We are screwing over the small landlord, and it will only make the problem worse.
First off, let me say that I agree with helping renters stay in their homes. No one during this crisis wants anyone thrown out on the streets. Unfortunately, and as usual, the government is only fixing half the problem with their “tenant plan.”
Taking care of families is essential, but what about the landlords and their mortgage payments? Do they deserve different treatment than the people renting from them?
Unfortunately, this is what is being proposed all over the country, and I think it makes the problem worse, not better.
Here what they want to do:
The renter doesn’t pay rent, with no ramifications.
The landlord can’t pay the mortgage. The best-case scenario is the landlord’s credit is affected, and their interest rate goes up. Worst case? They lose their real estate.
Nothing happens to the bank, and they collect late fees, higher interest rates, and possible foreclosure.
As is always the case, and what I have been warning about since this Coronavirus debacle began, is that these idiots in government have no practical experience in the real world. If they did, they would stop pandering to a constituency and start working on a real solution.
This decision is desirable and safe for them, while the correct choice is not so simple. The easy answer is rarely the correct one, and these idiots are proving that once again, by taking the path of least resistance.
Had they done their homework, they would have had to ask the following questions before making a decision:
Would or should the banks get a pass?
Every time we have something like this happens, it is always “those poor banks. If we lose them, we lose the system!” So we suck up to them, get them what they need, and then sit back while they hand it to the rest of us.
Why do the renters get a pass?
Realistically they should be paying their rents. However, it is essential to concentrate on reality to deal with the problem in front of us. There will be mass evictions if we do not put something in place quickly, and no one wants to see that.
Why do landlords have to suffer? Shouldn’t everyone, or no one, have to feel the pain? We all know the simple answer is no, so why do we ignore it? Let’s do the easy steps of placing the burden on all three parties. Make it so no one gets hurt in the long run.
What should we do?
“We need to freeze all mortgage and rent payments for at least the next two months — no late fees or principal and interest payments to banks or landlords, a complete shutdown of the mortgage system. Everyone pays eventually, and go back and tack the two months onto the end of all mortgages and leases, using congress and the law if needed.”
Think about it, how is a renter who hasn’t worked in a month or more and is already living check to check able to pay back the rent owed over the next six months? Most of them live check-to-check?. By definition, they can’t pay more money.
What about the rental owner that can’t pay the bank because they didn’t collect the rent? How are they supposed to make up the difference in a few months?
These challenging but necessary changes will go a long way towards stopping the pain that is coming for the economy and the people.
You can’t give a break to two out of the three and call that equitable. The government should not be picking winners and losers at any level. And believe me, as someone who has been in business for almost 25 years, you cannot trust the banks as far as you can throw them. They are every bit as rapacious as their reputations portray them. They will avoid helping and will step in and take advantage of the first opportunity that presents itself.
Banks have been the recipient of more largesse from the Federal government than any industry, along with insurance companies, in this countries history. Additionally, banks have the resources to handle a short term cash shortfall, particularly with the access they have to the fed window and the near-zero percent rate they are paying. Paying us the taxpayer I might add!
I get the tenant needs a place to live, but what about the citizen that owns the property? Do they not have the same rights?
What about the young kids I have helped buy rental properties over the years? The ones that were just starting and bootstrapped and risked everything to buy a rental property. Who’s looking out for them?
What about the landowners that have significant holdings, earned over a lifetime of hard work, toil, and risk. Do they not count?
None of these owners are looking for handouts or government help. It’s the last thing they want. Unfortunately, because of choices the government has made, landlords have been forced to get in line along with everyone else or risk losing it all. Not helping them will be at our peril.
And helping all three is the right thing to do.
Not exactly something any pandering, narcissistic, life-long politicians, looking out for only one constituency, would have any idea how to do.
For more info about me, please go to jerrybrazie.com for links to my podcast, on Facebook at the Jerry Brazie business page, and my Facebook group page at The Succesful Mindset Group Page, and Twitter and Instagram @jerrybrazie.
