How the Latest Stimulus Package Helps Renters
The $1.9 trillion stimulus package signed into law March 11 by President Biden contains more than $40 billion in aid that will directly help renters across the country. That includes the nearly one-fifth of U.S. renters who are behind on their rent payments. According to one estimate, the overdue rent adds up to nearly $27 billion.
Here’s a rundown of aspects of the legislation (formally known as the American Rescue Plan Act of 2021) that affect renters and, therefore, multifamily owners and investors.
Under the stimulus package, $1,400 checks are going to individuals earning less than $75,000 and couples earning less than $150,000, as well as each dependent. Therefore, a couple under the $150,000 income threshold with two school-age children would receive a total of $5,600. The income limits to qualify for stimulus checks are $80,000 for individuals and $160,000 for couples; still, about 85% of U.S. households will receive stimulus checks.
Emergency Assistance for Renters Act: This component of the stimulus package authorizes nearly $21.6 billion to help low-income renters pay rent (both overdue and future payments) and utility bills during the COVID-19 pandemic, and to help multifamily property owners recoup their costs. This money will be distributed by state and local jurisdictions with at least 200,000 residents.
Emergency Housing Voucher Act: This measure allocates $5 billion for 70,000 emergency housing vouchers geared toward people who are experiencing or are at risk of homelessness, as well as survivors of domestic violence and victims of human trafficking.
Coronavirus Housing Counseling Support Act of 2021: This earmarks $100 million for the NeighborWorks program to help renters avoid eviction and foreclosure due to COVID-19 pandemic.
Protect Rural Renters Act of 2021: This part of the stimulus package allocates $100 million to help renters in rural areas who have suffered financial hardships because of the COVID-19 pandemic.
Emergency Tribal Housing Assistance Act of 2021: This provision authorizes $750 million to help Alaskans, native Hawaiians and Native Americans cope with housing needs during the COVID-19 pandemic.
The stimulus legislation provides for $300 a week in extra unemployment assistance through Sept. 6, 2021, to workers who lost their jobs. In addition, it offers unemployment benefits through Sept. 6, 2021, to people (such as those who are self-employed) who otherwise wouldn’t qualify for jobless benefits.
An extension of the federal eviction moratorium was not included in the $1.9 trillion stimulus package. As it stands now, the nationwide moratorium that the U.S. Centers for Disease Control and Prevention (CDC) ordered last September is scheduled to expire March 31, 2021.
A day before Biden signed the stimulus legislation, a federal court in Ohio paved the way for owners of rental property to resume evictions in parts of that state. A court in Texas made a similar decision in December; the U.S. Department of Justice is fighting that decision. It’s unclear how the Ohio ruling will affect evictions in other states.
Various states and municipalities have enacted their own eviction moratoriums, which expire on different dates.
Paycheck Protection Program (PPP) Loans
The stimulus package allocates an additional $7.25 billion for PPP business loans. PPP lending still ends March 31, 2021, however.
Forbearance for Multifamily Owners
While not part of the stimulus package, multifamily owners have been given more time to apply for forbearance. Government-backed agencies Fannie Mae and Freddie Mac have pushed the forbearance deadline for eligible multifamily borrowers from March 31, 2021, to June 30, 2021.
This forbearance program enables a multifamily property owner to put off mortgage payments for 15 months — without a financial penalty but with interest still accruing — if they’ve struggled to collect rent during the pandemic or they’ve suffered other financial hardships.
During forbearance, a multifamily owner can’t evict any tenants solely for failing to pay rent. In addition, a multifamily owner can’t charge late fees or penalties for nonpayment of rent and must offer flexibility to pay back rent over time (rather than in a lump sum).