The CARES Act imposed a temporary moratorium on evictions for federally supported multi-family dwelling units, which expires July 24, 2020.
Where should you turn next if your rent payments are in arrears and you face the prospect of losing your apartment? Follow the money.
Private lenders have the resources for creditworthy tenants who have the financial capacity to cover loan repayment and rent at the same time.
Tapping into your 401K retirement fund or suspending student loan payments could free up cash to satisfy your landlord.
Federal and state governments can sell bonds and then distribute the funding following needs-based criteria. However, charities and churches rarely have resources.
Emergency Loans for Rent
The private sector is the ideal place to turn for an emergency loan to help you pay rent that is due immediately. Commercial lenders can respond more quickly to help you avoid eviction than a public agency ever could.
Afterward, you can turn to government programs (see below) that assist with more favorable terms – but typically take longer to get.
Emergency Eviction Loans
Request an emergency personal loan (Affiliate Link) if you need help paying your rent as soon as possible to prevent eviction. If approved, the lender could deposit funds directly into your checking account right away – allowing you to meet your payment deadline.
Borrowing money during a financial crisis is rarely a good idea because you take on additional costs in the form of origination fees and interest charges. Therefore, take this step only as a last resort with your eyes wide open to the consequences.
- It would be best if you had enough income to cover your future lease obligations plus the monthly payments on the loan
- People with delinquencies appearing on their consumer report face higher borrowing costs and lower approval rates
You will be hard-pressed to find government-sponsored rental assistance loans for payments in arrears. No federal or state agencies that we could discover, lend money directly to consumers with a pending eviction crisis.
On the other hand, two federal departments support loan and payment modifications that could help tenants that are in danger of being forced out of their apartment shortly.
The federal government allows the use of money held in 401K retirement accounts to help renters avoid an eviction notice. Under Internal Revenue Service (IRS) rules, retirement plan sponsors can allow two types of distributions without incurring penalties.
- 401K loans can fund short-term rental obligations, but the employee must repay the money to avoid paying income taxes and penalties
- 401K hardship distributions can support an immediate and substantial financial need if limited to the amount necessary to alleviate the crisis
Furthermore, IRS safe harbor rules state that an employee automatically qualifies for a 401K hardship withdrawal when he or she uses the money to prevent eviction from his or her primary residence.
Tenants with ongoing student loan payments may be able to forestall eviction by redirecting these funds to satisfy your apartment lease. You may be able to eliminate or reduce your monthly student loan obligation temporarily because of economic hardship or disability.
Student loans issued by the federal government offer several options that could allow you to focus your limited resources on rent payments – at least temporarily.
- Deferment and forbearance allows the suspension of payments for a short period while interest may continue accruing
- Income-driven repayment plans lower monthly obligations while retaining possible forgiveness eligibility
For example, the Department of Education granted automatic student loan deferment with no interest accumulation in response to the Covid-19 national emergency. The suspension of payments lasts from March 13 to September 30, 2020.
Rental Assistance Programs
A wide array of rental assistance programs can benefit tenants looking to avoid eviction when they have more than just a few days to find support. Keep in mind the lengthy application process, which precludes those looking for financial help today.
The federal government provides rental payment subsidies at the beginning of a lease term. The application process takes time, as the agency needs to verify the level of financial need. Therefore, these programs do not help tenants who need money tomorrow to avoid eviction.
For example, the Department of Housing and Urban Development (HUD) provides three types of resources to help you find a more affordable place to live.
- Privately owned subsidized housing
- Public housing projects
- Housing Choice Voucher Program (Section 8)
Rental Assistance Grants
Beware of the online companies touting government grants for rental assistance. The federal government does not issue grants to individuals – instead, national departments award grants to universities, state agencies, and nonprofit organizations.
Therefore, tenants must follow the grant money to these end-point entities to find the help they need.
The state housing authority (under HUD) or board of social services in the region where you live is the best place to turn for rental assistance. State governments can tap into federal grant money, bond sales, and taxpayer funding to offer resources to low-income residents in danger of becoming homeless.
Also, many state agencies have responded to the Covid-19 economic crisis. Many families lost their jobs during the shutdown and will face difficulty covering living expenses when the extra unemployment benefits expire. For example, New Jersey created a $100 million fund to address this problem.
Research the programs available in your state and their qualifying criteria.
Charitable organizations often receive government grant money, which they combine with donations from corporations and individuals to fulfill their mission. However, an eviction prevention program that offers emergency money for rent is rarely one of their programs.
Also, keep in mind that funding is scarce, and demand often exceeds supply – especially during times of economic crisis. Therefore, temper your expectations about how much direct financial support with the rent you might be able to find.
- 211 is a vital service that connects people to centers of help in their area but does not provide monetary aid themselves
- Catholic Charities owns and operates 35,000 affordable housing units and 11,000 rapid rehousing beds
- Eviction Defense Network offers free legal consultations to at-risk tenants in the Los Angeles, California area
- Eviction Defense Collaborative provides legal aid and interest-free loans to tenants in the San Francisco, California area
- The Salvation Army primarily operates homeless shelters and other forms of transitional housing
- Red Cross helps people find temporary shelter after leaving their home due to an emergency or disaster
The local church most likely to help you pay rent is the same one you supported in the past through your tithing and service in ministry. Also, having a personal relationship with the pastor, priest, rabbi, or imam makes a big difference.
Every place of worship has more financial needs to fill than their budgets will support. Therefore, churches often prioritize giving on more significant requests, such as eviction avoidance, to committed members of the body.
However, many church outreach programs help low-income members of the community with food pantries and raiment (used clothing). The regularly donated sustenance and apparel presents an opportunity to share the Gospel with non-believers. Use the money saved towards paying your landlord.