Newly unemployed workers owe $1.7B in housing payments

COVID-19 job losses were a gut punch to service-industry workers. While federal and state aid softened the blow in the short term, service-sector employees who lost jobs due to the COVID-19 pandemic owe more than $1.7 billion a month in housing payments, 70% of which is rent, according to Zillow.

The new Zillow analysis shows that of those receiving unemployment benefits in April, service-sector workers (those in the food, arts, entertainment, recreation and retail industries), appear to have suffered the greatest impact.

The vast majority of the folks – 70%, to be specific – of those who missed payments are renters, who collectively clocked in at $1.2 billion in missed rent payments a month. That’s equal to nearly 3% of the total monthly rent paid in the U.S., even before accounting for newly unemployed renters in all other industries, the report found.

Zillow estimates service-sector workers comprise a little more than a third of those who have lost their jobs to the pandemic. Previous Zillow research found renters in the food and retail industries “already struggled with cost burdens before the pandemic, making it difficult for those who fall behind to catch back up,” analysts note.

Workers who lost their jobs during the pandemic owe more than a quarter of the total housing payments due from the U.S. food service industry. Some manufacturing-heavy states, such as Ohio and Michigan, have seen heavy job losses, and unemployment is hitting healthcare workers in Georgia, Washington and Oregon.

There are some signs of improvement, however. Nearly 20% of renters did not pay any rent in the first week of May, the report notes, which is higher than during the spring of 2019, but down from 22% in April, “suggesting government aid and the reopening of some businesses is easing short-term financial burdens.”

“As we’re watching resilient buyers return to the for-sale market and more renters able to pay on time in May than in April, it’s important to remember that much of the confidence that led to that improvement rests on massive government aid,” said Zillow Senior Principal Economist Skylar Olsen. “By supporting the more than 40 million Americans who have filed for unemployment benefits, that package is not only easing financial hardships but also safeguarding the housing market from widespread evictions and foreclosures.”

Unemployment benefits, the stimulus checks and temporary renter protections have eased tensions for many households for the short-term, the report notes, but with state reserves stretched, a large share of housing payments could be missed, likely pushing some into housing insecurity.

“That safety net has an end date,” Olsen explained, “ so if employment does not bounce back as hoped this summer the housing recovery could be impeded, especially for renters who aren’t insulated by the equity owners hold in their homes.”

Ally completes $1.8M COVID-19 commitment round

As you may remember, Ally had pledged to deliver $3 million in assistance to communities impacted by COVID-19. To date it has funded 32 grants and distributed over $1.8 million and plans to distribute the reminder of the funds as needs arise, according to a statement.

Ally made 12 awards in Detroit, including grants to:

  • Feed the Frontlines Detroit, which provides first responders with meals from local restaurants
  • Gleaners Community Food Bank and Forgotten Harvest, to distribute food to those who need it most
  • TechTown Detroit, to support small businesses.

In Charlotte, Ally’s 11 awards included grants to Carolina Farm Trust, to get fresh food from farms to local food banks. Ally also co-sponsored a program that donates a quart of soup to a food bank for every quart sold, through several local entities. Aid to CMS Foundation, Renaissance West and KIPP Charlotte provided local schools with remote learning technology.

Similarly, Ally distributed COVID-19 community response funds to nonprofits in Atlanta, Charlotte, Dallas, Detroit, Flint, Mich., Little Rock, Ark., New York City, Philadelphia, and Southern New Jersey.

Recent changes to the signature corporate citizenship program with the Local Initiatives Support Corporation (LISC) were implemented in Charlotte, Detroit, Jacksonville, Fla. and Philadelphia, as Ally continues to support LISC’s network of nonprofit agencies with immediate emergency assistance for their clients and technology upgrades.

Ally also awarded $100,000 to its “Moguls in the Making” program partner, the Thurgood Marshall College Fund, to support students at historically black colleges and universities.

Company matches to donations made by employees topped $100,000 in pandemic relief efforts of $1,000 in individual matches or group matches of up to $10,000 per year. Virtual volunteering at qualified nonprofits nationwide is eligible for a $25 donation per hour.

Volunteer hours were delivered through:

  • Catchafire, which matches professionals with non-profits
  • Northern Manhattan Improvement Corporation, an education and career services provider;
  • City of Detroit’s COVID-19 Financial Relief Application Support for Small Business Owners
  • TutorMate, which connects volunteer story readers with at-risk students.

Ally also has launched an employee relief fund that awards non-taxable financial assistance ranging from $500 – $1,500 to employees impacted by COVID-19, in addition to other Ally benefits including food, shelter, utilities and childcare.

All in all, it looks like Ally’s been getting busy doing good. We can only hope it’s contagious.

RED Mortgage closes first Freddie multifamily property loan in Ohio

RED Mortgage Capital, which provides targeted financial services in the multifamily and affordable housing markets, announced it has provided an $11.36 million Freddie Mac conventional mortgage loan to refinance Redwood Reynoldsburg, a multifamily community developed in 2018.

Based in Columbus, Ohio, RED is a division of ORIX Real Estate Capital (OREC), a Fannie Mae DUS, MAP- and Lean-approved FHA, and Freddie Mac OptigoSmall Balance lender whose companies originate $6 billion annually and service a $25 billion portfolio, according to the company website.

The loan paid off construction debt and helps recapitalize the borrower by retiring preferred equity, the company said in a statement.

Three guarantors backed the borrower, Ohio limited liability company, Reynoldsburg One LLC. The loan is a 10-year term with five years of interest only, followed by a 30-year amortization period and standard defeasance prepayment.

“This is the first Freddie Mac conventional loan closed by RED, a division of ORIX Real Estate Capital, and is made possible by our recent merger with Hunt Real Estate Capital,” a seasoned agency lender with long-standing, credible relationships with Freddie Mac and Fannie Mae, said Andy Warnock, managing director at RED. “We were glad to tap their expertise and expand our capabilities to close our first-ever loan of this kind.”

The Redwood community consists of 20 one-story residential buildings with a total of 89 for-rent apartment units, a leasing office and a maintenance structure. It totals 120,293 square feet of rentable space. Each residence has an attached two-car garage included in the monthly rent. As of early June 2020, Redwood was 94.4% occupied, the company said.

The neighborhood is located in Reynoldsburg, Ohio, located within the Columbus metro area, which is approximately 125 miles southwest of Cleveland and 100 miles northeast of Cincinnati.

Redwood Living, Inc., an affiliated management company headquartered in Ohio will manage the Redwood community.  

“Redwood is a premier multifamily development operation with current ownership interests in nearly 9,900 stabilized units housed in more than 120 phases, and growing,” added Warnock. “They are also loyal, repeat agency borrowers.”

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