LendUp Blog 3 Things to Do If You Struggle with Rent or Mortgage Payments

It can happen to anyone: One day you’re employed; the next you’re laid off. Millions of Americans lost their jobs due to the coronavirus pandemic. With up to 78% of Americans living paycheck-to-paycheck and thousands without any savings, many people are wondering how they will pay their rent or mortgage during these uncertain times.Here are three things you can do if you struggle with your rent or mortgage payments.1. Use Government Eviction Moratoriums and Financial Assistance to Buy TimeGovernment eviction moratoriums and financial assistance programs can buy you some time.Government MoratoriumsThe Coronavirus Aid, Relief and Economic Security Act (CARES Act) provides homeowners and tenants with immediate protections.If You RentLessors (landlords) of covered properties - see below for more details -  are prohibited from filing new evictions for non-payment of rent and from charging fees, penalties and other charges related to the non-payment of rent.Lessors of covered properties also cannot evict a tenant after the moratorium period expires except on 30 days’ notice. That notice cannot be given until after the moratorium period expires.The federal moratorium does not prevent landlords from evicting if:The eviction is for some other reason aside from non-payment of rent or non-payment of other fees/charges.The property is not covered by the moratorium.The eviction was filed before the moratorium went into effect or after it expires.Covered properties include:Properties that participate in a “covered housing program” as defined by the Violence Against Women Act.Properties that participate in the rural housing voucher program under the Housing Act of 1949.Properties that have federally backed mortgages.Properties that have federally backed multi-family mortgages.Keep in mind that these are federal moratoriums. States may have their own eviction moratoriums, so check the laws in the state where you live. Many renters will be protected from eviction under one or both of these moratoriums, so it’s a good idea to find out how your state is handling rent issues.In Connecticut, for example, renters can’t be evicted right now and have a 60-day grace period to catch up on rent after the state moratorium is lifted. Other states, however,  may not offer a grace period, and you may be required to pay back rent right after it’s lifted.If You Pay a MortgageUnder the CARES Act, homeowners with federally backed mortgages are protected in two ways:Mortgage lenders and mortgage loan servicers of federally backed mortgages cannot foreclose on your home for 60 days after March 18, 2020. Essentially, lenders and loan services cannot start any type of foreclosure proceedings against you or finalize a foreclosure judgment or sale during this period of time.If you are experiencing financial hardship due to the coronavirus pandemic, you can request a forbearance on a federally backed mortgage for up to 180 days. You may also request an extension for an additional 180 days. Forbearance isn’t automatic. You will need to contact your loan servicer to request it. No additional fees, penalties or interest will be accumulated during the forbearance period, if it is granted to you. No additional documentation is needed. You only need to claim that you are experiencing a pandemic-related financial hardship.What if I don’t have a federally backed mortgage?You may still have relief options for paying your rent or mortgage through your state or through your individual loan servicer. Call your servicer to find out about your options.Other Sources of Potential Financial Assistance For those who are facing hardship, financial assistance may be available through:Section 8 Program: Income restrictions apply to who is eligible for assistance. Visit https://hsvha.org/hcv/ to see if you qualify.Department of Human Services: Provides rent assistance to low-income residents. Learn more here: https://dhs.dc.gov/service/emergency-rental-assistance-programSSI Rent Assistance: Supplemental Security Income (SSI) provides financial assistance for rent and utilities. Learn more here: https://www.ssa.gov/ssi/text-living-ussi.htm.County Housing Assistance: Your local county may offer some form of rent assistance to residents. Check the housing website for your county government for more details.Veterans Assistance and Financial Support: A special rent assistance program for veterans of the U.S. military services. Visit http://www.veteransinc.org/ to learn more.The Arc Program: Provides rent assistance to disabled adults. Visit https://www.thearc.org/what-we-do/public-policy/policy-issues/housing to learn more.2. Talk to Your Landlord or Bank About Your OptionsIf you’ve been laid off or are experiencing financial hardship, talk to your landlord or bank about your options for paying your rent or mortgage.Mortgage ForbearanceMany banks (mortgage lenders) and other mortgage loan servicers are offering forbearance options to borrowers. Contact your loan servicer or bank to find out if you qualify for forbearance and how it works.Forbearance is a period where your mortgage servicer or lender suspends (or pauses) or reduces payments.Forbearance does not forgive or erase mortgage payments. You will still be required to repay the missed or reduced payments in the future, and it is likely that you will still be charged interest on the outstanding principal of your loan.Banks and loan servicers handle forbearance in different ways. Before you enter into a forbearance plan, make sure that you understand how missed or reduced payments will be repaid.Once the forbearance period ends, you may be required to pay all of the missing payments at once, those missed payments may be spread out over several months, or they may be added to the end of your mortgage. It’s important to understand how a particular forbearance plan will work.Rent ForbearanceLandlords, under some circumstances, may not be able to evict tenants right now, but that doesn’t mean that they can’t start proceedings once the moratorium described above is lifted. To avoid further financial hardship and complicating the relationship with your landlord, try finding a solution (together) to making your rent payments that will satisfy both parties.Your landlord may be open to a forbearance period, providing a temporary discount or working out a payment plan.Being upfront and honest about the situation may make it easier to find a solution. Try not to wait until the last minute to discuss the issue because ringing up the problem early on will also help your landlord prepare.These are unprecedented times. Millions of people have lost their jobs due to the impact of COVID-19 on the economy. If you’re out of work because of the pandemic, it’s not your fault. Most landlords will be understanding to some degree because this pandemic has affected everyone.You can also consider making the request to your landlord in writing. A letter or email? may make it easier to have this difficult conversation and will also leave a paper trail that you can refer to in the future if necessary. Get your landlord’s response in writing.3. What to Do to Raise Money in the MeantimeOne way or another, you will most likely have to pay back any missed rent or mortgage payments. But in the meantime, there are quite a few things you can do to raise money.Ask Family and Friends for HelpIn times of hardship, friends and family are often more than happy to help. Reach out to trusted loved ones and explain your situation. They may be able to provide some financial help in the form of a loan or a gift.Find a New JobOptions may be limited right now, but getting any type of job (temporarily) can help you get through this time without piling on more debt.Depending on your skills and experience, you may be able to find remote work. Many businesses have found ways for employees to work from home. Most desk jobs can be performed remotely.If you cannot find remote work, you may be able to find employment at:Grocery storesFast food restaurantsRetailersCompanies that supply personal care and health care productsYou can earn money quickly through:UberLyftInstacartDoorDashPostmatesUberEatsExplore New (And Cheaper) Living ArrangementsIf you’re concerned about being able to pay back your missed rent or mortgage payments, consider new and cheaper living arrangements. Explore living with roommates.Finding more affordable living arrangements may make this time less stressful and help you get through with less of a financial burden.Borrow Money (Last Resort)If you’ve exhausted every avenue and are still struggling to make your rent or mortgage payments, borrowing money may be your only option. Taking on more debt, especially at a time like this, is never ideal, but it may be necessary.Depending on your credit and financial situation, you may be able to borrow money through:Bank or credit union loansPawn shopsPayday loans or cash advancesBefore you borrow any money, make sure that you understand the terms and conditions of repayment. Payday loans and cash advances typically have very high interest rates, so keep this in mind before you commit to taking out a loan from these providers.If you can't afford your rent or mortgage, you do have options. But it’s important to take action as soon as possible. Find out if you qualify for forbearance or other relief options, and start finding ways to raise money in the meantime.