California Homeowners Wonder How To Pay Mortgage As Renters Withhold Payments Amid Coronavirus Sheltering
SAN FRANCISCO (KPIX 5) -- More than one million Californians have already filed for unemployment amid the coronavirus shelter-in-place order. That massive loss of income has many wondering how to pay bills that are due next week.
Attorney Daniel Bornstein, who represents small landlords in San Francisco, is watching that trickle up to homeowners.
"Well, what about those homeowners who are dependent upon rent in order to cover their mortgage? In order to cover their property tax payments, utility bills, and what have you," Bornstein said.
Many homeowners are not expecting to receive rent payments next week which means they, in turn, might default on their mortgages.
"Some of the penalties that arise when you're late in paying a mortgage or you're late in paying property taxes, I would like to see those proactively waived across the board so that there's a more shared understanding of the risk involved," Bornstein said.
There is a lot of help being offered to homeowners. California has put protections in place and the federal stimulus package will add to it.
The credit protections allow property owners to defer one payment to creditors without penalty and request contract modifications for the next 120 days. There's a grace period on mortgages for up to 180 days on federally backed mortgages including FHA, NHA, VA, USDA, FHLMC and FNMA loans. Foreclosures and evictions have been stayed for 60 days.
Renters, if your landlord is not paying their mortgage you cannot be evicted, charged late fees, or asked to vacate for 30 days. For the next 120 days your landlord cannot take legal action for nonpayment of rent, but in most cases this relief only applies if you can prove your financial impact is a direct result of COVID-19.
"Without question, don't just stop paying your mortgage, bad things happen there," said Chris George, President and CEO of CMG Financial.
George's company provides direct-to-consumer mortgage lending services. He says your lender is where you need to start, and adds most questions can be answered online. If you can prove your finances have changed because of the virus, you'll likely qualify for relief but you will also have to be patient.
"Be prepared. For right now, that will be a pretty significant wait," George said.
The same is true for property taxes which are still due on April 10th. You can apply for a hardship exemption but determining who qualifies for property tax relief will likely take six weeks.
"The biggest impact has been confusion," said Keith Robinson, Chief Strategy Officer with NextHome Realty.
Robinson has been tracking the impact the shelter-in-place order has had on California's real estate market. He sees a small silver lining for people looking to buy.
"There will be buyers who were sort of somewhat locked out of the market due to competition that could find something for themselves, or if they felt comfortable taking action, could have an opportunity in the coming weeks and months," Robinson said.
He says California's housing shortage largely protects it from the volatility of the market, but things will likely cool off to some degree.
"Has there been a decrease in demand in the last week? For sure. There are people who were looking 10 days ago that are not looking today, there are sellers who were planning on selling 10 days ago that are not selling today," Robinson said.
As for those who are struggling to pay their bills, George says there's a silver lining there, too. This crisis has forced the industry to get creative.
"The consumer is going to have a lot of options on how they're going to repay those payments that they didn't pay and it goes all the way from, 'Okay, I'm back at work and I can pay the payment,' all the way to amortizing that payment over a series of months, all the way to adding that payment to the end of their mortgage," said George. "So there's a lot of optionality for them to be able to come up with that payment."
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