Homeowners get 90-day pass on mortgage bills. Renters still owe rent

This article was updated with comments from the Department of Banking on April 4 at 11 a.m.

The week started with the Grauer and Rojas families not knowing how they were going to pay their housing expenses. The COVID-19 crisis has both families bracing for a significant drop in income.

Rick Grauer – who owns his Fairfield home and numerous investment properties nearby – welcomed news Tuesday that Connecticut’s governor had negotiated with banks and credit unions to give a 3-month suspension of mortgage payments for struggling homeowners.

The Rojas family – who rents their apartment in Hartford – has received no such relief. Their landlord told them Wednesday that rent must still be paid this month.

Amelia Rojas– a mother of four – doesn’t know where they are going to get the $850 to pay the rent. She no longer has a job as a housekeeper, the restaurant her husband worked at closed and his hours at a landscaping company were significantly scaled back.

“We had to make a choice,” said Rojas. “We bought food and other essentials and hope that we aren’t evicted.”

Housing advocates say that with countless families like the Rojases out there, it was hard for them to watch Gov. Ned Lamont arrange a 90-day pass for homeowners, while renters – whose income is typically less than half of homeowners – get no such reprieve.

“Where is the renter’s relief?” asked Erika K. Stanley, who rents in Bridgeport.

Mortgage relief disproportionately benefits residents in Connecticut’s more affluent communities. For example, in Fairfield, 83% of the residents owned their homes, compared to 24% in Hartford.

“Why do you keep putting the burden on the people least able to bare it?” asked Kathy Flaherty, executive director of the Connecticut Legal Rights Project, Inc., which represents low-income people with mental health conditions.

Help doesn’t appear to be on the way.

Asked twice this week whether assistance is coming for tenants whose grace period to pay rent ends April 10, Lamont deflected the question, pointing out that judges are not hearing eviction cases during the crisis.

“I can tell you one thing about renters is there won’t be any evictions. The court is down,” said the Democratic governor. “They’re not worried about foreclosure or an eviction.”

Halting evictions isn’t as good as it sounds

Like in most states, Connecticut’s courts have been ordered to stop processing eviction requests from landlords. But tenants are still legally on the hook for paying rent even with the courts closed – and can face eviction when courts reopen for any rent they are unable to pay.

“It does not prevent landlords from filing. It might mean that the [marshal] won’t come to your door to physically evict you from the house, but your landlord can still initiate an eviction process,” said Alieza Durana of The Eviction Lab at Princeton University. “We call it the, ‘Scarlet E.’  That eviction could prevent them from accessing future housing, trigger future job loss, affect their mental and physical health and their family’s wellbeing. So while these moratoria are important first steps, it does not blanketly ensure that renters everywhere are going to stay housed.”

During the first 14 days that the courts stopped hearing these requests to evict, 516 families have had lawsuits filed against them, court filings show. While many of these complaints involve tenants not paying rent in the weeks leading up to the pandemic, housing advocates worry that with April rent due now, even more people will face huge consequences when they aren’t able to pay rent.

“Right now as we speak, new eviction cases are being filed,” said Amy Eppler-Epstein, an attorney with New Haven Legal Assistance. “What we don’t want to see happen is when the courts reopen that there are thousands of eviction cases for everyone who wasn’t able to pay their rent.”

“I don’t know what’s going to happen when the four month moratorium lifts and you’re four months behind on your rent,” said Jeff Gentes, managing attorney with the Connecticut Fair Housing, whose clients include low-income tenants struggling to pay rent. “The rent’s not going away.”

Two-thirds of the families living at P.T. Barnum Apartments, a housing complex for low-income residents in Bridgeport, report they are going to have a hard time paying the full rent they owe in April because they lost their jobs when COVID-19 touched down in the state, a survey done by a coalition of residents shows. Residents in public housing or receiving housing vouchers are able to have their rent recalculated based on the drop in income, but many are finding it hard to navigate the system and fill out the paperwork. (Click here for a tool Connecticut Fair Housing has set up to help)

“Basically, the residents are left to fend for ourselves,” said Zenida Gonzalez, a resident an member of the coalition, called P.T. Partners. “It’s sad, but that’s the world we live in.”

There is some hope that the additional federal benefits for increased access to unemployment benefits, paid sick leave and the one-time $1,200 check will help tenants be able to pay rent.

But there is a five week backlog for processing unemployment claims in Connecticut and many workers who rely on tips or contracted work won’t get as much as they typically earn. Also, not all large employers have to provide paid sick time, and several aren’t. The one-time stimulus payments will barely cover one month’s rent for the typical household in Connecticut.

Undocumented immigrants like the Rojas family aren’t expected to qualify for any of this help, despite having paid taxes since moving here 14 years ago from Mexico.

“These have been an important first step in trying to prevent evictions from taking place during the pandemic, but many of the policies still leave holes for families to fall through,” said Durana from The Eviction Lab. “I think these holes really underscore the need for a robust housing relief package.”

What will landlords do?

Millions: that’s how much Grauer owes the bank for his investment properties scattered throughout Fairfield County and New Hampshire.

On the eve of rent being due – and with several tenants indicating they weren’t sure they would be able to pay – Grauer was mulling over what he should do.  All the scenarios involved him calling the bank and pleading for mercy.

“April and May are going to be really scary months,” he said Monday.

With the majority of mortgage lenders agreeing to give landlords like Grauer three months off from paying their mortgage – and tack on the missed payments to the end of the loan – some are hopeful landlords will share the benefit with their tenants.

“It’s probably in the landlord’s interest to work something out with the tenants who’ve lost their jobs,” said Matt Spiegel, a professor at Yale University’s School of Management specializing in housing and finance.

That’s because it’s expensive to kick someone out, and finding someone to move in right now could be difficult.

“We can avoid this huge economic friction by somehow retaining the ties. Rental assistance helps with that,” he said.

A spokesman for the Connecticut Department of Housing said the agency is, “working through these issues” when asked if the Lamont administration plans to increase rental assistance programs — such as housing vouchers — or other eviction prevention efforts for those who are unsure how they’re going to pay rent. It is not yet clear how federal funding dedicated for housing will be used by the state.

“Landlords are asked to be compassionate and patient — they can do their part to help prevent the spread of COVID-19 by allowing tenants to stay safe and stay home,” said Aaron Turner, the DOH spokesman.

But landlords waiving rent is not guaranteed, and some are skeptical it will happen on a broad scale.

One reason is that many landlords rely on the rent payments to pay their own living expenses, said Kevin Gray, a lecturer at Yale’s School of Management specializing in real estate and housing markets.

“They’re probably going to have less interest in rebating rent,” he said.

Not all landlords are civic-minded, either.

“It may come as a surprise to you, but we have some pretty devious people in our business,” said Gray. “There’s a certain part of the industry that is maybe not as civic minded as you would wish. I just hope there are landlords out there that would take advantage of the situation.”

Matt Smith, spokesman for Lamont’s Department of Banking, said those who receive a three-month forbearance for paying their mortgage will not be required to suspend rent collections. Since the majority of mortgages are federally-backed, Smith said, “The Department of Banking cannot override or dictate the terms of federally backed mortgages. That has to come from the feds.”

Fair housing attorneys disagree that Lamont administration doesn’t have the authority to require a rent freeze. Gentes points to a Supreme Court decision from the Great Depression that allows states the ability to modify contracts during emergencies.

“The state could modify contracts. Aggressive action could be taken. It would be a fight. I don’t know if it would prevail with this Supreme Court,” said Gentes.

Those who are unable to pay rent may have their credit ratings negatively impacted. The three-month reprieve being offered to homeowners will not impact credit scores. For the 516 families whose landlords have filed complaints since the pandemic began, their credit scores will be impacted since many rating agencies use those filings.

“There’s credit consequences to filing an eviction on the judicial website, even if they’re not being acted on,” said Shelley White, litigation and advocacy director at New Haven Legal Assistance.

Advocates also worry landlords will raise rents after the pandemic to make up for lost revenue, rendering thousands homeless who were unable to work as COVID-19 shuttered the economy.

“They won’t be able to afford the new rent,” White said. “Our tenants are already very rent-burdened in Connecticut. … Everybody has lost money in this crisis and the recession it’s creating. No one group of particularly poor tenants should be saddled with the need to make up the losses in our economy.”

But Gray points out that homeowners have historically been favored.

“I would say there’s a bias towards homeowners, and they’re the least impacted. But they’ll probably be doing more for the homeowners than the renter,” he said. “I’d like to think the state does something to help individuals who are apartment renters.”

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