Mass Evictions Set To Begin


On March 27, the CARES Act was signed into law and included a moratorium through July 24 on evictions for those living in homes funded by federally backed mortgages or who rely on housing vouchers. This protection covers roughly a third of renters and expires today, putting millions of families at risk of losing their homes in the middle of an unprecedented health and unemployment crisis.

Once the moratorium ends, landlords must still give renters 30 days’ notice before filing a complaint in court. Some states and cities have their own bans on evictions so renters should check with their local government if they receive notice.

Over 17 million Americans are still unemployed and unable to find work, and the number of confirmed COVID-19 cases only continues to rise. Removing families from their homes amid the surge in cases will result in even more lives being lost.

According to a report by The Center for Public Integrity, communities of color are most at risk of losing their homes. This same group is also the most vulnerable to the disease because of structural conditions. One example is that Black and other people of color are more likely to be considered essential workers or work in jobs that can’t be done remotely. The disparities in the quality and access to healthcare for Black individuals has been widely documented as well. These factors mean that the expiration of the moratorium on evictions will disproportionately affect Black and brown communities, and widen the racial wealth gap.

According to the report, “low-income housing tends to be clustered in Black and brown neighborhoods, because centuries of discriminatory laws kept Blacks out of white communities by restricting where Black people could get a mortgage, and covenants that prohibited owners from selling or renting homes to non-whites.”

Aside from the obvious hardships that result from families being thrown into the streets, social and financial implications are just as devastating. According to Princeton sociologist Matthew Desmond, evicted families regularly lose their jobs, lose their possessions, and have higher rates of depression. Children are not spared by the instability either. Worse outcomes in education, health, and future earnings are all linked to the uncertainty caused by eviction. The crippling effects of losing a home are long-lasting, even for the youngest groups affected.

Schools in Los Angeles and San Diego won’t reopen for in-person classes this fall, and other school districts are following suit. Evictions would result in children not only losing their homes but also their ‘classrooms’ and places of study. The loss of access to the internet and other basic services would again hit communities of color the hardest. 

The Black Lives Matter movement has reached widespread support, with over two-thirds of U.S. adults supporting it. However, eviction perfectly highlights the systemic racism plaguing our country, and not extending eviction protections will only move our country backward. According to the ACLU, “women of color, and particularly Black women, are especially vulnerable to eviction for many reasons, including staggering pay disparities and wealth gaps.”

Between 2013 and 2019, average home prices increased by 47% while wages rose only 16%. The affordable housing shortage has caused countless families to be trapped in a vicious cycle where a seemingly good job is no longer able to cover basic necessities after a few years. 

In July, 1-in-3 renters did not make a full on-time rent payment. The figures for homeowners were almost as high. As mass evictions are poised to ravage communities throughout the U.S., there are calls for the federal government to step up and renew the moratorium.

Some bills have been proposed by House Democrats, which include forgiving or canceling rent payments. These proposals put the onus of seeking assistance on the landlords and not tenants, which would increase the number of individuals who would be protected since many Americans weren’t aware of the existing moratorium.

The $600 unemployment supplement is set to expire at the end of the month, exacerbating an already desperate situation. The GOP-led Senate is expected to introduce another stimulus bill early next week and to formally begin negotiations with Democrats to craft a new piece of legislation. As it stands, the GOP’s current framework focuses on additional direct payments, more PPP loans, expanded unemployment benefits, liability protections, and funding for schools to reopen. If eviction and housing protections are not included in a final bill, a catastrophic wave of evictions and homelessness will shatter countless communities and lives. Adequate housing is a fundamental human right, and as a nation, we have lost sight of that.

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Building a Personal Advisory Board for Finances


COVID-19 is making people take a hard look at their investment strategies, estate planning, insurance and their real estate. Market volatility has given rise to “experts” who are coming out of the woodwork with spam emails and ads that offer assistance with stocks or investment opportunities in hard assets like gold coins. Bad decisions are made in hard times, so it’s the perfect time to create an ad hoc personal advisory board for finances.  People who are looking at the overall assets of your business and family.  Businesses have Advisory Boards who take a hard look at the strengths and weaknesses of sales and revenue, receivables, expenses, debt and cash management to ensure the financial health of the organization. Who is doing the same thing for you to ensure a strong “Return on Life” (ROL).

The Power of ROL vs. ROI

Return on Life addresses the heart of what a person wants to achieve in their lifetime, whether that’s to retire by 50, create a non-profit to give back, ensure the family’s financial stability for the next generation or just to secure a carefree retirement.  Finances should ladder up to those personal fulfillment goals and lay the foundation for the next phase of life’s journey, whatever that might be.

One of the biggest challenges for people seeking guidance is knowing who to talk to about what because many financial advisors are very siloed into their areas of expertise. Just like siloes can be dangerous for a business, they also create pitfalls for personal financial planning. Firms like Miracle Mile Advisors have Family Office capabilities to bring a one-stop-shop option for clients looking to maximize their assets and align their financial goals with their personal goals. This means that experts in investment, real estate, taxes, insurance, trusts/wills, philanthropy and personal budget allocations come together to discuss each client’s objectives and determine an overall strategy and timeline to reach these goals. The areas of focus during the current crisis should be:

  • Investment Analysis – While it seems obvious, the pandemic has left many paralyzed or worse, desperate to take action. A steady hand is needed to navigate these unsafe waters, re-assess risk profiles and perhaps plan a new endgame.
  • Taxes – Virus relief has created new COVID-19 tax relief strategies that could impact every financial decision you make. Where can you take a loss to cover a gain? Every asset bears scrutiny.
  • Insurance – From life insurance to key man insurance, people should take this time to do an insurance assessment. Life Insurance has suddenly become very expensive, so maybe the policies need to stay in place for now, but do you think you’ll up coverage down the road? We are learning in real-time what makes us sleep better.
  • Social Good – We are seeing many clients step-up their contributions to charities and non-profits that support the local community and healthcare workers on the frontline. We see this as an investment in the ROL that contributes to social health now and will pay dividends in one’s legacy.
  • Estate Planning – No one wants to think about dying during a health emergency, but it is more important now than ever to get your house in order. People who have spent their lives building their wealth and their families want to ensure the next generation is taken care of and no assets are left in doubt. It’s an appropriate time to take stock of living trusts, wills, business continuity and the overhead of properties.

Sleeping Better at Night

Fear of the unknown can be immobilizing, but the right personal advisory team, combined with transparent data, can provide the visibility and expertise to navigate the future no matter how stormy the waters. In fact, today’s tech-savvy wealth management firms can set up clients with a personalized mobile app that can track all their assets in real-time and connect them with their financial planner at the touch of the button. This small step brings comfort when people feel overwhelmed by the many things they cannot control right now.

Technology has changed the way that financial advisors work by integrating the latest machine learning and predictive technology to determine the optimal ways to manage their portfolio. However, none of the data means anything without the right team to interpret and tailor it to a client’s life goals.

Besides a medical practitioner, there are few professional relationships in this world that are as intimate and personal as a financial advisor. It’s a relationship built on trust, open lines of communication and expertise regarding your life.

 



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The Coming Housing Crisis Is Already Here


Millions of renters and homeowners could face evictions and foreclosure as many have trouble paying their bills in the recession. With temporary job losses turning permanent and the unemployment rate still at double digit rates, many families do not earn enough to make ends meet. They often rely on government assistance, but that government help in all forms – from added unemployment insurance checks to eviction and mortgage moratoriums — is starting to fade. Families could then quickly lose the roofs over their heads.

The recession brought massive job losses and record high unemployment with it. Families quickly fell behind in paying their bills, especially rents and mortgage payments, as they lost jobs and incomes. Rent and mortgage payments are among the largest and most consequential monthly payments for most families. If they fall further behind on those payments, they can lose their apartments or houses to evictions and foreclosures. Losing one’s home can further exacerbate other financial pressure, mainly because it becomes costlier to find a new place to live, and leave many families homeless or reliant on family and friends.

The federal government provided assistance to struggling families early on in the pandemic. This aid included moratoriums on rent and mortgage payments for federally backed properties as well as moratoriums on evictions and foreclosures. In addition, at the end of March, Congress passed the CARES Act that included stimulus payments, whereby adults could get up to $1,200 plus $500 for each child. The legislation added more financial support for struggling families after Congress increased the amount of unemployment insurance benefits for a larger number of people than would have otherwise received such benefits. Renter and homeowner protections coupled with added income support allowed a lot of people to stay in their homes that otherwise would have been out on the street.

Yet much of this government support is gradually disappearing. Federal protections for renters last through July, while mortgage forbearance protections expire in August. Added unemployment insurance checks will also come to an end before July runs out. The end to government assistance is coming at a time when the unemployment rate is still at double digits and some states are reimposing restrictions, forcing new waves of layoffs.

Many renters and homeowners with a mortgage already struggle, even in a world with government support. The Census reports that during the two weeks from June 11 to June 23, 18.2% of renters and 12.4% of homeowners with a mortgage didn’t pay their rent or mortgage or deferred those payments.

Many of those having trouble paying their rent or mortgage already lack regular income sources. For instance, only 50% of struggling mortgagees, who couldn’t pay their mortgage in mid-June, had some regular income, compared to 80.6% of mortgagees who paid their mortgage. Among struggling renters, an even smaller share, 40%, had a regular income, compared to 65.6% of renters, who paid their rent. As permanent job losses and long-term unemployment quickly rise, many renters and homeowners will continue to struggle paying their bills.

Families having a hard time paying their rent or mortgage already often rely on government assistance. For example, 29.6% of renters who did not pay their rent or deferred it in mid-June, used stimulus money to pay their bills and 20.2% relied on unemployment insurance benefits. Among struggling mortgagees, 31.7% used stimulus money and 19.0% had unemployment insurance benefits to pay their bills. As federal assistance disappears or shrinks, many renters and homeowners who deferred payments, for example, will not be able to make those payments after all.

Worse, many renters and homeowners who so far have paid their bills rely on government support, too. Among renters current on their rent, 27.8% used stimulus checks and 17.6% unemployment insurance benefits. And among mortgagees, who were up on their mortgages, 21.1% used stimulus money and 11.0% used unemployment insurance checks to pay their bills. Without Congress extending more financial assistance to families, many renters and mortgagees, who currently still pay their bills, could quickly fall behind on their payments.

The necessity of added government help is also apparent from the fact that many renters and homeowners are already going deeper into debt and using up their savings. More than one-in-five renters – 23.2% to be exact — who are paying their bills, went deeper into debt, for example, by using their credit cards, and 21.2% used savings. These shares were similar among struggling renters with 24.5% and 21.6%, respectively. Among mortgagees, who paid their mortgages, 24.5% went deeper into other debt and 23.3% used savings. More worrisome, more than one-third, 35.8%, of struggling mortgagees went deeper into debt and 31.5% dipped into their savings – and still could not afford their mortgage. A large share of struggling renters and homeowners are depleting their own resources, while they still cannot pay all of their bills. And many renters and homeowners, who are keeping up with their housing payments, have fewer and fewer reserves left if anything goes wrong.

The labor market will likely remain depressed for some time, especially as several states are now reimposing restrictions on businesses to get control on record virus cases. Temporary layoffs will increasingly turn into permanent ones. Families will find it harder and harder to pay their bills. Many have already dipped into their reserves, even with stimulus checks and added unemployment insurance benefits. All of this makes or a toxic combination that could result in massive evictions and foreclosures later this summer and going into the fall.

The federal government has the financial wherewithal to extend much needed financial assistance, while also protecting struggling renters and homeowners from losing their homes. Without this support, the country could quickly see a massive wave of evictions and foreclosures, destroying livelihoods and communities in its wake.



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5 New Year’s Resolutions That Can Help You Buy a Home


New year, new home? Whip your financial resume into shape to improve your home-buying odds.

Thinking of buying a home this year? We compiled five New Year’s resolutions that can help you keep your financial resume in tiptop shape.

1. Avoid job hopping

Employment history and income are two of the biggest factors lenders look at when evaluating a mortgage application. A new job may be a good career move, but if you plan to buy a home in the new year, know that job hopping can be a red flag to some underwriters — especially if you’re moving to a different industry.

A steady job history and few or no gaps in employment over the past two years are ideal, as it helps lenders more easily forecast your future income.

If you do get a new job while home shopping, let your lender know as soon as possible. It doesn’t mean you won’t qualify for a mortgage — just be prepared to show extra documentation.

If you’re moving from a commissioned or hourly job to one that’s salaried with equal or more compensation, it may help your application. Lenders often prefer borrowers to have steady, predictable paychecks.

2. Limit monthly subscription services

Monthly subscription services are certainly convenient, but they can add up. Even if you pay off your credit card every month, you could be dinged for high credit utilization if your credit report is pulled midcycle.

If you’re thinking of buying a home this year, consider keeping your monthly subscription services to a minimum.

3. Build a solid credit history

One of the first things a lender will look at is your credit history. Lenders prefer borrowers who have a history of paying off credits cards and other debts on time — because it signals that you’re a responsible borrower and less of a risk.

If you don’t have credit, securing a home loan may be significantly more challenging and time-consuming, but not impossible. Records of paying rent and utilities on time, as well as student loan debt or cell phone bills, can help show a potential lender that you have a history of managing monthly payments.

4. Check your credit

Your credit score can have a significant impact on your ability to buy a home. A low credit score can negatively affect how much money a lender is willing to loan you, as well as your interest rate.

Just a few percentage point differences in an interest rate can cost you thousands over the life of a loan. Monitor your credit closely, especially for fraudulent activity, to prevent any surprises that could delay the loan application process.

If you’re unsure of your credit score, many financial websites offer credit score monitoring, or you can get a full credit report once a year.

5. Avoid large purchases

Avoid taking on large amounts of debt — whether it’s buying a car or planning a large vacation — before buying a house. This is advisable even if you’re already preapproved.

Your debt-to-income ratio, or how much money you make compared to how much debt you have, can significantly affect how much money a lender is willing to give you. Keeping debts to a minimum can help make the home-buying process go a lot more smoothly.

Just like proofreading your resume before you apply for a job, cleaning up your financial resume can help improve your chances of buying a home.

Take advantage of online tools and resources, like our affordability calculator, which can help you determine how much home you can afford. Our mortgage calculator can also provide custom down payment estimates based on home price and interest rates. And as you search for your future home, check out our extensive lender and agent reviews, which can help you find the best real estate partners for your needs.

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Originally published January 2018



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