Millions of people are out-of-work, furloughed, or have had their hours reduced. One of the first payments that often goes when times are tough is the mortgage or rent payment. It is generally a person’s largest bill (representing 25-50 percent of many people’s budgets) and not making that large payment can be seen as a way to continue purchasing things that are necessary right then (such as food and utilities).

If you, or a client you are working with, is struggling, there is some relief in the CARES Act.

As is always the case in situations like this, TALK WITH YOUR LANDLORD OR MORTGAGE SERVICER ahead of time. Let them know what is going on. There are programs and policies in place, not just with the CARES Act, but in many states, cities, and companies. Chances are there is a program in place to help, but your best bet is to contact them before the payment is due.

Let’s take a look at both rent/eviction and mortgages/foreclosure and what provisions are in the CARES Act for each.

RENT/EVICTION

It is estimated that 1/3 of Americans did not pay rent or only paid partial rent in April. Under the CARES Act tenants cannot be evicted for non-payment of rent if their landlord has a federally-backed mortgage (which would include, among others HUD, VA, USDA, Fannie Mae, Freddie Mac, and public housing).

This moratorium on evictions lasts for 120 days starting on March 27, 2020. After that, the tenant needs to be given 30-days notice before they can be evicted.

It is important to note that this is not free money or free rent – the rent is still due, and the tenant can be evicted after the moratorium is over. Also, this provision only applies to non-payment of rent – eviction can continue for other reasons such as violating the terms of the lease or damage to the property.

No additional fees, penalties, or other charges can be added beyond the rent payment.

It is important to remember the effect this is having on landlords as well. For most landlords, rentals are their livelihood and they are concerned about the implications of the economic shutdown on their business and on their tenants.

In addition to the CARES Act provisions, many states have passed laws temporarily banning evictions. Columbia Law School and other lawyers have put together a database that outlines eviction orders in place in all 50 states.

How do you know if your landlord has a federally backed mortgage? The only way to find out for sure is to ask them. If the landlord is not forthcoming about information, or they illegally start the eviction process (officially or unofficially), you may need to talk with a lawyer.

 

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