COVID-19 has been wreaking havoc on the U.S. economy ever since cases began multiplying domestically. In the past week, we've seen mass school closures, citywide restrictions, and large numbers of small businesses closing their doors. The result? Millions of Americans are now facing weeks without a steady paycheck, whether because they no longer have a job to go to or because they don't have the childcare that makes reporting to work possible.
Unfortunately, a large chunk of U.S. adults don't have the means to cover their living expenses in a situation such as this. Last year, the Federal Reserve Board found that 39% don't have enough cash in savings to cover an unplanned $400 expense, which means that in the coming weeks, countless renters and homeowners will likely struggle to pay their landlords rent or come up with their mortgage payments.
Thankfully, they won't run the risk of being kicked out of their homes in the process. On March 18, the Department of Housing and Urban Development announced that it's suspending all evictions and foreclosures until the end of April in light of the current economic climate.
That same day, the Federal Housing Finance Agency announced that it's directing Fannie Mae and Freddie Mac, the entities that buy most home loans and make them available to investors, to do the same for a minimum of 60 days. These moves buy renters and homeowners a bit of breathing room during an otherwise stressful situation.
A bit of relief
Renters who miss a single rent payment and homeowners who miss one mortgage payment don't automatically get evicted or foreclosed on. But given that a large number of Americans might struggle in the coming weeks or months to make good on their housing payments, this is very good news. It's also good news for those renters who were in the process of getting evicted and for homeowners who were already on the verge of foreclosure.
That said, those who can't make their housing payments in the near term shouldn't just sit back and do nothing, as going that route could negatively impact their credit. Rather, renters who think they'll fall behind on rent should contact their landlords or management companies, explain the situation, and ask what options they have.
Similarly, homeowners who can't make their upcoming mortgage payments should reach out to their lenders. Many are allowing borrowers to hit pause on their payments temporarily, though it's worth noting that in many cases, interest will continue to accrue on those mortgages while they're in forbearance.
It's too soon to tell when the COVID-19 outbreak will be better contained and when Americans can get back to their normal way of living. But for now, it's nice to see that renters and homeowners alike are getting some breathing room as the country navigates one of the greatest challenges it's ever faced.
Get the 'Dirt on the Real Estate Market
Are you looking for the next hot real estate market? Want to know how new rules and regulations could impact your next home purchase or real estate investment? Would you like to find out which improvements to your property will get you the most bang for your buck? We cover all these things and more in our newsletter, Paydirt.
Sign up here to get our best insights delivered to you.