Aid for Renters, Landlords, and Homeowners with Arrears

Although the U.S. economy is slowly starting to take steps toward recovery, with 48.4 percent of the population fully vaccinated as of July 16, many people are still in serious financial difficulties. It is important to direct them to sources of relief that they may not know of.

Aid for Renters

Many renters have been behind on their rent during the pandemic as they either lost their job or had to accept fewer hours of work and pay cuts. According to CNBC, as of the third week of June 2021, more than 10 million Americans still had arrears on their rent.

The U.S. government ordered a moratorium on evictions in September 2020 to protect these renters. This was supposed to end on June 30, 2021, but the Centers for Disease Control and Prevention (CDC) announced its extension until the end of July.

Renters must get updates on developments in their state, though. Austin and Travis County in Texas prohibits evictions until August. Kenmore, Washington extended its moratorium to October. In Oregon, tenants cannot be evicted if arrears are for months between April 2020 and June 2021. They have up to the end of February 2022 to pay up. In Minnesota, renters who are already applying for rental assistance are protected until June 2022. In Nevada, tenants cannot be evicted while their rental assistance application is pending.

In addition, The U.S. Treasury Department has made the Emergency Rental Assistance program available to renters through the state, local, and tribal government agencies. Qualified households are those that experienced financial hardship in the pandemic, are within certain income requirements, and are behind in their rent.

Depending on the state or locality, the assistance can cover back rent and up to three months of future rent payments. It may also cover late fees, water, electricity, gas, fuel, oil, sewer, and trash removal fees. For those who need to move to another rental place, it can cover application fees, screening fees, security deposits, moving expenses, and home Internet service. Renters must contact the Consumer Financial Protection Bureau (CFPB) for details.

Aid for Landlords

Not all landlords are wealthy. Many are relying only on rental income to support themselves and sometimes also pay mortgages. When renters cannot pay up, the landlord also goes into financial distress. The U.S. Treasury’s Emergency Rental Assistance program also benefits landlords. In some cases, the landlord and tenant must work together in applying for assistance. Landlords can also apply for mortgage forbearance if their tenants’ arrears and the pandemic have affected their ability to pay.

Homeownership Assistance

Some renters are not behind on their rent. The sudden surge in the rent this June, however, may make them think about the option of buying a house on a mortgage.

Data from Zumper shows that according to the national index, the median rent for a two-bedroom unit in June 2021 increased year over year. It increased 4.9 percent year-over-year for a one-bedroom unit. This is a shock because the rent was stagnant in 2019, and changes in 2020 were only in the range of one percent. In the suburbs of the Dallas-Fort Worth area, rent increased by up to 15 percent compared to the start of the pandemic.

With such an increase in outlay, it would be wiser to add some more and put the money into a mortgage instead. This way, the money becomes an investment in a house. The best option for potential homebuyers is to apply for a housing loan.

An FHA loan is the friendliest loan to first-time homebuyers because it does not require a high credit score. Scores below 620 will need a 10 percent down payment based on the home price. Scores above 620 will pull the down payment down to 3.5 percent but will require mortgage insurance.

Mortgage Refinancing Program
mortgage refinance

The foreclosure moratorium for homeowners who are behind on their mortgage payments was extended to July 31. Foreclosure is only possible when a homeowner’s arrears are over 120 days. The Consumer Financial Protection Bureau (CFPB) added a new rule effective August 31, 2021, up to January 1, 2022.

Lenders must give homeowners three options to avoid foreclosure. One, they can immediately resume monthly payments, and the missed payments will be moved to the end of the mortgage. Two, they can adjust the length of the loan or the interest. Three, they can sell the home.

For those who did not miss payments in the last six months and only missed one payment in the last 12 months, there is a reward. They can qualify for a new refinance program if they live in the mortgaged house, their income is not more than 80 percent of the median income in their area, or they have a credit score of not less than 620.

They must also have a debt-to-income ratio below 65 percent, and their mortgage’s loan-to-value ratio must be above 97 percent. According to the Federal Housing Finance Agency, if they pass all those qualifiers, the program will lower their mortgage payments by as much as $100 to $250 a month or $1,200 to $3,000 a year.

Help Someone

Some people who most need these services are not digitally savvy and have no easy access to such information. If you know of families who need these, please guide them to have access to aid.

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