Coronavirus: Rents and Mortgages

This blog will be periodically updated as new information is received. Each writing is dated with the newest information at the top of each of the two categories. You should read all the information in rents or mortgages if this is your first visit.

I have been asked questions about how the Coronavirus, or Covid-19, will impact people making mortgage payments and rent payments for foreseeable future from family members, friends and tenants. I have also been seeing a lot of posts on social media about mandated rent reduction or rent elimination and the same with mortgage payments. I will try and keep my opinions out of this and post only factual information, so let’s talk about that.

I want this post to be fluid as the current situation evolves, so I hope to update this blog as new information becomes available. This means new information is always welcome. I would love to hear about anything you have to say in the comments below or by email at Gary@GaryBuysHouses.com. This post will be on social media as well for asking questions or providing new information.

Links for more information:
https://coronavirus.utah.gov/
https://www.cdc.gov/coronavirus/2019-ncov/downloads/2019-ncov-factsheet.pdf
https://www.slc.gov/mayor/covid-19/
https://www.uaahq.org/need2know.html Utah Apartment Association

Coronavirus and Rents

8/07/2020

The Salt Lake Tribune is reporting that the State of Utah will be opening a rental aid program to Utahns receiving jobless benefits. The full story here. Renters can receive up to $2,000 a month from the program to pay for rent and utilities if a renter’s income has been affected by COVID-19.

6/30/2020

There were no updates to report in June concerning rent assistance as the stat of Utah sees an uptick in new coronavirus cases. As a landlord, we have not seen the need to step in and work with our tenants because they can not pay their rent for the most part. There have been exceptions with some late payments. We have eliminated the late fees if the late rent is due to job loss or a reduction in hours due to Covid-19. The other people I know that rent houses are reporting the same thing.

05/20/2020

On May 11th, the state is planning to launch a rental assistance program as part of the coronavirus funding. This program intended to fill in the gaps for people that may not of been helped with other programs such as the increase in unemployment payments to people. Read more about rent help during the coronavirus outbreak here.

05/16/2020

The eviction freeze and rent deferment set to end May 15, 2020 has passed with no updates from the state.

04/01/2020

Governor Herbert issued an order today freezing evictions and allowing rent deferment for some tenants until May 15 2020. My attorney explained what this order means below. It should be noted the media is reporting this order incorrectly. People are also encouraged to apply for unemployment.

Essentially to qualify, a resident must:
1. be current on their rent as of March 31 and
2. have:
    a. suffered a loss of wages or job loss as a result of COVID-19;
    b. been subjected to a mandatory quarantine order by the Utah Health Department or a local health department; or
    c. tested positive for COVID -19.

A qualified resident may not have an unlawful detainer action filed against them from April 1 through May 15.

If a landlord and a tenant cannot agree on whether the tenant has been directly affected, the Department of Workforce Services is to offer free mediation as to that issue.  

The order does not grant forgiveness of the rent owed nor forgiveness of any fees.

03/31/2020

This is more information from our eviction attorney concerning evictions of people in properties that are backed by HUD mortgages.

Evictions – The stimulus bill also restricted certain evictions for the next 120 days. This restriction applies to properties insured, guaranteed, supplemented, protected or assisted in any way by HUD, the Federal Housing Administration, Fannie Mae, Or Freddie Mac. Also, any property that must comply with the Violence Against Women Act (Section 42, Section 8, etc. )

This restriction applies for evictions based upon non-payment of rent and for end of term.  If you are a restricted property you cannot serve Pay or Vacate notices nor End of Term notices until after July 25, 2020.  Nuisance evictions and criminal activity evictions may still be filed.

Late Fees – Late fees cannot be charged on properties that are restricted from evictions. Nor can other charges relating to the non-payment of rent.  Concession charge backs due to non-payment of rent would also be prohibited.

These are typically large apartment complexes that are backed by HUD during construction and that keep the HUD backed financing. I am still learning more about this. Tenants should keep in mind that if your rent is not paid in this situation, and you are not evicted for 4 months, you as a tenant will still owe the rent. Your landlord will want a rent deferral agreement which will become part of your lease. The stimulus package and unemployment benefits are intended to get people through this. This is a fluid situation so things can change. See more about help for tenants at Freddie Mac and Fannie Mae. Click on the renters button.

03/29/2020

As of this writing, I can find no federal, state or local mandated rent controls based solely on the inability of tenants to pay their rent because of Coronavirus. I am going to say up-front that your lease is a very important document right now. While most leases are not written to leave an “out” for tenants, some are. For example, students that live in off campus BYU approved housing may have an out. There is really not much else to say because there are no mandates for landlords at this time. Currently, any deferred rent agreement will be between a tenant and the landlord. I am a landlord renting mostly single family houses. Some landlords run large apartment complexes, and there is everything in between. Some landlords will be easy to talk to and some will be difficult. What I can talk about is what my attorney recommends. I have retained the same eviction attorney for several years in Utah. They are as committed to making sure I am following the law as protecting my interests concerning receiving the rent.

From Our Eviction Attorney

In response to the COVID-19 (coronavirus) pandemic, several governmental entities have been suggesting that emergency rules should be enacted relating to evictions and rental payments. Particularly we have heard some officials express intent to require landlords to waive rental payments and fees. While likely these types of rules would have constitutional issues, the impact would none the less be felt industry wide.

We have worked with the Utah Apartment Association and had discussions with many elected officials to express that the industry itself can handle this problem without the need for any governmental interference or action.

While this is voluntary, we are highly suggesting to the extent possible that all landlords implement some type of rent deferment policy. This is not an open door for everyone. Tenants would need to qualify for the deferment. Each landlord would have the ability to enact its own policy, its own requirements, and its own deferment payment plans. However, broad implementation throughout the industry will help to stem that the government will step in and require certain compliance.

Here is what we suggest:

  1. Determine what your policy is going to be. Write it up. (There is a document on the website with suggested criteria and some questions to think about in determining your policy. Also, a sample policy you can modify and adapt.)
  2. Notify your tenant base of the policy and the process by which they can apply for a deferment.
  3. Evaluate each request based upon the criteria you have established.
  4. Prepare a Deferment Agreement for each approved resident. (The website has a sample Deferment Agreement. It can also be modified for you specific situations. You should make sure that all persons signed on the lease {including guarantors} sign the agreement.)

Attorney Highlights

  • There are no government mandates for rent reductions or elimination at this time.
  • Any help your landlord may or may not give is voluntary on their part.
  • Deferred Rent Agreement. Most likely if your landlord will work with you on the rent, he will want a Deferred Agreement. This document will outline what your rent will be lowered to, for how long, and how you will repay what is owed. Some landlords may elect to eliminate part of the deferred rent.

Personal Thoughts as a Landlord

First, landlords like good tenants. Even the landlords that operate large apartment complexes like good tenants, even though they typically are not as flexible as mom and pop landlords. Many landlords are also people that own a few units and rely on the income after their mortgage payment is made in the same way people rely on their paychecks. 75% of rental properties are owned by people that own 1-3 properties.

Personally, I am going to follow the advice of my attorney and work with my tenants. So far, most of my tenants are still working the same hours as they were before the virus or their employer is continuing to pay them their full wage if their hours were reduced. Some people may be on SSI or receive retirement income. For the tenants that have requested help with rent, we are doing the following:

  • Requesting a description of the situation for each person on the lease that has had reduced income.
  • How much each person was making prior to job interruption and what they are making now.
  • How much their unemployment payments will be and when they will start.
  • How much any other federal or state assistance will be and for how long it will be received.
  • Have any of the household expenses gone up as a direct result of the virus.
  • We will use this information to determine the deferred rent amount. Deferred amounts will still be due at some point and become part of your current lease.
  • We may also write off some rent on a case by case through our company giving program.

Again, we will update this blog as new information becomes available.
What the Utah Apartment Association has to say.

Coronavirus and House Payments

I have been researching a lot of information on mortgage payment deferrals. As of now there is no federal government mandated forbearance plans (explained 03/30/2020 post) or deferral programs (explained 04/01/2020 post) for non FHA backed mortgages. Each servicer, the person you make your payment to, will develop their own rules. Currently, most servicers have agreed to not report missed payments to the credit reporting agencies. It has also been made clear that, as least for now, a mortgage payer will verify that the mortgage payers that can not make their payments have been impacted by Covid-19.

07/02/2020

Again, there are no updates. Mortgage companies, a loan servicer and the investors that back the mortgages all seem to want to help property owners. Please see the 05/30/2020 post below for more information.

05/30/2020

There have been no major updates to mortgage payment issues relates to Covid-19. Every mortgage company we have looked at is offering some sort of help. This can be a complicated thing to work through unless you understand the process. It is most important to know what will happen with the payments you have missed and when those house payments will be due. Knowing the difference between a forbearance, modification and what happens with your late payments is critical. Anyone can call Gary at 801-382-9199 for no cost help with your questions.

04/01/2020

We have heard that Freddie Mac and Fannie Mae have agreed to come up with deferment plans for mortgage payers. A deferment is different than a forbearance. I explained a forbearance in the 03/30/2020 section. A deferral plan is when the mortgage servicer will defer 3,6,9 or 12 months of payments depending on your situation. The big difference with a deferment plan is the way the missed payments are paid back. With a deferment, the payments can be paid back in the following ways. One way is to have the missed payments added to the back end of the loan as a balloon payment. So when you finally pay your mortgage of several years down the road, a balloon payment will be due for the missed payments. If the house is sold, the missed payments will have to be made, or if you refinance your home the missed payments would need to be paid. This should not affect your credit.

03/30/2020

I am starting to see some of the results from people calling their bank. Also, in talking with other home owners and landlords with mortgages, the following is what the banks are saying.

The following may not pertain to your mortgage company. Please call them to verify what they might offer.

It looks like many banks are offering a forbearance Plan with no application process. What this means you are automatically approved, and as the example in the picture shows, the mortgage company will allow the mortgage payer to miss 3 payments and then they will all be due at once as a balloon payment. Every mortgage company can be different so please contact your mortgage company.

Further, you can probably apply for further assistance by going through an application process. Further assistance would be something like your missed payments are added to the back of your loan or your current payment is increased for a while to pay back the missed payments once you can start making payments again. This is basically applying for a loan modification. The process is tedious and all information, like what caused you to lose income etc., will be verified. I am happy to answer any questions about loan modification or loan forbearance anytime by calling 801-382-9199.

03/29/2020
There are currently no federal mandates to eliminate or defer mortgage payments. However, Fannie Mae, Freddie Mac (the Enterprises) and the Federal Home Loan Banks are taking steps to help people who have been impacted by the coronavirus according to the Federal Housing Finance Agency.

Here are some highlights from the Federal Housing Finance Agency

 If your ability to pay your mortgage is impacted, and your loan is owned by Fannie Mae or Freddie Mac, you may be eligible to delay making your monthly mortgage payments for a temporary period, during which: 

  • You won’t incur late fees.
  • You won’t have delinquencies reported to the credit bureaus.
  • Foreclosure and other legal proceedings will be suspended

Keep in mind these are deferment programs. Your missed payments might be added to the back end of your loan, your payments could go up in a few months for the remaining time on your loan or any number of things.

If you do not have a Federally backed mortgage, your individual bank will most likely work with you. Call then asap if your income has been affected by Covid-19. Below is a graphic of what one mortgage servicer is saying they will do.

The bottom line is call your bank asap if your income is being affected by Covid-19

If you have additional information concerning your rent payments or mortgage payments and the Corona Virus, please email me at Gary@GaryBuysHouses.com, and I will confirm and add to this blog.

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