A few weeks ago, single mother Heidi Ferguson, 44, seemed to be doing well. She was able to make ends meet as the owner of a vintage clothing and housewares shop in downtown Lake Worth, FL. But as the coronavirus tore through the U.S., leaving shuttered businesses and a ravaged economy in its wake, she was forced to close up shop two weeks ago and lay off her two employees.
She was able to pay the April rent for her two-bedroom, one-bathroom apartment only by taking out a credit card loan and tapping a separate line of credit for her business. She’ll need to pay back the latter within 60 days. Her landlord, a local building owner, granted her only a five-day extension to come up with the $1,435 rent.
Ferguson has been ramping up her online shop, but with consumers feeling wary, she’s not seeing items fly off of their virtual shelves. If she’s not able to reopen her store in a month, she’ll have to find another job. She’s never missed a rent payment before, but she’s worried that she’ll be forced to rack up more debt, and accrue interest, to pay rent next month.
“I don’t know what I’m going to do. I don’t really have a solid plan at this point,” says Ferguson. “Not knowing if I’m going to be evicted is keeping me up at night.”
Ferguson’s plight isn’t unique right now. Millions of Americans have been laid off or had their hours reduced at their jobs, making it difficult to come up with their rent due on April 1. Jobless claims reached a new high this month as COVID-19 cases have surged around the country, tanking the stock market, forcing business closures, and requiring the majority of Americans to stay indoors. And while some protections have been put in place for homeowners, few have been extended to tenants.
Instead, individual states and cities have attempted to cobble together a patchwork of protections to help tenants. But the assistance, which mostly focuses on preventing evictions during the crisis, is spotty. And in 12 states, no action at all had been taken to limit or suspend evictions as of Tuesday, according to USA Today.
Renters are likely to be worse off than homeowners
There were nearly 44 million renter households in the U.S. in 2018, according to Harvard University’s Joint Center for Housing Studies. And while there is a growing number of well-off tenants in luxury apartment buildings, especially in the nation’s big cities, renters as a group are particularly vulnerable to downturns. They tend to earn less than homeowners, resulting in less savings. And they often work hourly jobs that are quick to be cut in economic recessions.
On the national level, little is being done to directly help tenants. Last month, the Federal Housing Finance Agency announced a plan to bail out landlords, which would theoretically trickle down to renters. Landlords are now eligible for up to three months of mortgage forbearance if they don’t evict tenants who can’t pay their rent due to the pandemic.
However, this applies only to owners of buildings with five or more units who have Fannie Mae or Freddie Mac mortgages.
Some states, particularly those that have been inundated with COVID-19 cases, are extending their own protections. In Washington, the governor announced a 30-day halt to evictions on March 18. California has a 60-day moratorium, while it’s 90 days in New York. New Orleans courts won’t be hearing eviction cases until April 24, while no evictions can take place in Michigan until at least April 17. In Florida, where Ferguson is located, court clerks have the option of putting final actions on evictions on hold until mid-April.
Many more states and cities have enacted their own moratoriums.
But even if evictions are suspended, renters are still on the hook for their monthly rent payments whether or not they can afford them.
“The real issue is what happens after any moratorium has ended,” says Richard Alderman, a professor emeritus of law at the University of Houston. “Generally, [eviction protections] don’t waive rent. Rent is still due and owing.”
Paying back several months of rent all at once is an impossible task for many who’ve lost jobs. And even when the virus is under control and businesses can reopen, renters may still be looking for work.
“The hopes that everything will pick up quickly when the pandemic ends aren’t necessarily realistic,” says Alderman. “I don’t believe the economy will immediately start up again and everyone who had a job will suddenly have a job again.”