Eviction – being removed from your home due to nonpayment of rent. The CARES Act, passed in March, provided a temporary ban on evictions of tenants who live in rental properties with federal assistance or federally backed financing. The idea was to avoid the consequences of removing people from their homes during the COVID-19 outbreak.
Not all renters are covered by the CARES Act. But those who live in public housing like the Alliance Housing Authority, or who receive Housing Choice Vouchers, Section 8 Rental Assistance, the Low Income Housing Tax Credit, or are covered by the rural housing programs received this protection. Renters who don’t receive this assistance from the government may also be protected if their landlord has a federally backed mortgage.
If you live in a covered unit, your landlord cannot file a new eviction action against you for failure to pay rent from March 27 to July 24, and then you have 30 days notice to move. You also will not be charged late fees. However, if you are being evicted for breaching your rental agreement for another reason, you may still be removed from your home.
An unintended consequence of the CARES Act has been receiving a lot of press this month. The Act did not eliminate the obligation to pay rent. All back rent money is due at the end of the moratorium. This worked well for those who were laid off and whose state unemployment was delayed for over a month due to the backlog. When they received their back money, they should have paid back rent. Those who did not pay rent may well be evicted in August.
We also have to realize that property owners have obligations that have to be paid so when rental income isn’t coming in, landlords have difficulty making property taxes and mortgage payments, building maintenance, employee salaries.
Tricia Klemke, Director of the Alliance Housing Authority, is not expecting evictions at a rate higher than usual. The rates for their rental units are based on monthly income, so those who lost jobs or other income had their rental payments reduced, sometimes to nothing.
Along with eviction protection for renters, the CARES Act offered mortgage forbearance for those who have federally backed mortgages. This means that financial institutions like banks could not foreclose on a mortgage for “federally-backed loans,” which means loans purchased, secured, owned, insured, or guaranteed by Fannie Mae or Freddie Mac, or owned, insured, or guaranteed by FHA, VA, or USDA. Most home loans in our area fit under one of these programs. This moratorium ended June 30.
Mortgages are frequently assigned (bought and sold or traded among financial institutions) or contracts were signed several years ago, so homeowners may not know whether their loan is federally backed. Fannie Mae and Freddie Mac have easy loan look-up websites to determine if they own a mortgage. See https://ww3.freddiemac.com/loanlookup/ and https://www.knowyouroptions.com/loanlookup#. FHA, VA, or USDA loans should have language in the mortgage that identifies them as loans protected by those agencies.
Again, it is important to recognize that the mortgage must be paid in full. Homeowners who have asked for forbearance, where the bank would not foreclose and remove them from the home, still owe the mortgage payment. They need to work out an agreement with the financial institution, possibly to add those payments on the end of the mortgage.
Why would the CARES Act have a provision regarding evictions and foreclosures? Nonpayment of rent presents a financial hardship for landlords who cannot cover their expenses. Evictions are devastating to a person’s financial standing, throwing many into deep poverty. Next week’s article will follow up on the consequences of an eviction.