By Barry Zigas, Principal, Zigas and Associates, LLC
Note: Policies addressing COVID-19 continue to develop rapidly. We are doing our best to update this piece in real time. If you come across any new information, contact us by email at firstname.lastname@example.org.
The COVID-19 virus has upended our economy. Workers are stressed. Millions are out of work, working reduced hours, or struggling to make the gig economy pay the bills. Renters are worried about making their next rent payment. Homeowners are worried about the next mortgage payment. Lenders are worried about maintaining their financial health in the face of a potential wave of delinquencies. And everyone is worried about the health and well-being of their families and themselves.
Anchor institutions can play a leadership role as the crisis continues to develop. You can help your employees, patients, and community members understand and address the economic and health threats they are facing. As key employers, stakeholders, and leaders in your community, you can provide leadership and partnership in crafting and executing community initiatives.
The challenges we face are daunting, but hospitals, health systems, and other anchor institutions can take immediate concrete steps to help stabilize families and communities while continuing to build productive partnerships in health and housing. This post on what you can do for renters, homeowners, and housing partners is the start of a CCI series that will feature resources, information, and recommendations for taking meaningful action as we move through this crisis.
Below, we summarize actions you can take to INFORM, EDUCATE, ADVOCATE, LISTEN, and INVEST in order to support those who face housing challenges.
The fear of being evicted because rent cannot be paid is real and looming for renters, especially those who have lost their jobs.
Inform and Educate
1. Let your employees and patients who are tenants and may be suffering financial strain because of COVID-19 know they may be protected by national, state, and local eviction moratoria.
- MAKE SURE YOUR EMPLOYEES, PATIENTS, AND COMMUNITY MEMBERS WHO ARE TENANTS KNOW THEY SHOULD CONTACT THEIR LANDLORDS IMMEDIATELY TO DISCUSS ANY CONCERNS ABOUT BEING ABLE TO PAY THE RENT.
- Any tenant in an apartment whose owner has a mortgage financed by Fannie Mae, Freddie Mac, or another government agency like FHA, is protected from eviction for up to 90 days if their landlord seeks forbearance on their loan. In addition, owners of these federally backed apartments cannot evict tenants for nonpayment of rent or charge fees for late rent payment for 120 days after the COVID-19 relief bill is adopted.
- Tenants in government-assisted housing like Section 8 or Section 202 are protected from eviction.
- Tenants in privately owned housing may be protected by local or state moratoria on evictions.
- Partner with other community organizations like your housing development partners, community groups like United Way, and housing counseling and direct service groups to offer tenants hotlines, fact sheets, webinars, and other information that will help them stay in their homes.
- Where there are no government protections from eviction, health systems and anchor institutions should partner with local housing counseling organizations and your housing development partners to identify existing sources of aid for tenants in danger of losing their homes. Work with local charitable organizations like United Way and foundation partners to create or augment emergency assistance funds and to support emergency hotlines and websites where tenants can find up-to-date information and resources.
- New federal legislation will provide direct cash payments to many households, extended unemployment benefits to laid-off workers (including part-time and gig workers), and new paid family and sick leave benefits, all of which may help people stay in their homes. You can educate employees, patients, and community members about these new benefits and how to access them, including by offering online sessions with federal, state, and local housing officials.
1. Share the facts on the ground for you, your employees, and your patients with your U.S. House and Senate offices, your state legislative and executive leadership, and local political leadership to support swift intervention to prevent evictions because of COVID-19 disruptions. Your role as a key anchor institution in your community gives you a powerful voice with elected officials—you are not one of the usual suspects when it comes to protecting tenants, and your voice can make a difference.
2. Rent and eviction moratoria will hit landlords hard, undermining their financial health and their ability to maintain their properties and meet their obligations. Support mortgage moratoria for landlords, as well as funding from the federal government, Federal Reserve, and state funds to ensure that owners, lenders, and investors are protected from the impact of lost income and rents. Work with your housing partners, local housing and community development offices, state departments of housing and community development, and state housing finance agencies to advocate for and support immediate interventions to protect health and safety in rental homes and help landlords who will be suffering loss of income.
Homeowners with mortgages face the same dilemma as renters—how to avoid losing their homes when incomes decline or disappear altogether. Also at stake for homeowners is the equity they have already invested in their homes and the potential loss of an important long-term asset. Institutions can help their homeowning employees, patients, and community members in several ways.
Inform and Educate
1. Most homeowners with mortgages—including any home whose mortgage is insured by Fannie Mae, Freddie Mac, VA, or FHA—will be eligible for a form of relief called forbearance, which allows them to miss a mortgage payment, without penalty, and without incurring late fees, other charges, or negative credit reporting. The amounts that are not paid during this period will be owed; different repayment options after forbearance will be available to borrowers from their servicers, depending on their circumstances.
2. Lenders who are holding mortgages in their own portfolios may be offering similar relief. Anchor institutions can reach out to local lender CEOs to find out what relief they are offering and help to publicize options and encourage their constituents to take advantage of them.
3. Homeowners who were in a loan modification or some form of distress before COVID-19 should contact their servicers immediately to learn what special treatment is available for them.
4. Most homeowners are now protected from eviction for mortgage arrears from before the COVID-19 crisis, including delinquent payments or loan modifications that predate the health emergency. Owners should check with their servicers to verify their specific circumstances.
1. Support federal legislative efforts to ensure full forbearance and eviction protection coverage for all mortgage borrowers.
2. Work with local elected officials and other service organizations in your community to publicize these forbearance and eviction provisions and identify additional steps that can be taken locally to support homeowners. Consider making grants to housing counseling and other direct service providers to support their work in your community.
3. Support additional public funding by the federal government or Federal Reserve for servicers who are responsible for forwarding payments to investors for loans in mortgage-backed securities (which includes all Fannie, Freddie, FHA and VA loans).
You can also work through your own professional and organizational affiliations to promote these important priorities for tenants and renters. Keeping people in their homes will prevent further economic devastation in communities everywhere. Stress the importance of emergency measures commensurate with the scale of this health emergency.
Affordable Housing Producers and Owners
The financial ripple effects of the crisis are likely to affect current as well as future affordable housing development and preservation efforts. Banks are pulling back from all forms of commercial lending activity. Investors are reconsidering and repricing their existing commitments to pending deals. Community efforts already underway to expand and preserve affordable housing resources could be jeopardized by the crisis.
Listen and Invest
1. Consult with your community partners about their circumstances. Find out how lender or investor changes are affecting the deals you are working on together. Identify specific needs your partners may have and how you could help them. Reiterate your support for their continuing work and your willingness to help.
2. Catalogue and share the resources you could offer to help developers offset reductions in other forms of assistance: letters of credit or guarantees to help keep or obtain credit; bridge loans to cover what may be longer pay-in periods by investors for Low Income Housing Tax Credits; grants or low interest loans to bolster the capital needs of existing projects. Your partners can identify their pain points.
3. For existing properties, identify ways you can help tenants weather this crisis and help landlords continue to be paid. Consider grants, loans, lines of credit, and loan guarantees to landlords of smaller properties so that your employees, patients, and community members can continue to have safe housing.
1. Support efforts at the local, state, and federal level to keep capital flowing to your partners’ projects; these could include maintaining existing commitments of assistance and/or offering modifications like larger subsidies, lower interest rates on loans, and more use of grants to fill gaps in financing. Meanwhile, you can also identify resources anchor institutions can offer, such as low interest loans, grants, letters of credit, and loan guarantees to help keep projects on track.
2. Work with your partners and state housing finance agencies to support LIHTC and identify where gaps are appearing, as well as what additional legislative or regulatory steps might be necessary to keep ongoing work moving. For instance, LIHTC deals financed with state housing bonds receive credits whose value currently fluctuates based on interest rates. Support legislative efforts to fix the value of the credits at four percent of the eligible basis in the property to maximize their value and reduce uncertainty.
Housing is one of the essential threads in the fabric of our communities. Through the activities outlined above, anchor institutions can support tenants and homeowners to stay in their homes and landlords and housing developers to continue to provide housing during the COVID-19 emergency. As we emerge from the immediate devastation of this pandemic, your actions will be critical to the long-term health of your communities.
Barry Zigas has a unique blend of for-profit and nonprofit experience, including more than 40 years of leadership in diverse roles in housing, community and economic development. This includes leading organizations and workgroups ranging from more than 200 national and regional staff members as a Senior Vice President at Fannie Mae to leading the National Low Income Housing Coalition, a national nonprofit advocacy organization, with 16 staff. He currently serves as a Senior Fellow for Consumer Federation of America in addition to working with nonprofit and other clients. For more information, visit zigasassociates.com.