After the federal government agreed last week to help out struggling homeowners affected by the coronavirus, many hard-hit renters struggling to pay their bills cried foul as they wondered if any help was heading their way as well. Well, now it is—sort of.
The Federal Housing Finance Agency announced this week that it would be offering financial assistance to many landlords—if they don’t evict tenants in apartments for rent who’ve lost jobs or income due to the pandemic and can’t make their rent payments. Think of it as trickle-down assistance.
Landlords will be eligible for mortgage forbearance for up to three months if they own multifamily properties, defined as buildings with five or more units. (They must also have Fannie Mae or Freddie Mac loans.) The hope is that landlords won’t have a financial incentive to kick out renters if building owners aren’t depending on those rent checks to make their own mortgage payments.
“Renters should not have to worry about being evicted from their home, and property owners should not have to worry about losing their building, due to the coronavirus,” FHFA Director Mark Calabria said in a statement. “[This] should bring peace of mind to millions of families during this uncertain and difficult time.”
This could help up to 4.2 million people living in more than 27,000 properties, according to Freddie Mac.
This is the first time the government has offered anything like this before, according to a FHFA spokesman.
Tenants are likely to need the help as they tend to earn less than homeowners. Renter households earned a median $41,515 in 2017—compared with $77,523 for homeowner households, according to a National Multifamily Housing Council report. And many of the nation’s lower-wage jobs are industries that have been badly hurt by the crisis, such as retail, food service, and tourism and hospitality.
It’s “a smart policy reaction to the coronavirus emergency,” says realtor.com® Chief Economist Danielle Hale. “It gives building owners with mortgages some flexibility in their payments so that they can pass this flexibility on to their renters.”
The FHFA announced last week that homeowners affected by the crisis would get a break. The government will suspend all foreclosures and evictions for at least 60 days for single-family homeowners with Fannie or Freddie loans. This affects about 28 million borrowers—about half of all residential mortgages.
The agency will also provide monthly mortgage payment forbearance, for up to 12 months, for struggling homeowners.
There are some efforts underway to protect renters. The U.S. Department of Housing and Urban Development is urging public housing authorities not to evict anyone during this crisis.
Cities such as Detroit and Los Angeles have temporarily suspended evictions as have states such as New York and Washington. San Francisco’s sheriff also said that he won’t be enforcing eviction orders for now.