (CDC) issued an order establishing a nationwide eviction moratorium for eligible renters. Individuals earning $99,000 or less or couples earning $198,000 or less qualified. A tenant also qualified if they received a 2020 stimulus check. The CDC order applied to evictions in public housing as well. However, the order did not relieve a tenant’s obligation to pay rent once the moratorium expired, including rent that came due during the moratorium. This order ended on August 26, 2021.
Additional protections may be available to tenants in properties backed by federally insured mortgages. If the property contains five or more units, and the landlord has received a forbearance on the mortgage, they cannot evict a tenant for unpaid rent or late fees, or charge late fees or penalties to a tenant who makes late payments. If a tenant or a landlord is receiving a federal subsidy, or if the building contains five or more units and is backed by a federally insured mortgage, the tenant has a right to a CARES Act 30-day notice before the landlord can ask them to leave or file an eviction. Tenants also are protected from certain late fees that accrued from late rent payments between March 27, 2020 and July 24, 2020.State, city, and county governments across the country often went further, implementing bans on eviction, and in some cases prohibiting late fees and utility shutoffs based on nonpayment of rent. Depending on the jurisdiction, these policies took the forms of state legislation, executive orders, and local ordinances. While most of these initiatives required tenants to pay rent eventually, and also tended to require a showing of harm related to the COVID-19 pandemic, they were generally more protective of tenants than federal options. However, as of late 2021, most of these protections have expired or will expire soon.
Mortgage Assistance and Foreclosure Relief
Under the CARES Act, homeowners with federally backed mortgages were guaranteed a 60-day moratorium on foreclosures starting on March 18, 2020 if they experienced losses due to the coronavirus outbreak. These borrowers also qualified for up to 180 days of forbearance. Property owners with federally backed multi-family mortgages had access to up to 90 days of forbearance, provided that they did not evict any tenants or charge them fees for late rent.
These protections expired in the late summer and fall of 2021, but some federal agencies announced additional measures to help people with government-backed mortgages who suffered income loss or other negative effects from the pandemic. For example, HUD, the USDA, and the VA instituted policies that were designed to provide homeowners with a roughly 25% reduction in borrowers’ monthly principal and interest (P&I) payments. This was meant to help ensure that they could afford to remain in their homes and build equity in the long term. In other words, options for homeowners with mortgages backed by HUD, the USDA, and the VA more closely resembled options for homeowners with mortgages backed by Fannie Mae and Freddie Mac.
Moreover, the federal government allocated nearly $10 billion to the Homeowner Assistance Fund. This program provides states with funding to help homeowners catch up with overdue mortgage and utility payments and other housing costs so that they can remain in their homes. Most states will distribute the funds through their housing finance agencies. These programs often will be available in early 2022. State and local governments also worked to protect homeowners by instituting foreclosure moratoriums, forbearance periods, and other relief.
Negotiating Alternatives
Tenants and homeowners facing financial difficulties due to the coronavirus pandemic, particularly those who are not able to access government protections, may also be able to negotiate solutions with their landlords or lenders that will allow them to remain in their housing. For example, tenants may be able to notify their landlords that they will not be able to pay their full rent, and possibly reach an agreement to pay partial rent and make up the balance in future months. Similarly, mortgage loan borrowers may be able to pursue loan modification or other alternatives that allow them to avoid negative credit reporting or foreclosure proceedings.
