CONTENTS
- Federal Updates: Protections for Renters, Special Issue Brief on Consumer Credit
- Support the RMAI Legislative Fund
- RMAI COVID-19 Resources
COVID Updates – Federal
Protections for Renters
In response to the COVID-19 pandemic, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Among other protections, the CARES Act provided tenants in federally subsidized or federally backed housing, certain protections from eviction and late fees due to nonpayment of rent. However, in most instances these protections expired on July 24, 2020.
To provide continued protection for qualified renters, federal, state and local governments are taking action to offer relief to eligible renters:
- For renters of single family homes, the FHA, VA, and USDA have extended eviction protections until December 31, 2020;
- Effective September 4, 2020, the Centers for Disease Control and Prevention (CDC) has issued an order to temporarily halt certain residential evictions for nonpayment of rent for qualified renters. Unless the CDC order is extended, changed, or ended, the order prevents eligible renters from being evicted or removed from their place of habitation through December 31, 2020. To be protected from eviction for nonpayment of rent, each adult listed on the lease, rental agreement, or housing contract, must satisfy the qualification requirements for this protection.
So, what does this mean? If you collect rent for residential properties or conduct eviction proceedings, you will want to monitor these federal programs as well as similar state and local government programs. By understanding the qualifications for the programs, you can better allocate your resources to collect debt from those who can pay and extend their hardship programs to those who cannot.
Even if you do not specialize in residential property collections, by understanding these federal, state and local rent protection programs, you can suggest the programs to consumers who are struggling to pay their debts. Consumers participating in rental assistance programs can free up their limited resources to pay off the debts they have already incurred and save money for the future. Some states and local governments have:
- Prohibited any eviction notices or action;
- Stopped all court eviction hearings; and
- Stopped enforcing eviction orders or judgments
Visit LegalFAQ.org to find out if renters are protected by a local community eviction protection program during this time. For more information about rent and eviction protections at the federal level see, click here.
CFPB Office of Research Special Issue Brief: The Early Effects of the COVID-19 Pandemic on Consumer Credit
On August 31, 2020, the Consumer Financial Protection Bureau (CFPB) issued its second COVID-19 Special Issue Brief. This report describes trends in delinquency rates, payment assistance, credit access, and account balance measures with a focus on the period since the start of the COVID-19 pandemic (March 2020). Based on the credit outcomes analyzed, this report shows that between March of 2020 through June of 2020, consumers did not experience many of the negative credit consequences typical of periods of high unemployment and large income shocks. The report focused on mortgage, student and auto loans and credit card accounts from March 2020 to June 2020, and notes that outcomes may reflect payment assistance provided to American consumers through the CARES Act.
Specifically, the analysis shows during this period:
- Delinquencies actually declined on auto loan, mortgage, student loan, and credit card accounts;
- The number of accounts with zero payment due increased;
- Financial institutions both increased the number of closures of credit card accounts and halted credit limit increases. The report shows neither of these actions significantly limited overall access to credit;
- As of June 2020, contrary to market predictions, consumers did not appear to have responded to adverse financial conditions by increasing balances; and
- Consumer spending decreased significantly since the start of the pandemic.
Click here to read the full report.
So, what does this mean? According to the report, many of the doom and gloom predictions for consumer credit and the U.S. economy resulting from the pandemic have not proven to be true. Whether this result was due to the stimulus payments, the general resolve of the U.S. population, other factors or all three, an increase in credit card debt did not take place. Additionally, most of the accounts receivable management industry has not taken the financial hit to the bottom line predicted at the outset of the pandemic.
In many cases, the remote work force business model, coupled with tax refund payments and the Federal Government’s financial assistance program that benefited millions of Americans, have actually buoyed the collection industry’s economic outlook resulting in record-breaking months of revenue in the second and third quarters of 2020. This report offers insight into future consumer behavior, economic trends and charged-off debt volumes in a financial market that continues to baffle even the most astute economists.
Support the RMAI Legislative Fund
The reach of RMAI’s advocacy efforts extends to COVID-19 related actions as well as state and federal regulatory and legislative activity. If you haven’t contributed yet this year, click here.
RMAI COVID-19 Resources
Visit the RMAI COVID-19 resource page on the RMAI website to access other legislative and regulatory guidance and relevant information, RMAI Member Alerts, COVID-19 recorded webinars, and more.
RMAI’s Commitment to Consumers and FAQs is posted in the Resources for Businesses, Employers and Consumers section of the COVID-19 resource page as well as on the Consumers page of the RMAI website.
This alert is intended for members of the Receivables Management Association International and is for informational purposes only and is in no way intended to provide legal advice. Members are encouraged to consult with an attorney of their choice for legal advice concerning this matter.