Preserving Homeownership

As the coronavirus pandemic walloped the nation and non-essential businesses were shuttered from New York to California — and pretty much everywhere in between — more than 26 million people found themselves out of work from late March through the week ending April 24. And millions more will likely be filing for unemployment benefits in coming weeks before stay-at-home orders are lifted and the economy begins to recover.

Those staggering jobless numbers from the U.S. Labor Department, which occurred over the short span of roughly four weeks, dwarf layoff figures from the last recession. And they mean many Americans are concerned about their ability to remain in their homes as they figure out how to pay bills of all kinds.

Likewise, if tenants can’t pay rent, landlords are worried about paying mortgages on the buildings they own.

To keep people in their homes and businesses solvent, federal, state and local government agencies, banks, philanthropies and other groups are providing aid and guidance to consumers and companies.

Megan Booth, director of Federal Housing, Valuation, Commercial Real Estate Policy and Programs for the NATIONAL ASSOCIATION OF REALTORS® (NAR), said NAR “is on the front lines fighting for our members, independent contractors, small business owners and the industry by working with the administration to ensure they have vital access to essential resources and financial aid, assistance and information through the CARES Act and stimulus package.”

But there remains uncertainty, in large part because researchers are uncertain how soon they will be able to come up with widespread testing, to say nothing of an effective vaccine for the virus.

Navigating the Uncertain

“It’s scary,” said Marietta Rodriguez, president and chief operating officer of NeighborWorks America, a public, nonprofit with a Congressional charter that works with more than 240 community development and affordable housing organizations in the United States and Puerto Rico.

“We are just starting to see the economic impact of COVID-19 and the literal shutdown of large parts of our economy that’s now rippling through our communities,” she said during an interview the second week of April. “We don’t have a complete picture yet, but clearly communities are feeling this in a very acute way.

Photo courtesy of NeighborWorks America

“I’m very concerned about the long-term impact that the pandemic will have, particularly on communities of color and low-wealth. They are the ones that will feel ripples in the faltering economy first and longest and hardest.

“I also worry about service, small business, hotel and restaurant workers. The longer they are out, the harder it will be for them to return to their jobs. Restarting the economy is going to be difficult. It’s not just flipping a switch.”

The CARES Act, signed into law on March 27 provides $1,200 for most adults and 120 days of eviction relief for tenants in federally backed housing, which means people won’t be put on the street if they can’t pay their rent.

Photo courtesy of NeighborWorks America

The eviction relief is widely lauded as a compassionate move, but Rodriguez said the lack of rent payments is causing problems for the affordable housing landlords her agency works with.

“That’s because they typically need revenues coming in from rent to maintain their properties and to service the debt on any loans they may have on their buildings,” she said. “So on the affordable side, people are really feeling it right now.”

Rodriguez’s group works with organizations that own and manage about 175,000 rental units. “In the Twin Cities alone, one of our organizations owns and runs about 5,000 rental units,” she said.

“With a 20 percent reduction in rent, they could see a $1.1-million loss of revenue a month. And 20 percent is probably pretty conservative, so they will likely see more than that as the pandemic sweeps through the economy. We are trying to make sure that lenders who have loans against these properties are being as flexible as possible.”

She said federal, state and local governments are issuing guidance to lending institutions that encourage them to work with affordable housing agencies that aid low- and moderate-income communities.

“Lenders should receive Community Reinvestment Act (CRA) credits if they do this,” she said. “Everyone is trying to figure out the layering of guidance and what is permitted and not permitted, where resources are and how they are going to be flowing, so it’s pretty confusing right now.”

Photo by Derek Bridges

She said she has no idea when things will return to a pre-COVID normal, or even what that will look like. “I’m trying to orient our 240 organizations and advise them that ‘normal’ — whatever that will mean — won’t happen until almost everyone has access to testing and a vaccine. And a vaccine could be 18 months or more from now.

“I’m not an epidemiologist, so I don’t know. But I suspect the rules on which businesses can be open will loosen as we work through the ‘flattened curve.’ How to pivot to that new normal, whatever that is, is all part of the confusion.”

She said NeighborWorks had sent out grants for member organizations to “weather the coronavirus storm so they can continue to operate and provide services and programs from a virtual environment as their workforces shelter in place. In some cases, they’ve had to beef up their technology and buy hardware so they can interact with their customers and clients virtually.

“For those groups that we support that run food banks, homeless shelters and rental properties, they’ve had to spend a lot of money on cleaning supplies and face masks and other personal protective equipment for staff who are still at these locations. We’ve tried to alleviate this financial burden as much as we can.”

Photo by Tim Dennell

She said one organization in Arizona spent more than $50,000 during the first two weeks of March on cleaning supplies. “And these were all un-budgeted expenses. Our first plan of action was to hear from organizations about what they were experiencing on the ground and try to help them. We are sharing this information with a lot of our financial partners and stakeholders and many have told us they want to help.

“As we learn more, we will start to develop tools that are more consumer facing for the networks we use, both in terms of rental assistance and mortgage assistance.

“I think most lenders are operationalizing the moratorium on foreclosures, getting call centers up to capacity to respond to questions that are coming in. We want to be sure we are sending borrowers to the right places at these financial institutions.”

She said she’s also quite concerned about unsavory predators who are using financial scams to prey on the unwary. “We saw this uptick during the foreclosure crisis. We’re already seeing it again with people charging for vaccinations that aren’t real and scams around the treasury payments to people or charging to negotiate with landlords or banks. We want to develop some consumer-facing tools, but we are probably a couple of weeks out of getting those on line. We want to share those widely to make sure that consumers are getting the best information and protecting themselves against scams.”

Housing Counseling

She also wants consumers to know that there is a “strong network of U.S. Department of Housing and Urban Development (HUD) approved housing counseling agencies out there who can help them with rental assistance, foreclosure and financial capability counseling.

Courtesy of HUD

“Many of them serve a critical role in communities because they are trusted advisors,” she said. “They were there before this crisis and they will be there afterwards. They can triage resources.“It is hard for people in crisis to figure out which programs and services that are out there are relevant and appropriate to them. These counselors are abreast of those.

“So I would really encourage consumers and REALTORS® to use these counselors, which they can find through our website at neighborworks.org and also the housing counseling page on the HUD.gov website to find a directory of their counseling agencies.”

In fact, NAR released a “Protect Your Investment” brochure that encourages homeowners to work with REALTORS® and housing counselors and offers guidance on options provided by lenders.

Housing counseling agencies serve a critical role in communities because they are trusted advisors.

Wendy Penn, Housing Opportunity Program Manager for the NATIONAL ASSOCIATION OF REALTORS® said NAR “created the brochure to help REALTORS® and Associations easily share important resources with homeowners who are struggling to meet their loan obligations during these challenging times.”

Philanthropy Aid

At the Robert Wood Johnson Foundation, managing director Abbey Cofsky said her organization — the nation’s largest philanthropy focused on health — has a long history of working in housing.

“Initially, that meant focusing on using healthy building materials and addressing issues dealing with explicit connections between health and housing, like exposure to lead poisoning.

“But in the past decade or so, we’ve focused even more on issues around housing affordability and the importance of housing stability for overall health, well-being and access to healthcare.”

We want to be part of the conversation, to hear from folks on the ground and to encourage other philanthropies to work a little differently in this moment.

She said the philanthropy is encouraging people to stay home and self-isolate. “But for some, that is not an option,” she said. “And because of the economic crisis caused by the pandemic, people’s ability to afford rents and mortgages is becoming even more precarious. And that is a threat for health, beyond the immediate threat posed by COVID-19.”

Courtesy of USDA; Photo by Lance Cheung

In early April, the New Jersey-based foundation made a $50-million donation to a variety of agencies, mostly dealing with food, shelter and income assistance in communities of color, low-income and disabilities.

This largesse included the Fair Share Housing Center in Cherry Hill, N.J., a leading fair-housing advocate in the Garden State; and the Disaster Housing Recovery Coalition, a national organization with 800 members.

“As the largest [philanthropic] funder in New Jersey, we have a special commitment to our home state,” she said. “That was part of the rationale for selecting the Fair Share Housing Center, which did great work post Hurricane Sandy, and really stepped up during other calamities in the past.”

She said the Disaster Housing Recovery Coalition was started after Hurricane Katrina and partners with many other groups, working to prevent homelessness. It was chosen because it connects “frontline providers with advocates and policymakers to really understand what the need is, what are the policy responses and where the resources go.”

Courtesy of USDA; Photo by Ben Cohen

Cofsky said she has no idea how much longer her group will need to make donations. “I have no crystal ball,” she said. “I can’t speculate about when a vaccine will arrive or if it’s even possible. We are hoping this type of humanitarian response from us is a one-time infusion of resources.
 
“We did it because we want to be part of the conversation, to hear from folks on the ground and to encourage other philanthropies to work a little differently in this moment.

Courtesy of USDA; Photo by Lance Cheung

“It’s really a way for the foundation to say we know the scale of need is really quite breathtaking and that our funding abilities pale in comparison to the resources that are needed. This crisis shows how fragile the reality is for so many renters, especially in communities of color because only 41 percent of black households own their own homes versus 73 percent of white households.

“Meanwhile, we’ll continue our strategic grant making that is more around research, advocacy, policy tracking and a whole realm of other issues — housing and community development being one of them.”

Local Government Action

Teryn Zmuda, chief economist for the National Association of Counties, said county leaders are taking their own steps to keep people in their homes during this pandemic.

“They are responding to the health and safety needs of their residents because of the hardships that the coronavirus is having on people across the nation,” she said. “So many have lost their jobs.”

Courtesy of LA County

She said some counties are foregoing late fees or even formally extending property tax deadlines.

“Depending on their fiscal year, counties collect property taxes at different times. Some collect in first quarter and are not expecting to collect again until early 2021.

“But we’re also seeing a wave of property taxes due in June. California is in the middle of collecting them now and some counties there issued deadline extensions to help residents deal with the economic burden of the pandemic.”

County leaders are at the forefront of this response right now.

In addition, she said counties have put a hold on evictions and foreclosures until the pandemic has subsided. They include Alameda County in Northern California, Hudson County in New Jersey, Miami-Dade and Orange counties in Florida and Multnomah in Oregon.

Courtesy of LA County

Likewise, other counties — such as King County in Washington State — are providing grants to small businesses so they can continue to pay employees so they can cover their bills, mortgages and rent.

“Our organization has been convening meetings with county leaders virtually,” she said. “County officials are asking one another what they can do to help their residents. If they aren’t in the thick of it yet, they are seeking advice to prepare for the pandemic hitting them. For our part, we are sending out emails three times a week with updates about federal policies that are in the pipeline.

“County leaders are at the forefront of this response right now. It’s a big task, but they are being innovative as they balance the appropriate responses for the safety and health care of their residents, while also understanding the pandemic’s significant financial impact.”

At the city level, James Brooks, Housing and Community Development Director for the National League of Cities (NLC), said in an email that cities are doing their part to keep people housed.

Courtesy of LA County

He explained that Chicago has created a COVID-19 Housing Assistance Grant for individuals and families hit by the pandemic’s economic fallout. Half of the dollars are going to individuals directly via a lottery and the rest being distributed by nonprofits. These funds are being sent out via direct deposit as well as PayPal or CashApp accounts.

Other cities around the country are housing the homeless — arguably one of the most vulnerable populations to the coronavirus — in vacant hotels.

In Madison, Wisc., more than 300 homeless have been placed in motels on the east side of the city, while Salem, Ore., has found lodgings for more than 100 medically vulnerable or older homeless people in hotels. And in Los Angeles, the city and county are coordinating to find 15,000 hotel rooms for the homeless during the pandemic.

As the federal government sends cash assistance to residents due to passage of the CARES Act, he said cities can play an important role to make sure that their residents access these funds through safe and affordable means.
 
In addition, they can alert them that scammers will be trying to take advantage of the pandemic to take some of their stimulus funds. That money is especially needed by low-income households, he said, because 40 percent of Americans don’t have $400 set aside to pay for unexpected expenses.

“Right now, 6 percent of Americans are unbanked and 16 percent are underbanked. Those that are underbanked are individuals who manage their financial lives through alternative financial services like check cashers, who often charge high fees, so less money goes into these individuals’ pockets.”

To help keep people in their homes and pay bills, he said cities can virtually convene local financial service providers to leverage their relationships to decrease the barriers that residents often face when signing up for banking services. Lenders can do this by waving fees or minimum balance requirements and connecting with national BankOn products.

Mortgage Lenders’ Assistance

Susan Altran, a spokeswoman for the Bank of America, said her bank is doing its part. “We absolutely want to help people as much as we can during this crisis through various relief programs that will keep them in their homes until things return to normal.”

Altran said the bank has paused foreclosure sales, evictions and repossessions. For clients with our mortgages, the bank is offering three-month deferrals, with payments added to the end of the loan term. That period may be extended, she said, if clients continue to need relief, until the crisis is over.

CDFIs are integral to the development and sustainment of small businesses as well as the financing of affordable housing and economic development projects.

Likewise, loans owned or guaranteed by other entities, including Fannie Mae, Freddie Mac or FHA, offer consumers three months of deferrals. Clients with small business and consumer loans can also seek payment deferrals and refunds on late fees from the Bank of America.

She said the bank will provide up to $250 million in capital to community development financial institutions (CDFIs) by funding loans through the newly established federal Paycheck Protection Program. In addition, Bank of America will provide up to $10 million in philanthropic grants to help fund the operations of CDFIs.

“Small businesses are the backbone of our communities,” Anne Finucane, vice chairman of Bank of America, said. “CDFIs are integral to the development and sustainment of small businesses, health care centers, schools and other community facilities, as well as the financing of affordable housing and economic development projects. CDFIs will be critical in the response to the unprecedented challenges our communities are facing as a result of the coronavirus.”

In addition, Altran said the Bank of America is committing $100 million to support communities in need “as the world faces unprecedented challenges from the coronavirus. The funds will help increase medical response capacity, address food insecurity, increase access to learning as a result of school closures, and provide support to the world’s most vulnerable populations.

“We must all work together as one global community — public and private sectors, as well as individuals — to address this health care and humanitarian crisis,” Brian Moynihan, chairman and CEO of Bank of America said in an email.

“As the needs in our local communities continue to rapidly escalate, we must take swift action to provide resources where there are gaps, and help local communities protect their most vulnerable populations.”