US govt saves millions of renters from eviction

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THE US Federal Housing Finance Agency will protect millions of renters from eviction by freezing landlord’s mortgage repayments, whilst in Australia the industry is calling for similar measures to protect eight million Australians.

This is a significant move by the government sponsored enterprises, Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac), which together represent 48.6% of the total outstanding multifamily mortgage debt in America. According to the Federal Reserve, outstanding mortgage debt was $15.8 trillion as of the 3Q2019, with $11.1 trillion held by homes and multifamily represents $1.6 trillion.

On Monday they announced a freeze on mortgage repayments for landlords on the condition they do not evict renters who can’t pay their rent due to changes in their financial circumstances because of the coronavirus.

The announcement will provide relief for the millions of renters across America. According to the National Multifamily Housing Council (NMHC), 43 million households are renters, some 40 million people live in an apartment, of which 5.2 million households are single women and the sector employs 17.5 million people.

As a result, FHFA will also suspend foreclosures on landlords who cannot meet loan repayments because renters are unable to pay their rent.

According to the FHFA, the eviction suspensions are in place for the entire duration of time that a property owner remains in forbearance.

FHFA director Mark Calabria said in a statement: “Renters should not have to worry about being evicted from their home, and property owners should not have to worry about losing their building, due to the coronavirus,”

“The multifamily forbearance and eviction suspension offered by the Enterprises should bring peace of mind to millions of families during this uncertain and difficult time,” Calabria added. “The Enterprises are working with mortgage servicers to ensure that these programs are implemented immediately so that property owners and renters experiencing hardship because of the coronavirus can get the assistance they need.”

NMHC president Doug Bibby welcomed the FHFA’s decision, adding: “This crisis is testing all of us – every industry, every family. No one should lose the roof over their head during a pandemic,”

“That’s why our members are taking action and why NMHC proactively issued a series of principles to assist renters, including a halt to COVID-19 related evictions and the establishment of payment plans for residents who are unable to pay their rent because of the outbreak.

“We welcome the Federal Housing Finance Agency’s decision today to offer mortgage forbearance to multifamily housing property owners who suspend evictions for those who have been financially impacted by this public health emergency. This is a necessary step. Most property owners are small businesses and they are committed to working with public officials and residents to keep families safe during this national crisis.” Bibby said.

“We know many of our tenants live from pay cheque to pay cheque and this is particularly the case at the lower end of the market.” the REIA said.

Meanwhile in Australia, the major banks have agreed to suspend home loan repayments for up to six months but there is no protection for distressed renters.

In comes as thousands of newly unemployed Aussies across the country queue up at Centrelink offices and crash the government’s website seeking assistance after 88,000 people lost their jobs on Monday and another 200,000 are expected to join the unemployment queue within the week.

According to the Real Estate Institute of Australia, there are over three million rental properties housing approximately eight million people nationwide.

“In these times of the coronavirus pandemic, we are in unchartered waters. If a tenant is unable to pay their rent, due to a loss of income, the situation is further exacerbated by the fact they may need to self-isolate for a period of time.

“A larger problem on the horizon is in the case of a property owner who cannot afford to make mortgage repayments because their tenant can’t pay their rent. We already have property owners, particularly in Melbourne and Sydney, whose tenants are overseas student currently locked out of the country.

“We know many of our tenants live from pay cheque to pay cheque and this is particularly the case at the lower end of the market.” the REIA said.

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