COVID-19 Rent and Mortgage Payments

May 18, 2020

During the COVID-19 pandemic, rent and mortgage payments immediately began to go into default.   Job loss and other interruptions pushed default rates to new levels.    These housing defaults will play out in a way that may cause record amounts of bankruptcy within the next year.

Rent and Mortgage Payments Will Not Be Forgiven

A growing movement now fights for the permanent forgiveness of rent and mortgage payments during the months of COVID-19.  However, due to the legal complications, forgiveness for these months will most likely not be possible.  Eventually, these missed-payment months will need to be addressed.

The rent and mortgage payments that are missed during COVID- 19 will need to be caught up.  If they are not caught up, they will need to be addressed through modification or forbearance agreements.  Mortgage holders and renters will not face an immediate problem during the early months of COVID-19.  This is because evictions and mortgage foreclosure will be suspended for up to 6 months.  However, immediately after the 6 months, mass waves of foreclosure and eviction will likely occur after court restrictions are lifted.

Stay Up on Rent and Mortgage Payments

If at all possible, rent and mortgage payments should be caught up during COVID-19.   Mortgage and rent payments will always need to be addressed later where other forms of less essential debts may have more flexibility.  Because of bankruptcy and other debt-relief options, credit cards and other loans could possibly be reduced or eliminated.  Essentially, it is always best to address your most basic needs such as housing first.

Make Plans for Your Rent or Mortgage Early

If you do get behind, simply stay proactive with your rent or mortgage payment.  Many lenders or landlords may eventually offer modifications to your housing situation.  The most important thing to do is to communicate and negotiate early.  Remember, it is very likely that you will need to negotiate a forbearance or modification.  Your housing lender or landlord may not be interested in such negotiation if you get too far into the eviction or foreclosure process.

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