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It's The 1st Of The Month. Renters Are In A Much Tougher Spot Than Homeowners

Apr 1, 2020
Originally published on April 1, 2020 12:22 pm

Rent is due for the first time since millions of Americans lost their jobs or incomes as the coronavirus pandemic shut down large swaths of the U.S. economy.

Many renters are in a tough financial spot because they received fewer protections out of the $2 trillion economic rescue package than homeowners did.

Homeowners who lose their income can defer mortgage payments for many months if they need to. Then they can have those missed payments tacked onto to the end of their loan term so they won't have a giant pile of debt to pay right away. They can just resume their normal mortgage payments when they get back on their feet.

There are eviction moratoriums stopping most renters from being tossed into the street. But Congress didn't give renters a plan to defer payments and then get back on track in an affordable way.

Nicolena Loshonkohl is a single mom in Roanoke, Va. The hair salon where she worked shut down last month, and she lost her only source of income. So she doesn't have the money to pay her rent on top of health care and all her other bills. "I feel like I'm drowning," she says.

Loshonkohl told her landlord of her precarious situation, "And I felt actually kind of afraid telling them that," she says. "Like, what if they tried to evict me? I don't think that's something they can legally do. But I felt a bit of anxiety going into that."

That's a natural concern for many tenants, but landlords say reaching out to them, explaining the situation and asking for help is the best thing to do. Some are trying to be flexible and work with renters until state and federal rescue money starts flowing to them.

But in Loshonkohl's case, the landlord in her big apartment complex says she has to pay the rent for April. She can pay it four weekly installments instead of all at once, but Loshonkohl says that's not so helpful.

So she figures she will have to start piling up credit card debt until those expanded unemployment benefits start flowing to her from the government. It's unclear how long that might take given how overwhelmed this system is. More than 3 million people applied in a single week in March — nearly five times the previous record. And millions more are continuing to apply.

Loshonkohl had just gotten out out of her last relationship and had run up credit card debt to come up with money for a new place to live and furniture, for a new start.

"So what is really discouraging about this is I was starting to see the light at the end of the tunnel in terms of paying off that debt," she says. "And now it feels like I'm back at the beginning where I'm trying to dig myself out of a crisis."

Her landlord, Beacon Property Management, said in statement that it is "continuing to evaluate different ways to assist our residents."

Bob Pinnegar, president of the National Apartment Association, a trade group for landlords, says the first priority for landlords has been health and safety. He says companies that own big apartment complexes have been "trying to figure out what is our pandemic playbook and how do we protect the residents."

Pinnegar says that after that, the companies have been scrambling to figure out a serious cash flow problem. Renters have bills to pay, and so do the owners of apartment buildings.

"The estimated default on rent payments based on people I've talked to is anywhere between 20 and 50% per portfolio, depending upon the location around the country," Pinnegar says.

And so, he says, apartment building owners are "trying to figure out, from a crisis standpoint, how do they stay in business during this period of time while still being sensitive to the residents."

Under the rescue plan, those big landlords can actually get a break if they have government-backed loans. They can skip some loan payments themselves, through what's called a forbearance, so they can work with tenants who can't pay the rent.

But about half of all renters rent from mom-and-pop landlords. Those landlords can also get help if they know what to do. Many need to pay the mortgage for their rental property, and if they call their lender, they should be able to qualify to defer payments through a forbearance as well. That should enable them to afford to be flexible with their tenants.

"Yes, that is correct," says Laurie Goodman, a former Wall Street mortgage and housing market analyst who's now with the Urban Institute. She worries about renters.

"We haven't done nearly as much for renters as we've done for the homeowners," she says. "The rental population is much, much less affluent, much less able to withstand disruptions in their cash flow than most homeowners."

Goodman thinks the federal government should provide additional help for renters. Some states and cities are considering doing that. A proposal in New York would require landlords to accept a renter's security deposit if they can't come up with rent money this month. Another bill would suspend rent and mortgage payments for several months for some renters, property owners and small businesses.

Meanwhile, Skip Schloming, director of the Small Property Owners Association in the Boston area, has some advice for landlords: "Be very sensitive to the situation and ... deal on a case-by-case basis. The idea of asking everyone to pay their full rent is not reasonable, nor is it reasonable to ask them to pay no rent at all."

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RACHEL MARTIN, HOST:

It is the first of the month. And for many Americans, that means the rent is due, which is a problem for people who lost income in March. The economic relief package does not give them full protection. NPR's Chris Arnold reports.

CHRIS ARNOLD, BYLINE: Most renters can't be evicted for now because of emergency rules put in place. But many landlords are saying the rent is still due even if you've lost your job.

NICOLENA LOSHONKOHL: I feel like I'm drowning.

ARNOLD: Nicolena Loshonkohl is a single mom with a 2-year-old daughter living in Roanoke, Va. She worked in a hair salon.

LOSHONKOHL: Our salon closed two weeks ago, and I lost my entire source of income.

ARNOLD: She filed for unemployment. And under the big federal rescue plan, she should be getting just about her normal income. But she doesn't know how long that will take to happen. The system is clearly swamped with millions of people applying. And she doesn't have enough money to pay her rents, her health insurance, her car payments and all of her other bills.

LOSHONKOHL: That is where I feel like I'm drowning.

ARNOLD: Loshonkohl had just gotten out of her last relationship. And she'd run up credit card debt to come up with money for a new place to live and furniture, a new start.

LOSHONKOHL: So what is really discouraging about this is I was starting to see the light at the end of the tunnel in terms of paying off that debt. And now it feels like I'm back at the beginning, where I'm trying to dig myself out of a crisis.

ARNOLD: And her landlord, a company called Beacon Management, tells her that she has to pay her rent in full for April. She can pay it in four installments over the month if she wants, but she still has to pay it. The company said in a statement that it is, quote, "continuing to evaluate different ways to assist our residents." Bob Pinnegar heads up a trade group for large and small landlords. It's called the National Apartment Association. He says, the first priority for landlords has been health and safety.

BOB PINNEGAR: Trying to figure out, what is our pandemic playbook? And how do we protect the residents?

ARNOLD: Pinnegar says after that, companies that own big apartment complexes have been scrambling to figure out a serious cash flow problem. Basically, renters have bills to pay, but building owners do, too. And he says some estimate that between 20% and 50% of residents may not be able to pay their rent at some properties, at least until they start receiving unemployment checks.

PINNEGAR: And so they're trying to figure out, from a crisis standpoint, how do they stay in business during this period of time while still being sensitive to the residents?

ARNOLD: Under the rescue plan, those big landlords can actually get a break if they have government-backed loans, but some don't. About half of all renters rent from mom and pop landlords, though. And those landlords can get help, too, if they know what to do. Of course, many need to pay the mortgage for their rental property. But if those landlords call their lender, many right now should be able to qualify to defer payments. And then they can afford to be flexible with their tenants.

LAURIE GOODMAN: Yes. That is correct. That is correct.

ARNOLD: Laurie Goodman is a former Wall Street housing market analyst who's now with the Urban Institute. She worries about renters. With this rescue plan, the vast majority of homeowners who lost their job or income can call up their lender and defer mortgage payments if they need to for up to a year. The payments then get tacked onto the end of your mortgage. But Congress didn't give renters any kind of a plan like that to defer payments.

GOODMAN: We haven't done nearly as much for renters as we've done for homeowners. And, oh, by the way, the rental population is much, much less affluent, much less able to withstand disruptions in their cash flow than most homeowners.

ARNOLD: Goodman thinks the federal government should provide some sort of additional help for renters. Some states and cities are considering doing that. One proposal in New York is to require landlords to accept a renter's security deposit as rent if they can't come up with the money for this month.

Chris Arnold, NPR News.

(SOUNDBITE OF RRAREBEAR'S "BACKPACK") Transcript provided by NPR, Copyright NPR.

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