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Climax Approaching for Rent Assistance and Evictions

By Brian Kline | June 7, 2021

The current national COVID-19 rent moratorium for evictions is scheduled to end on June 30, 2021. Late in May, it’s estimated that as many as 11 million Americans are behind with their rent in an amount totaling as much as $70 billion. Between the last two major stimulus packages, Congress has allocated more than $45 billion in rental assistance. However, as of May 18, the Treasury Department numbers show that only a little over $6 billion has been disbursed to states to help struggling renters and landlords. At the least, more than $30 billion either is now available to states or will become available over the next several months. This represents an unprecedented situation for both renters and landlords.

Billions Could Remain on the Table

Although the amount allocated falls far short of the high end of the estimate of rent that remains delinquent ($75 billion - $45 Billion = $30 billion shortfall), it would leave both renters and landlords worse off if the available billions remain on the table. Without a plan, landlords will begin evicting delinquent tenants at the beginning of July. Without a plan, all of that money is at risk of not being distributed.

Landlords will be out billions of dollars that could have been used for many purposes that include making delinquent mortgage payments or using the money for capital improvements to the rental property as well as their risk/reward profits. Evicted renters will be in an even worse financial position. Generally, an eviction report will remain part of their rental history for seven years. It doesn’t matter if the landlord reports this to the credit bureaus or not because it is a court record that the credit bureaus pull from public recorders. How this will play out after the eviction moratoriums end is not known but typically a court-ordered eviction often includes attorney's fees, court costs, late fees, interest, and treble damages. It is highly probable that millions of delinquent renters will become homeless.

There does not appear to be any legislation in work that will make it possible to apply unused rent relief funds towards back rents after the moratoriums expire at the end of June. At least not in a manner that will prevent court-ordered evictions from doing a lot of damage to the credit and rent history of evicted tenants. In lieu of a plan to successfully end the eviction moratoriums and rent relief programs, tenants, landlords, and state-sponsored programs should step up the game during June.

Both Landlords and Renters Can Take Immediate Action

Tenants need to be aware that the moratoriums only protect tenants from eviction for nonpayment of rent. It does nothing to forgive the debt. The only purpose is to prevent eviction notices from being issued until July 1. However, debt relief is available to many delinquent tenants by applying for the still available rent relief funds. The general requirements to qualify are that you expect to earn no more than $99,000 in annual income for Calendar Year 2020-2021(or no more than $198,000 if filing a joint tax return). And that you are unable to pay your full rent or make a full housing payment due to substantial loss of household income, loss of compensable hours of work or wages, lay-offs, or had extraordinary out-of-pocket medical expenses. The rent relief programs are run at the state, tribal, and local levels. At the time of this writing, the National Low Income Housing Coalition (NLIHC) has developed a searchable database of 388 national programs offering emergency rental assistance.The US Treasury Department has a similar searchable database.

Landlords can also take direct action. Landlords can request rental assistance on behalf of their tenants. To request assistance on behalf of their tenant the landlord must:

  • Obtain a signature from the tenant on the application (can be electronic).
  • Share documentation of the application with the tenant.
  • Ensure any funds obtained from the application are used towards rent or arrears.

What solutions can you offer as a successful solution to ending the eviction moratoriums and rent relief programs? Please leave your comment.

Also, our weekly Ask Brian column welcomes questions from readers of all experience levels with residential real estate. Please email your questions, inquiries, or article ideas to [email protected].

Brian Kline has been investing in real estate for more than 30 years and writing about real estate investing for seven years with articles listed on Yahoo Finance, Benzinga, and uRBN. Brian is a regular contributor at Realty Biz News
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