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Rural tenants, already delaying rent, face pinch without relief

‘Back to where we were in March’

The USDA Rural Housing Service’s Section 515 program has more than 400,000 rental units and is an important source of affordable housing.
The USDA Rural Housing Service’s Section 515 program has more than 400,000 rental units and is an important source of affordable housing. (Bill Clark/CQ Roll Call)

The impasse between the Trump administration and congressional Democratic leaders in negotiations over a COVID-19 relief package worries both advocates for rural low-income housing and owners of Department of Agriculture-financed rental properties.

Advocates and landlords say the now-expired federal $600 a week add-on to state unemployment payments probably helped the most vulnerable of rural tenants in USDA-financed rental units — those who don’t receive federal rental assistance — to stay mostly current with payments. In turn, property owners were able to pay expenses such as mortgages.

“Now we’re back to where we were in March,” said Colleen M. Fisher, executive director for the Council for Affordable and Rural Housing whose members build, finance, manage or own rural housing. Fisher said the uncertainty over a possible deal on federal unemployment payments leaves her members up in the air.

On Thursday, President Donald Trump said he could intervene in the next day or two with an executive order that might include unemployment benefits, but he offered few details.

Fisher said her organization doesn’t have a position on whether benefits should remain at $600 a week, but some of its members think the $200 a week proposed by some Republicans may not be enough to allow tenants to pay rent and feed their families. The organization also wants a COVID-19 bill that provides additional funding for USDA’s rental assistance program, which pays the majority of eligible tenants’ rent.

The relief bill passed by the House in May would provide $309 million through Sept. 30, 2021, to increase rental assistance for current low-income participants who have taken pay cuts or lost jobs. Language in the bill also would allow more renters in USDA-financed units to qualify for aid “without regard to any existing eligibility requirements based on income.”

Senate Republicans proposed $113.4 million to continue rental assistance without expanding aid to those not currently participating.  

The relief law enacted in March provided the $600 a week unemployment payments and a moratorium on evictions for rental housing financed by federally backed mortgages, including properties in the USDA Rural Housing Service’s Section 515 program.

The program is an important source of affordable housing and provides low-interest direct loans for construction of rental and cooperative housing in rural areas. The loans are repayable over 50 years and apply to 13,500 properties across the country with about 417,000 units.

The eviction moratorium for renters expired on July 24, but renters, depending on where they live, could receive protection under state eviction delays. If landlords have received deferments on mortgage payments, they cannot evict tenants for nonpayment during the deferment period, which is typically 90 days. The USDA’s Rural Development housing agency will continue to accept deferment requests while the federal national emergency is in place or through Dec. 31.


Tom Collishaw, president and CEO of the nonprofit Self-Help Enterprises in Visalia, Calif., which provides housing for low-income families, said 25 percent of the group’s tenants receive rental assistance from the USDA or other federal programs. He doesn’t have data on how many renters get unemployment benefits.

But Collishaw said California’s Central Valley, which had high poverty levels before COVID-19, is under pressure. Farmworker communities served by his organization have many residents who have seen their hours reduced, he said, adding that many are reluctant to seek government help because they are undocumented.

California had a seasonally adjusted unemployment rate of 14.9 percent in June, according to the Bureau of Labor Statistics.

Collishaw said rent collections have remained high, and he thinks it’s largely because federal stimulus checks and jobless benefits for those able to claim them kept tenants afloat. But he said tenants are taking longer to pay the rent. It took 21 days in April to collect all the rents, above the average of 10 days. It took 25 days in May, and his organization began payment plans for some tenants. He expects July rent collections to reach 97 percent with 8 percent to 10 percent of tenants on payment plans.

Self-Help Enterprises also has begun an assistance program for about 400 tenant households that provides an average of $300 to $500 for food and other needs.

“We know the stress is there,” Collishaw said.


Chris Potterpin, vice president of family-run PK Development Group LLC in Okemos, Mich., said the tenants he most worries about in his units are those earning $12 to $15 an hour with no federal or state help to pay rent. The company has 125 properties in six states and 65 percent of its mortgages are backed by the USDA.

About 60 percent of the tenants in those properties receive rental assistance and 40 percent are responsible for paying the full rent.

“They don’t have a government safety net and don’t have their own safety net because they are clearly living check to check because it is hard to get by anyway,” said Potterpin, who is president of the Council for Affordable and Rural Housing.

Rent collections at company properties have been steady, but the company has received mortgage payment deferments for several properties. Payments not made during this period will be tacked onto the mortgages, essentially extending the life of the loan.

Potterpin worries about rent payments in September and beyond if there is no expansion of the USDA rental assistance program or no additional unemployment benefit. Michigan had a seasonally adjusted unemployment rate of 14.8 percent in June, according to the BLS.

Potterpin said his company and its Michigan tenants may be aided by a new state program that will help tenants who fall behind and provide landlords with 90 percent of outstanding balances. He expects it to be a popular program and wonders how long funding will last.

When it comes to additional weekly unemployment payments, Potterpin said he doesn’t know what the best number is.

“I don’t think $200 would do it. Certainly it would help, but if you’re talking about folks who spend 50 percent of their income on housing and they’ve got $500, $700 a month left for the rest of their bills … it’s so tight. I’m not sure that’s the right number,” he said.

While the focus has been on renters, low-income homeowners in a Rural Housing Service program for individual mortgage borrowers, known as Section 502, were able under the March law to get an initial delay of up to 180 days in making payments on loans if they claimed financial hardship caused directly or indirectly by the pandemic.

They were able to request a second 180-day deferment of payments if necessary. The program provides direct loans from the USDA to low- to moderate-income borrowers or guarantees by the USDA to private lenders against default.

In June, USDA extended a moratorium on foreclosures and evictions for homeowners until Aug. 31.

Bob Rapoza, legislative director and executive secretary for the National Rural Housing Coalition, said homeowners had defied his fears that many would fall behind in loan payments.

“That may yet come,” Rapoza said.

He said Congress could strengthen the safety net for these homeowners by giving the USDA greater flexibility to lower a loan’s interest rate and to extend it for up to 30 years after the modification. That provision is part of the House recovery bill passed in May.     

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