Canceling ALL Evictions Up to A Year, Additional $1200 Stimulus check for all, and automatic forbearance on all mortgages… We have A LOT to unpack on the HEROES Act (HR 6800), recently passed by the House.
Hey what’s going everyone, this is Sam Kwak here with the Kwak Brothers!
In this blog article, we have quite a bit to unpack and breakdown on the latest HEROES Act that was introduced on May 12th, and just yesterday, it was passed on the House Level. Remember, this isn’t law just yet. It has to be passed by the Senate and signed off by the president until it goes into full effect.
Like I mentioned above, the HEROES Act contains provisions on canceling evictions up to a year, an additional $1200 stimulus check to all, automatic mortgage forbearance for all mortgages… Wait a minute… Why does all of this sound oh so familiar…. (Scratch Head)
Well that’s right… this is just a proposal that pretty much combined all the little proposals that we’ve seen in the last few weeks. It’s like the Power Rangers where these robots combine together to form a bigger robot.
So in the HEROES Act, we’re seeing a little bit of the Rent and Mortgage Cancellation Act, Emergency Money to the People’s Act, BOOST to Communities Act, It’s just a melting pot of different proposals that we’ve already seen.
So the first point I want to break down in the HEROES ACt is the additional $1200 part. We’ve already seen this in the CARES Act but we’re seeing it again where individuals will receive another $1200 check like CARES Act 2.0
The next MAJOR proposal that affects real estate and my landlords watching this is the EVICTION Ban of all rental properties for up to 12 months + 30 days of the expiration period. So really, let’s just call it 13 months.
This provision covers all rental properties with a lease or without a lease. So even if your tenant is on a month-to-month lease, a non-payment of rent will not be a cause to filing an eviction.
Now, I get that this is meant to protect the tenants from the worst of us but this provision would only cause the tenants NOT to pay the rent because there’s ZERO consequences of doing so.
A perfectly awesome tenant whose been paying rent won’t face any eviction action if they choose to stop paying rent. Now, I think most of the tenants out there will be sensible about this and will try to be nice about it but we’ve all experienced tenants who (sigh) often take advantage…
I mean I get a 2-3 month eviction ban but 12 months… I think that’s pushing it…
That leads me to my next point where the HEROES Act also includes a provision for an automatic forbearance up to 60 days, and borrowers can request a forbearance of up to 12 months.
Now I did make a video about how mortgage forebearance can have a negative impact on the borrower’s ability to obtain future financing AND could lead to a massive wave of foreclosure because many banks may demand a lump sum payment at the end of the forbearance period.
But the HEROES act decided to close that loop by specifically addressing those concerns by adding other provisions to stop the credit bureaus from reporting negative reporting on the credit report
And also preventing lenders from collecting fees, charges, interest, and lump sum payments from the borrowers due to the forbearance
The HEROES Act also included a provision about providing funding and assistance to homeowners to pay for utilities, insurance premiums, property taxes, HOA fees, and other expenses of homeownership.
Now, this provision doesn’t specifcally name landlords (or lessors). But technically, landlords are homeowners as well. So my interpretation of the HEROES Act would also include funding for landlords to cover insurance cost, utilities, property taxes, and so on.
I’ll have more breakdowns when I return to the office next week in regards to multi-family & apartment investors and how this will affect you guys but overall, this proposal has A LOT of moving parts and I would say it has more provisions than the CARES Act itself.
Overall, I’m not sure how I feel about this though they seemed to have covered some of the grounds such as no consequences for the mortgage forbearance part, providing assistance for homeownership costs, while on the flip side, banning evictions for non-payment of rent.
Is it better than just complete cancellation of rent and evictions without support for the landlords? Yes…
But I think more and more individuals are tired of this whole quarantined lifestyle and they just want to get back to the normal life.
My whole thought on this is that any new stimulus has to help the country return back to normal, not sink into a stimulus-enduced state where the people would constantly have to rely on more stimulus after stimulus.
The goal is to empower individuals, howmeowners, and investors to have the highest fighting chance of returning to the normal.
With that being said, Stay tuned for more updates and I’ll be providing more breakdown on the HEROES act as it’s presented to Senate pretty soon!