September 30, 2022
  • September 30, 2022

8 million households risk foreclosure or eviction

By on June 23, 2021 0

A mind-boggling 8000000 households are threatened with foreclosure or eviction.

Here’s what you need to know.

Mortgages: foreclosure and eviction

The Covid-19 pandemic has taken its toll on all walks of life – and housing is no exception. New research from Harvard University shows that:

  • 2 million homeowners are behind on their mortgages; and
  • 6 million tenants are behind in paying their rent.

Here’s another problem: The federal moratorium that prevents foreclosures for landlords and evictions for tenants is set to expire on June 30, 2021. Without an extension, that means millions of Americans could be left homeless. here a week.

Covid-19 pandemic: housing has not exploded for everyone

While the Covid-19 pandemic has caused house prices to rise in parts of the country, not everyone’s financial fortunes have prospered. Some households that survived the Covid-19 pandemic and did not experience financial hardship bought new homes. Limited supply and quick home purchases have pushed up house prices. Other households that lost income or suffered financial hardship during the Covid-19 pandemic fell behind on mortgage and rent payments. Many of those tenants are low-income and people of color, according to Harvard researchers. While the federal government has provided billions of dollars in financial assistance, researchers say more financial stimulus is needed. According to the report: “About a quarter of tenants with COVID-related job losses said they had significantly depleted their savings, another quarter had borrowed from families and friends, and a tenth had turned towards payday or personal loans. Even assuming they regain their financial equilibrium, these households will have fewer resources to draw on, whether for daily needs, emergencies or a down payment on a house.

Will the moratorium on foreclosures and evictions be extended?

There has been no shortage of advocates who have called on the Biden administration to extend the federal moratorium beyond June 30. However, there is currently no indication that the federal moratorium will be extended. The federal moratorium was included in the Cares Act, the $ 2.2 trillion stimulus package that Congress passed last March. President Joe Biden then extended the federal moratorium. However, some protections and financial aids may be available at the state level. Homeowners and renters can check with their state’s housing authority for all available options. The Consumer Financial Protection Bureau (CFPB) has proposed that lenders postpone foreclosure proceedings until 2022. In the absence of an extension of the federal moratorium, or any state or local moratorium, for example, a lender or a homeowner could possibly begin the foreclosure or eviction process. from July 1, 2021.

Cancellation of rent and mortgage during Covid-19

You’ve heard of student loan cancellation. For example, Biden has now canceled $ 3 billion in student loans. Now, some members of Congress have not only offered to extend the federal moratorium, but have also taken new steps to protect landlords and tenants. Have you heard of mortgage and rent cancellation? For example, last April, Representative Ilhan Omar (D-MN) introduced a law – the Rent and Mortgage Cancellation Act – that would institute a nationwide cancellation of residential rents and mortgage payments until the end. of the Covid-19 pandemic. Unlike a moratorium, Omar’s legislation cancel rent and mortgage payments during the Covid-19 pandemic.

The Rent and Mortgage Cancellation Act, if Congress passes the bill, would include the following:

  • cancellation of full payment of the rent for your primary residence;
  • total discount of mortgage payments for your principal residence ”
  • no accumulation of debts for tenants;
  • no accumulation of mortgage debt for borrowers; and
  • no negative impact on credit rating or rental history for mortgage borrowers or tenants

Despite bold attempts to help homeowners and tenants, there is no plan for Congress to pass this bill. That said, the researchers note that the federal government can take several steps to provide financial relief. Among other proposals, the researchers note that the Biden administration has proposed an expansion of housing vouchers and affordable housing programs. Researchers say increasing homeownership is an important step in reducing the disparities that have been exacerbated by the Covid-19 pandemic. Specifically, they say that federal support for down payment assistance to buy a home can help reduce access to quality financing. Finally, the researchers propose that policymakers reduce bureaucracy and land use regulations so that home builders can build affordable housing in a wide range of geographies.

Disclosure: Zack Friedman graduated from Harvard University.

Student loans: more reading

Biden has now canceled $ 3 billion in student loans

Are you eligible for a $ 500 million student loan cancellation?

5 Ways Biden Can Change Student Loan Cancellation

Are you eligible for a $ 200,000 student loan cancellation?