There is no doubt we are living in an unanticipated situation in the United States, and the world as well. The COVID-19 is not only taking down people’s health but thousands of jobs and the country’s economy.
The Portland and Oregon real estate markets have seen a decreasing number of homes available for sale during June and July 2020, which means listed properties are selling quicker and to a higher price.
Anyone could think that this moment of the real estate market is a good sign but far from that, if we have in an account the variables influencing the market trends, as low-interest rates, the health, and local authorities recommendations to confront the coronavirus epidemic, unemployment rising to number never seeing before, the HB-4213 eviction moratorium law, the forbearance CARES act. It is obvious to predict that ending 2020 and during 2021, we will see hundreds of foreclosures in Oregon and thousands across the country.
What is The HB-4213 Eviction Moratorium Law?
On June 26/2020, Oregon’s legislature passed HB-4213, known as COVID-19 Eviction Moratorium law.
During the pandemic, tenants can defer paying their rent between April 1 – September 30, 2020. Landlords can not evict tenants for nonpayment during this time. Tenants will have six months (until March 31, 2021) to pay back the deferred rent. Landlords cannot charge late fees or other charges based on nonpayment of rent between April 1 and September 30, 2020. Landlords also cannot give notices of termination without cause or file for an eviction based on a termination without cause between April 1 and September 30.
Any rent that came due between April 1, 2020, and September 30, 2020, must be paid by March 31, 2021. Starting on October 1, tenants need to pay their rent each month under the terms of the rental agreement. But tenants have six months to pay back rent that built up before October 2020. Starting in October and after, a landlord can evict a tenant for not paying rent under the terms of the rental agreement but cannot evict a tenant for not paying any rent that was deferred between April 1 and September 30. A landlord will have to wait until April 1, 2021, to evict a tenant for not paying rent that came due during the eviction moratorium. If a landlord violates any part of the new law, a tenant can get a court order to force the landlord to allow the tenant to move back into their home. And a tenant can also sue the landlord for three months’ rent.
At Better Off Home Buyers offices, we have received a lot of worried homeowner phone calls saying that their tenants haven’t paid the rent since April or May 2020. Many callers are landlords having a second house as an investment, and still doing mortgage payments for their properties. They are afraid of the near future because if their tenants can’t get back on track, they would be in trouble to comply with their mortgage obligation.
Recently a landlord told us that his tenant stopped paying rent without notification. Also, his tenant hasn’t requested to defer his monthly rent payments according to the HB-4213 law. He was looking for legal assistance to find out his rights in this case, but one of the options he has as a landlord, for now, is to wait until the legal eviction moratorium ends, and see what is going to happen with his tenant.
Another option this landlord has is to sell his rental house to avoid foreclosure and all its consequences. Of course, it is difficult to sell a tenant-occupied house. There is not a real estate agent willing to work with a landlord in this situation, nor motivated buyers.
Better Off Home Buyers purchased his rental house and inherited the tenants. After an inspection of his rental house, we presented a fair offer to him. 7 days later we gave him a check paying in full for his property.
What is The CARES Act Mortgage Forbearance?
With the coronavirus pandemic still shuttering large swaths of the economy. Congress has stepped in to help struggling homeowners. The $2 trillion Coronavirus Aid Relief and Economic Security, or CARES Act, passed on March 27, 2020, included not only millions of cash stimulus checks but also a package of special aid for homeowners.
Forbearance is when your mortgage servicer or lender allows you to temporarily pay your mortgage at a lower payment or pause paying your mortgage. You will have to pay the payment reduction or the paused payments back later.
Forbearance can help homeowners to get back on their feet during short-term financial difficulty. The types of forbearance available may vary by loan type. Forbearance does not erase what you owe, you have to repay any missed or reduced payments in the future.
If a mortgage is backed by a federal agency including FHA, VA, USDA, Freddie Mac, and Fannie Mac, and if you are experiencing financial difficulty due to the impact of coronavirus, The CARES Act allows you to temporarily suspend payments.
For non-government backed or private loans, loan servers may also have forbearance or deferment options, contact your loan server to find out.
Through the CARES Act, you have the right to request forbearance for up to 180 days, with the possibility of another 180 days if you’re still under financial distress. As part of the relief program, you will also be given a mortgage payment reduction option, where future make-up payments will be spread out over 12 months or added to your mortgage payment once the reduction period is over.
As of March 18, the law also includes a foreclosure moratorium of at least 60 days which prohibits lenders and loan servers from taking foreclosure-related eviction action during this period.
To apply for forbearance, contact your lender directly. While the CARES Act stipulates you aren’t required to demonstrate financial need, experts recommend you write a hardship letter to keep track of your economic situation. For more information check The Consumer Financial Bureau site
The House bill 4204 establishes temporary limitations to lenders being able to enforce default remedies on obligations secured by mortgages, trust deeds, land sale contracts, or other instruments.
To take advantage of the payment deferral, a borrower must provide the lender with appropriate notice that the payment or payments cannot be made because of the COVID-19 pandemic. If the loan is secured by a residence with four or fewer dwelling units, the borrower need only “attest” that the borrower’s failure to pay is a result of the loss of income related to the COVID-19 pandemic. HB 4204 does not define “attest”; and the bill does not require this notice to be in writing. Thus, a residential borrower could arguably comply with the notice provisions by calling the lender and claiming that payment could not be made because of the COVID-19 pandemic.
During the Emergency Period, a lender cannot declare a borrower in default for failing to make a regular payment (or pay any other amount due to the lender under the loan) if the borrower notifies the lender that the borrower will not be able to make the payment because of the COVID-19 pandemic.
What Should A Landlord Expect In The Months to Come?
As we said at the beginning of this publication, right now the Portland real estate market as the big Oregon cities markets as well, are experiencing the ideal home sale conditions and the results every real estate agent once dreamed of. New listing properties don’t last in the market for more than 3 days, Up to 20 offers a new listing property could receive in 48 hours.
But this is just a mirage that will dissipate over the months. During the last quarter of 2020, we will be seeing renters relocating or searching for more affordable places to live. Even if unemployment numbers recover, still for the end of the year, we’ll be around 15% of people with no job.
By November and December, the first foreclosure wave of the corona-virus era will be the number one news item in the media. If we as a country don’t find the path to recover the economy, if the pandemic continues out of control 2021 won’t show a better scenario.
Homeowners and landlords who take action on time, selling their properties before the first next year’s trimester, will be in a better position to recover some of their property equity.
At Better Off Home Buyers, we want to help homeowners in need of selling their houses, every day we are receiving a lot of foreclosure leads, you don’t need to wait until your home is one of those foreclosure listing lines. Contact us filling out the information form in this page or dial directly (503) 212-9641
As a landlord, it may be that your tenants have already stopped making rental payments. They have the right by law to be protected by the HB-4213 Eviction Moratorium Law.
You as a compassionate human being, don’t have the heart to evict other people, but you need the money to keep operating, rental property is a business, and in its nature it has expenses.
Take care of yourself and your property as well, don’t take the risk to be facing a foreclosure. Contact us, we’ll be more than happy to help you!!