Mortgage

Small landlords undergo essentially the most within the rental sector: Harvard confirms

The proportion of properties with rental difficulties is up to 5 percentage points lower in buildings with five or more units, as an analysis by the Joint Center for Housing Studies at Harvard University shows.

The finding in the Centre's annual report on the state of the national housing market, which shows that the hardship rate for buildings with more than five units was 12%, compared with 14% to 17% for small rental properties, shows the extent to which larger apartment buildings are against device properties Distress isolated.

This may be one reason for the mixed prospects in the rental sector.

Several multi-family mortgage managers, including Charles Ostroff, Fannie Mae's senior vice president and chief credit officer, were relatively optimistic about performance amid general concerns about tenant solvency. However, Ostroff said that in his case, this is due to the fact that the market with more than five units tends to outperform smaller apartment buildings.

On the one hand, the data from the Census Bureau show that buildings with a larger number of units have a lower proportion of distressed tenants, but they also show that the relative difference is limited.

With the expiration of certain federal programs and some loopholes in the safety net they are currently deploying, concerns about the performance of multi-family and single-family mortgages are mounting.

"I worry that 12 million people will be out of unemployment insurance the day after Christmas," said Chris Herbert, executive director of the Harvard Joint Center for Housing Studies, at a virtual event in connection with the report's release.

Even if the unemployment insurance, evictions, leniency, and paycheck protection programs were extended, the problems would persist because those programs were imperfect, said Marietta Rodriguez, president and CEO of NeighborWorks America nonprofit community development.

Eviction moratoriums have been of great help to tenants in the short term, but landlords can get into trouble if the amount of rent missing is not made up by the leniency available on government loans.

"We need to think about how the landlords and owners keep this up," Rodriguez said. “This is especially true for small landlords with smaller portfolios or one or two rental units. We care about them. "

A widespread lack of awareness of the leniency options available to some borrowers is another cause for concern, she added.

"I think a lot of people took advantage of it, but we see that many haven't and they don't even know about it," Rodriguez said.

In response to these concerns, the Mortgage Bankers Association and the Consumer Financial Protection Bureau have launched a public loan outreach campaign aimed at borrowing from borrowers.

Although the number of uncertainties surrounding government programs suggests the real estate market may not do as well in 2021, there is still a chance the outlook could improve, Herbert said.

"It's like the Christmas story. It could be the future," he said. "I think we still have the opportunity to take steps to prevent this from happening. I think this is just a call to say we need to take action. There is still time. "

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