RACHEL MARTIN, HOST:
In these uncertain times - how often have you heard that phrase uttered in the past few months? We've explored the uncertainty from a lot of different perspectives, and nothing can feel more destabilizing than not knowing if you're going to be able to make your rent next month. We've heard on this show about how much renters who've lost income from the current crisis are struggling. Today, we're going to hear from the other side of that relationship - the landlord.
MARILYN YIM: My name is Marilyn Yim. I am a small mom-and-pop landlord in Seattle with my husband. We live in a triplex with our children and our tenants. Our house was built as a single-family home in 1912 by an Irish immigrant who had 18 children, and so it's a good-sized home. Sometime in the past, it was divided into a triplex.
MARTIN: They both have day jobs, but they rely on the rental income they get from several properties around the city.
YIM: You know, my husband will be the guy who's pushing the lawn mower, so our tenants know us - get to know us very well. They see us. They know that our family lives here. And you know, it's very much a personal, up close, upfront relationship.
MARTIN: But that relationship has taken on a new sense of gravity. Since the financial crisis triggered by the pandemic, all her tenants paid late in April. And then in May, one of her tenants couldn't come up with the money at all.
YIM: We came to the table with some ideas of what we could do to help and meet them in the middle. And we've come up with a plan that'll take us through the next two months, and then we're going to check in again in June and reassess. But you know, my husband and I have also had the conversation of, ultimately, how long is this going to last? How long can we last?
MARTIN: They're worried because they don't have a lot of extra money on reserve to float their mortgages if their tenants can't pay.
YIM: We are not hoarding money here. And so we don't have a large cushion to tap into to get through something like this. Our mortgage lender is only allowing three months of forbearance, and then they want full repayment at the end of three months. It's hard for us to think how we're going to get through if our tenants get to the point where they're no longer able to pay.
MARTIN: NPR correspondent Chris Arnold has been looking into the dilemma that Marilyn Yim and many small landlords find themselves in right now, and he joins us. Hey, Chris.
CHRIS ARNOLD, BYLINE: Hey, Rachel.
MARTIN: So what stood out to you in Marilyn's story?
ARNOLD: Well, you know, first, I just think a lot of people are in this situation, and there's all kind of landlords out there. And I think people tend to think about landlords as, like, big, mean, faceless corporations or, you know, as people rubbing their hands together wanting the money.
ARNOLD: But there's just a lot of mom and pops who are regular people. And they want to keep good tenants and they want to help them, but they do depend upon this rental income - right? - 'cause they're not big corporations. They got bills they got to pay, too, like their mortgage. And you know, Congress mandated help for homeowners, and that includes small landlords like Marilyn who are in exactly this situation. And so when you played the interview for me, the big red, blinking alarm light that I heard in it was she said that her lender told her that if she skipped payments, she'd have to pay them all back in just a few months in this, like, giant lump sum...
ARNOLD: ...Which doesn't make any sense in this crisis. And this kind of big balloon payment thing is absolutely not the way that this is supposed to work.
MARTIN: OK, so how is it supposed to work?
ARNOLD: Good question. So we should say that this is for home loans that are government-backed, so by Fannie Mae or Freddie Mac. A lot of people don't even realize that their home mortgage is backed by the government in some way, but 75% of all home loans in the country are, and so is Marilyn's. I checked. And experts that I've talked to say that for the vast majority of people who are struggling financially in this outbreak, for them, the rules say that they should make payments again when they're able to, and it should be the same monthly payment. Their payment should not go up, no big, crazy lump sum. And the missed payments should just get moved to the back end of the loan term.
MARTIN: OK, so if it's a 30-year loan, now it's a 30-year loan plus, say, six months of missed payments on the back end. If these are the rules, Chris, why is Marilyn hearing something different, and can Marilyn just push back?
ARNOLD: Yes, I mean, she absolutely can. And I've talked to borrowers who have done that, and sometimes they get a much better answer. And here's what's been going on. After a lot of initial confusion, the Mortgage Bankers Association now says that the companies are dealing with this much better. There's better information out there. But the current system has a complicated set of rules, and it relies on lenders who've got, like, call center workers working from home - that they have to interpret this complicated set of rules properly. And borrowers are sort of at the mercy of their lenders getting this right. And arguably, it's not really going that well for a lot of people. Look at what Marilyn's been getting, all this bad information. So that's why there are growing calls from Congress to fix this. I talked to Steve Sharpe with the nonprofit National Consumer Law Center.
STEVE SHARPE: It's so important, we believe, for Congress to step in and clearly state through law that for folks who have COVID-19 forbearance, the real default should be putting their mortgage payments at the end of the loan.
MARTIN: OK, so just make that the default, make it automatic so there's no confusion - the payments just go on the back end.
ARNOLD: Right. And some members of Congress do want to do this. There's a bipartisan group of state attorneys general who were pushing for this, too. The CEO of a mortgage company I talked to likes the idea.
And I actually called up and talked to Marilyn and her husband again. And currently, they're using their tenants' security deposit and the last month's rent to sort of make up some of the difference of the rent that they're not able to pay, but that's not going to be able to go on for too much longer.
ARNOLD: And Marilyn said, look; I mean, having the certainty of this default option would make them much more comfortable skipping mortgage payments so that they could afford to be more flexible with their tenants.
YIM: Yeah, 'cause then we wouldn't even need to be talking about, you know, drawing down from the money that they already put on deposit with us. You know, we could leave that untouched. We would definitely have a whole lot more flexibility to really see, you know, if they are drawing from their savings, maybe they don't need to do that.
ARNOLD: And that's really the goal that Congress had in mind here - right? - I mean, helping people weather this storm and survive financially intact so that they can carry on with their lives and spend money and keep the economy going as we get through this pandemic.
MARTIN: NPR's Chris Arnold. Chris, thanks for helping us understand this. We really appreciate it.
ARNOLD: You're welcome.
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