Rent Relief Again | Urban Living
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Rent Relief Again

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Strange times. Last week, the Centers for Disease Control and Prevention announced it would bar evictions for most renters in the country until the end of the year. This new rule update to the current moratorium is necessary, the CDC says, to stop the spread of coronavirus and to avoid having renters wind up in shelters or other crowded living conditions, compounding the crisis.

This moratorium has a wider reach than the previous emergency eviction rules that expired in July, and it isn't automatic. To get the benefit of the new moratorium, a renter would have to tell their landlord that they basically have no other options, no place to go except to live on the street. Tenants will have to fill out a form on the CDC website that states they have a substantial loss of income for their household and can't pay rent or can only pay partial rent. The form will be available on the CDC website shortly (if not already available).

Why is this necessary? Simply because Congress has not been able to come up with a new CARES Act or extension/update to the previous one that has expired. This could influence voters, right? If tenants don't get relief from rent, will they vote for Trump or Biden? Understand that any relief is not forgiveness. You do not get out of paying your debt to your landlord—you only defer the payment until later. Here's an example:

Under the previous CARES Act, there was a 120-day rent deferral option (from the end of March to the end of July). Assume you pay $1,000 per month in rent. You'd be three months ($3,000) in arrears now had you opted for the deferral with your landlord. Now, you can, if you would be homeless, opt for another deferral for four months, which will add another $4,000. At the end of this year, you would owe your landlord $7,000 that you would have to pay back. How do you pay rent back? You'd hopefully arrange some payment program with the owner of the property or their property manager. Would you be able to repay this? Many folks who've lost jobs and the $600 unemployment payments are getting more and more financially behind. Come springtime, bankruptcies could run rampant, and the "have nots" will have even less.

On the flip side, landlords don't get relief due to the deadlock in Congress. If they have a mortgage, they must ask their lender for a payment deferral because their tenants aren't paying them, and they can't make their monthly loan payment. I have past clients who are landlords who inherited a property, bought one to add to personal wealth, purchased one for their college kid(s) rather than pay dorm costs or are just buying rentals because that's their primary source of income. Also, if a property owner asks their lender for a deferment, then they can't qualify for a refinance loan to get a better rate.