Recently, the Washington Post highlighted the disparity between renters and homeowners in a piece entitled, “Homeowners are getting federal mortgage relief, but renters aren’t so lucky”
The federal government, through the Department of Housing and Urban Development and the Federal Housing Finance Agency, have halted home foreclosures. The moratorium applies to single-family homeowners who can’t pay their FHA-backed mortgages as well as homeowners whose mortgage loan is backed by Fannie Mae and Freddie Mac. The private market has indicated they will follow the government’s lead.
This is great news for millions of working people who desperately need mortgage relief during the pandemic. However, there is a massive hole in federal housing relief for renters.
Renters are left with, “a patchwork of approaches,” depending on where they live. The Post article cites many measures cities and states are taking to protect renters but the federal government has no long-term plan that targets tenants.
In fact, the Federal Housing Financial Agency, is offering mortgage relief to landlords, on the premise that they will be the ones suffering when their tenants can’t afford to pay their rent.
Renters Disproportionately At Risk
Matt Losak of the Montgomery County Renters Alliance was quoted by NPR this past week explaining the risk renters face from coronavirus:
“Multifamily communities present a unique possible situation for contracting the coronavirus because of the proximity of homes, because of shared community spaces like elevators and community rooms…We have large apartment communities with seniors and people who are vulnerable to the virus living in them. Renters have to think about their neighbors as well as themselves during this crisis.”
There is also extreme economic risk to tenants. When introducing a bill related to affordable housing last week, at-large Councilmember Will Jawando pointed out a recent American Community Survey showed that 49.5% of renters in Montgomery County are rent burdened.
These tenants pay more than 30 percent of their income on rent. What happens when a rent burdened tenant loses their job or has a reduction in hours?
Luckily, both the state of Maryland and Montgomery County have instituted an eviction moratorium. This will protect tenants from losing their home in the short-term but the long-term implications of economic recession and housing crisis call for a stronger approach.
Delegates Jheanelle Wilkins and Vaughn Stewart have a petition calling on Governor Hogan to extend lease agreements, require landlords agree to rent payment schedules, and more.
Extending tenants’ leases is a serious proposal because it begins to put renters on an equal plane with homeowners. Even in the absence of a national health crisis, homeowners can extend the terms of their mortgage in exchange for a lower monthly payment. Missed payments can be made up for by extending the lease.
Renters do not have such a luxury. Tenants in debt to their landlord will see a wave of eviction notices once the moratorium is lifted. It is unaffordable to most all tenants to pay past due rents at one time. A lease extension keeps the tenant in their home while allowing a repayment plan.
In the event things get very very bad…
While Governor Hogan halted evictions, it is my understanding that landlords can still file for eviction against tenants. And in all my experiences, the court will not disclose these filings. They could be mounting at this moment. Delegate Wilkins is already aiding a senior citizen whose landlord delivered them *notice* of intention to evict.
If the situation continues to get worse, if tenants can’t pay their rents and the FHFA fails to keep landlords in business, the country could see a mass default. Capitalist consolidation will melt-down and mutate what we know as the “rental market.” The re-solidified rental market and re-opened courts will break the floodgate on stalled eviction cases. Courts will be packed for months, potentially.
Tenants will need to be able to fight back, collectively negotiate with landlords repayment terms, and organize demands to the government.