As jobless claims mount and employers cut hours or furlough workers, millions of Americans may be wondering if they can make rent, which is often due at the first of the month.
Those who miss two months of paychecks could see spending up to 40% of their annual income spent on rent, according to a recent Zillow analysis, a major burden.
“Renters across the country, and in the service industries especially, are already often stretching their budgets,” said Alexander Casey, Zillow’s senior policy advisor, in a release. “They are likely to see their rent burden increase if paychecks disappear, which also means they’ll have less funds left after paying housing costs for other essentials, which can quickly become devastating.”
In times when cash is limited, what should you do if you can’t pay rent?
Know your state’s moratorium laws
To have a productive discussion with your landlord about delaying rent payments, you should first be aware of your state’s mandated moratorium laws for evictions, said Bruce McClary, vice president of communications at the National Foundation for Credit Counseling.
“You have to do your research because those deadlines vary state by state,” McClary said.
If you’re not sure about what tenant protections, check the U.S. Department of Housing and Urban Development’s website, which provides information about laws passed per each state.
Moratorium laws are also quickly changing to address the effects from the COVID-19 outbreak. For instance, as of March 20th, Governor Andrew Cumo ordered a 90-day moratorium for New Yorkers which would last until June. Washington State Governor Jay Inslee enacted a 30-day moratorium on evictions.
The federal government also recently announced an emergency 120-day moratorium on evictions for certain covered properties, including:
Those under the Violence Against Women Act
Rental properties under the rural housing voucher program
Rental properties with federally backed mortgage loans
Rental properties with federally backed multifamily mortgage loans
McClary said there might be cases when a landlord is not updated on the laws, so the responsibility falls on the tenant to update them. But if your landlord is aware of these mandates and isn’t complying, McClary said then it becomes a legal issue.
“If [landlords] are not abiding, you can tell authorities it becomes a law enforcement issue,” McClary said.
Rentals backed by government
Fannie Mae and Freddie Mac, the government sponsored entities that back mortgages for millions of Americas, recently issued statements of relief helping both renters and property owners alike.
Fannie is allowing lenders to grant forbearance up to 90 days to landlords who have a Fannie-backed mortgage to finance the property. In return, the landlord would have to honor they won’t evict tenants for missing rent payments.
“With millions of American renters facing uncertainty over how they’re going to pay bills, this move by Fannie will undoubtedly soothe the mind of some 27,000 renters,” said Joshua Clark, economist at Zillow. “This move won’t just help those renters, but also their landlords who face the very real possibility of missing mortgage payments if their tenants can’t come up with next month’s rent.”
Freddie Mac announced a similar 90-day loan payment deferment program for landlords of Freddie-backed properties as long as the landlord can provide proof of financial hardship. Freddie also requires landlords to not evict tenants due to missed payments.
Seek help from a housing counselor
If you are strapped for cash and a one-time stimulus check isn’t going to be enough to cover your mortgage payment, you can reach out to the National Foundation for Credit Counseling, which offers free initial consultations to clients.
If you want to look for agencies on your own, look for agencies approved by the U.S. Department of Housing Urban Development. This will ensure you don’t get tangled up in scams.
“We have resources on a community level and charity level,” McClary said. “If it’s a daunting task to make 12, maybe 20 phone calls you can get some help with the NFCC.”
Read more information and tips in our Spending section