Out-of-work renters facing financial ruin

Many renters and landlords are peering over the edge of a financial cliff, praying for a quick end to the coronavirus crisis. At the bottom of the cliff lies lease defaults, ruined credit, evictions and homelessness.

There are no bailouts for renters and landlords, except for those $1,200 federal stimulus checks and unemployment compensation that the state of Florida keeps promising but so far seems unable to deliver.

Thousands of renters who lost jobs at restaurants, stores, salons, bars and other businesses won’t be able to afford to pay their April and May rents. If financial help doesn’t arrive, they’ll face limited choices:

Pay what they can now and work out a plan with their landlords to pay it back later over time, after those assistance checks, particularly unemployment checks with the extra $600 a week in federal stimulus money, start showing up.

Pay their rent with a credit card if they have one, if they have enough credit available.

Contact t heir local United Way agency and see whether they qualify for assistance from programs

with limited funding and varying eligibility restrictions.

See if they can find out whether the rental property is financed by a federally backed loan — a daunting task — and then demand up to 120 days of rent forbearance as required under recent federal legislation.

Make plans to move somewhere else.

If none of those options are feasible, they still have at least five weeks before they have to panic. Last week, Gov. Ron DeSantis signed an executive order barring courts from processing evictions through May 17. That means renters won’t be kicked out before then and most likely not for several weeks after courts resume taking eviction cases.

However, the order is not a rent freeze and renters are not off the hook. Tenants are still responsible for making up missed payments.

Landlords throughout Florida still expect to get paid, even as many tell their tenants they’ll try to work with those who have been sidelined.

Karina Goodby of Coral Springs said she approached her landlord to explain that her work at a Boca Raton law firm had been cut from five to two days a week and her husband, a glass installer, hasn’t worked in three weeks.

She says the landlord agreed to waive late fees but told her “she still has a mortgage to pay and there’s nothing about pandemics in the lease, so I still have to pay my rent,” Goodby said.

Waiving late fees is all Nicole Sanft-Itkin’s landlord offered when she asked for help, the Boynton Beach resident said.

“We’re covered for April but unsure after that. I’m not working anymore.” Florida’s unemployment system “hasn’t even acknowledged my existence and I have a diabetic child. I need to worry about how to put food on the table.”

Officials of social service agencies such as Legal Aid of Broward County and local chapters of the United Way are bracing for a sharp increase in the number of tenants thrown out of their homes if the shutdown persists into the summer and promised government checks are stalled.

The situation is particularly pronounced in South Florida, where the percentage of renters and the amounts they pay are higher than state and national averages. How a prolonged coronavirus shutdown could affect South Florida’s housing market is a scenario most in the rental industry are choosing not to think about right now, says Tom Stravecky, a real estate agent with ERA Infinity Properties in Fort Lauderdale.

“Nobody wants to be that guy who puts people out on the street, but many might not have that choice,” he said. Landlords have mortgages to pay as well, plus expenses related to upkeep and management of their properties. “For now, everyone is just dealing with April.”

Landlords hurting

Edwin Cordova, supervising attorney for the housing rights division of Legal Aid Services of Broward County, and Alisha Hurwood, chief operating officer of Coast to Coast Legal Aid of South Florida, say they expect a wave of new clients seeking help in fighting eviction cases that have been piling up during the moratorium. “Landlords are going through the same thing tenants are. They’ve lost income,” Hurwood said.

With no clear government direction, and no assistance to help owners of rental properties assist financially troubled tenants, most are forced to figure out a way forward on a case-bycase basis, Stravecky said.

Most landlords are willing to work with tenants who demonstrate that they are truly undergoing hardship, he said.

And for the most part, landlords are still getting paid, according to rent analysis studies tracked by real estate consultants. The percentage of April rent delinquencies as of April 5 in the Miami metro region, which includes Broward, Palm Beach and Miami-Dade markets, was 21 percent compared with 31 percent nationally, according to data collected for the National Multifamily Housing Council, an industry trade group of mid- to large-size apartment complex owners.

Adrianna Willoughby, a Florida Atlantic University student, says she was surprised on April 8 to find a letter under the door of the apartment she rents in Boca Raton. It demanded that she pay the balance of her rent in full within three days or vacate the premises.

Willoughby said the letter surprised her because she had made numerous contacts with her landlord, Investments Limited, and her property manager assured her they would accept half the rent and get the other half when her $1,200 federal stimulus check arrives. She told them that her husband, who is in the military, was transferred out of state and lost a portion of his housing allowance, and that her own job in an FAU work study program doesn’t cover the balance.

Jim Batmasian, owner of Investments Limited, said the three-day notices were distributed by company staff members as they normally do a week after rents are due for the company’s 4,000 tenants:

“I didn’t authorize sending out those three-day notices,” he said Friday. “I messed up in that I didn’t stop it.”

Batmasian said he was aware of DeSantis’ eviction moratorium on April 3 but thought it applied only to tenants directly affected by the coronavirus. Because it orders courts not to process eviction filings, there’s nothing he can do to force non-paying tenants out until it expires on May 17 anyway, he said.

“No, they don’t have to get out in three days,” he said. “We’re sitting down with each of these people (who didn’t pay in full) and asking what the problem is.” Tenants who lost their incomes and don’t envision being able to pay will be allowed to break their leases and move out, he said.

Tenants with credit cards are told that they can charge what they owe, Batmasian said.

For tenants who don’t have jobs and no other way to pay, “we’re showing them how to make sure they get that $1,200 check and helping them apply for unemployment.”

There’s another group he doesn’t have much sympathy for — couples who are still employed and have the means to pay their rent but know about the eviction moratorium and don’t want to pay. “They’re telling us, ‘Tough luck, you can’t evict me.’

“I can’t get an eviction through the courts right now, but I just found out what kind of moral fiber they have. I guess I’ll just put a check mark by their names,” he said.

Skipping rent

One potential lifeline, while not a rent waiver, would at least give many tenants time to catch their breaths without worrying about eviction.

Tenants have the right to skip rent payments for up to 120 days if the mortgage loans that financed their apartment complexes are backed by federal guarantors such as Fannie Mae, Freddie Mac or the Federal Housing Authority. That protection, part of the coronavirus stimulus legislation enacted on March 27 called the CARES Act, could apply to nearly 30 percent — 12.3 million — of 43.4 million rental units nationwide, according to the nonprofit Urban Institute, a consumerfocused research and advocacy organization.

But few tenants have access to data that would tell them whether their properties are backed by federal loans, and, not wanting to forego any more payments than they must, landlords aren’t typically forthcoming with that information.

At any rate, the forbearance for multifamily properties might not help tenants unless they can get a lawyer to help them challenge an eviction, said Cordova.

The CARES Act gives enables owners of these properties to request to delay their own mortgage payments for up to 90 days, but Stravecky says servicers of their loans, which include banks and private mortgage service companies, are resisting forbearance requests.

Like single-family home borrowers are reporting, many banks are telling the multifamily borrowers that they’d be required to repay all of the delayed payments in a lump sum at the end of the forbearance period, Stravecky said. “I think it’s almost a scare tactic,” he said. “I’m not sure they want people to take a forbearance.”

More federal stimulus money is needed to help tenants and borrowers, say spokesmen for the National Multifamily Housing Council.

The council supports a proposal by California Rep. Maxine Waters for $100 billion that would be used for grants to help tenants stay in their homes. Although tenants would have to apply for the grants, the money would go directly to landlords to make sure it’s not misspent.

While Congress is debating various proposals for additional stimulus spending, Waters’ proposal isn’t part of any active legislation.

In South Florida, multifamily property investors and owners hope it’s not needed. Many are optimistic that the state and nation will be on the downward slope of the coronavirus curve soon and that workers will start getting back to work in May, earning money and saving for rent.

Lower-than-expected delinquency rates for April are fueling optimism among apartment property owners, said Robert Given, who oversees about 200,000 multifamly housing units in Florida for Cushman Wakefield, a global real estate services company.

South Florida likely had fewer delinquencies because many apartments are n e we r, h i g h - e n d u n i t s rented by professionals who didn’t lose their jobs, as well as well-off retirees, couples with double incomes and no kids, and people who split their time between here and homes in the north, Given said.

Among properties he tracks, delinquency rates for high-end properties were about 4% to 5% on April 5 and 15% to 20% for the older lowest-cost units. Typically, rent delinquencies range from less than 1% for high-end tenants and no more than 2% for low-cost units.

If sustained too long, even 8% to 10% delinquency rates would create financial problems for owners, Given said.

Stravecky said he isn’t as optimistic that South Florida’s tenants will be heading back to work so soon.

“People aren’t allowing themselves to consider a doomsday scenario,” he said. “They think the doomsday we’re living in is going to be enough. Personally, I think it’s going to last much longer than we’re anticipating. I don’t see the nation returning to normal social interaction until July or August at a minimum.”