
Millions of Americans skipping payments as wave of defaults and evictions looms - evo_9
https://www.npr.org/2020/06/03/867856602/millions-of-americans-skipping-payments-as-tidal-wave-of-defaults-and-evictions-
======
ngngngng
I'm so extremely grateful that I accepted section 8 tenants into my rental
units. Most of these tenants have nearly all of their payment covered by the
government and they just have to pay $100 or $200 on top of that to cover what
the government won't.

These tenants are often not accepted by landlords because they're thought to
cause more issues. Mine are great. They keep the units spotless, mow the lawn
for me on my multi unit properties. When I have a tenant like this, I never
raise their rent, and if they can't pay the hundred bucks the government won't
I sure don't care.

~~~
dmarlow
> if they can't pay the hundred bucks the government won't I sure don't care

I used to have this same mentality. Until the person who was renting one of my
properties decided to lie about certain issues (like claiming a shampoo bottle
lodged down one of the toilets was there for years). When I decided to not
renew the lease with that tenant, they decided to cause considerable damage to
our property.

Sometimes, when things come easy to people, they don't appreciate it. Holding
people accountable helps them lift themselves up too.

~~~
tyre
> when things come easy to people

I think you have a very misguided idea of what it's like to live in poverty.

~~~
olivermarks
I think you have a very misguided idea of what it's like to be a
landlord....and perceptions of who/what 'landlords' (a very unfortunate term)
are from some tenants... no good deed goes unpunished etc. Plenty of great
people around but you have to be very careful who you rent to...

~~~
majormajor
> Plenty of great people around but you have to be very careful who you rent
> to...

This goes both ways. You have to be careful who you rent from, too.

Of all the investment opportunities available to people, I'm not particular
sympathetic to purchasing property to seek rents.

~~~
taneq
When we talk about 'rent seeking' it's usually not about actual rental of
property, which fills a very real need in society.

Maybe it's different in other parts of the world but where I live, rent seldom
covers the mortgage on a property, let alone all other expenses. The profit,
if any, generally comes from capital gains when selling the property (which
right now isn't on the cards for pretty much anyone.)

~~~
benplumley
> rent seldom covers the mortgage on a property

Don't forget that "covering the mortgage" involves building the landlord's
equity, so it's not as if this portion is lost to the bank while the landlord
has to depend on appreciation. If I "only just cover the mortgage" while
renting for the entire term of the mortgage on a house that doesn't appreciate
above inflation, the landlord still goes from owning 20% of a house to 100% of
a house over that term.

~~~
taneq
True but there are a lot of additional costs (maintenance, council rates,
depreciation) to owning a house on top of the mortgage. Again only speaking
for myself but I have a small rental property and the rent basically only
covers the interest plus expenses.

------
bshipp
This is just the start. Landlords would be smart to work with tenants to share
some of the loss and renegotiate temporary adjustments to keep at least some
revenue coming in because the heady days of high demand for rental units is
likely behind us for a while.

It'll be worse in downtown areas. I've heard from multiple firms that are
looking at downsizing their expensive office space and continuing to allow
employees to work from home. if a person doesn't have to work downtown they
will often choose not to live there either.

COVID is going to change the face of urban real estate. So if you have a
tenant, they're gold and do what you can to keep them.

~~~
cft
In California for example, due to state-wide rent control, it's very dangerous
for a landlord to lower rents. I would rather offer 6 months free rent than
lock into permanent nonadjustable lower rent situation.

~~~
leereeves
If a lot of landlords start exploiting that loophole, I wouldn't be surprised
if the law were revised to be based on the average rent over a year, or
something similar.

~~~
favorited
They wouldn't have to change it, because that is factored in. The law states:

"In determining the lowest gross rental amount pursuant to this section, any
rent discounts, incentives, concessions, or credits offered by the owner of
such unit of residential real property and accepted by the tenant shall be
excluded."

So if your rent is $3k/month, and the landlord gives you 3 months rent-free,
your rent according to AB 1482 is still $3k.

~~~
throwaway2048
That doesn't mean the law cant change.

~~~
JshWright
No, but it means the law was expressly with to account for this circumstance,
so it isn't a "loophole".

------
burger_moon
>He says a call center worker told him that he didn't qualify for any help
because he was late on a car payment last year. When NPR contacted Ford, the
company said that is not its policy. And after reviewing the case, the company
is now letting Baird skip his next car payment, which he says is a big help.

It appears Ford operates on the Google customer service spectrum of only
helping those who can gain support of public outcry.

What I would like to see is a response from Ford that they will open an
investigation to review everyones requests which have been denied for skipping
payment.

~~~
noad
Like when Wells Fargo investigated their mortgage department and found no
problems, right? Or when Google investigated Andy Rubin and decided he wasn't
that bad and protected him for three more years? Why on earth would you ever
trust a corporation to police themselves? They always lie, they always fail.

~~~
thephyber
It can't hurt to expect companies to actually troubleshoot their own policies.
We don't have to expect that it's the _only_ recourse (eg. government
regulation, civil suits, public brand shaming, etc).

~~~
noad
I have seen no evidence of any positive outcome from companies policing
themselves, only negative results and coverups.

I'm sure there have been a few instances, somewhere, there must be, right? I
just don't recall reading or hearing about them in my entire life, ever.

------
beervirus
I have a commercial tenant who was forced to shut down their business during
the lockdown. I just waived rent until they were allowed to reopen. You can't
get blood from a turnip, and I really don't want to force them into default
and try to find another tenant in this environment anyway.

Almost everybody is taking a haircut this year.

~~~
londons_explore
Isn't the smarter move to _defer_ payment of the rent for a few years?

One day, they'll be able to pay, and then you'll get paid.

~~~
beervirus
Smarter? Eh, probably.

I dunno though. It's a small enterprise that doesn't do a lot of business even
in good times. I'm ok helping them out. It can be my good deed for the decade.

------
pnw_hazor
A wave of more layoffs will happen as soon as the Paycheck Protection quiet
period ends.

After June 30, companies that took PPP money are free to fire people without
repercussion.

~~~
thephyber
I like to remind people that in 2008, Bear Stearns fell in March. Most of the
the economy didn't realize the financial system problems until late August.

I'm waiting for a very large shoe to drop in a few months. How big will depend
on whether consumers feel comfortable about their jobs+health.

~~~
bsanr2
Titanic Syndrome. Everything's going under, but the people on the upper decks
are still enjoying their late-night cigars while the boiler crew is drowning.
It's an interesting phenomenon (and, I'm sure, has a better name than the one
I just made up).

~~~
fabianhjr
[https://en.wikipedia.org/wiki/Cascading_failure](https://en.wikipedia.org/wiki/Cascading_failure)

~~~
bsanr2
I wanna say, "There we go," but this is slightly different. Not so much that
one failure unexpectedly causes total collapse down the line, more so that a
catastrophic failure of important components (which obviously are going to
cause a system collapse to anyone who knows what happened) happens in a system
so large that other portions of that doomed system are not even aware.

------
avancemos
Lockdowns are effective as tourniquets, but indefinite or long term use was
never logical. There should have been more forward-thinking and pragmatic
options pushed earlier. We will now see the natural repercussions of lockdown-
centered policies.

~~~
cycrutchfield
Nobody was ever advocating for indefinite or long-term lockdown policies.
That's a strawman.

~~~
avancemos
Also: “ Durham leaving stay-at-home order in place indefinitely”
[https://spectrumlocalnews.com/nc/triangle-
sandhills/news/202...](https://spectrumlocalnews.com/nc/triangle-
sandhills/news/202..).

NJ stay at home order continued indefinitely | FOX 5 New York
[https://www.fox5ny.com/news/nj-stay-at-home-order-
continued-...](https://www.fox5ny.com/news/nj-stay-at-home-order-
continued-..). And many many more...

------
walterbell
If there is no spike in infections within two weeks, from areas which had
large public protests in the past week, can millions of Americans be helped by
restarting the economy?

~~~
aphextron
>If there is no spike in infections within two weeks, from areas which had
large public protests in the past week, can millions of Americans be helped by
restarting the economy?

Daily new infections have more than doubled here in North Carolina in the last
two weeks since "reopening" [0]. We have had more new cases in the last two
weeks (2200) than in the entire length of lockdown from March until then
(2000). The death rate has massively spiked beginning May 24th, exactly two
weeks (the median time from infection to death) from May 9th, the day the
governor relaxed restrictions [1]. The dream of this thing just magically
going away is absolutely delusional.

[0] [https://www.nytimes.com/interactive/2020/us/north-
carolina-c...](https://www.nytimes.com/interactive/2020/us/north-carolina-
coronavirus-cases.html)

[1] [https://www.nytimes.com/interactive/2020/us/north-
carolina-c...](https://www.nytimes.com/interactive/2020/us/north-carolina-
coronavirus-cases.html#deaths)

~~~
chrisco255
Remember the whole point of shutdowns was to "flatten the curve" to keep the
hospitals from being overrun. We can't stop the disease and we can't commit
economic suicide.

NC has only seen a slight uptick in hospitalizations:
[https://covid19.ncdhhs.gov/dashboard](https://covid19.ncdhhs.gov/dashboard)
and it's been flat for the past week.

~~~
majormajor
Yes, the shutdowns failed miserably if we thought we were going to eradicate
infections.

The government failed badly at communicating this.

So now you have half the people saying the shutdowns were useless (cause the
virus still exists) and another half saying they have to continue (cause the
virus still exists, also)!

If we had realistically wanted to squash this thing, the examples of other
countries suggest we would've needed much more aggressive tracing and
isolating of people, widespread early mask distribution and wearing, and more
tracking.

I fear that the government also may have failed miserably at taking advantage
of them to bring more capacity online. Maybe the minimum stuff like masks and
clothes and ventilators are taken care of, but we still seem in a very
precarious place.

Voluntary changes in behavior persist, though, which will make things very
hard to untangle "effect of shutdown" from "effect of people being cautious
about high-risk environments."

~~~
ptero
Can you define what you mean by saying other countries squashed the thing?
They may have flattened the curve, drove numbers down, etc. but until they get
either a herd immunity or a wide vaccination the infections will likely flare
up again as soon as travel restrictions get lifted.

~~~
gbear605
Some countries aren’t planning on lifting travel restrictions, or are planning
on having mandatory quarantine for arrivals

~~~
ptero
Not lifting travel restrictions is not realistic unless you are talking about
North Korea. If you do not lift restrictions you are also punishing your own
citizens (if you let your own citizens travel they can bring back the gift
that keeps giving). We will see. And quarantine where? In many countries for
returning citizens it just means "please go home and try to avoid contacts for
2 weeks", which is not super effective and gets treated creatively _a lot_.

I see friends (US and 2 countries in Europe) who are not affected by job
losses booking vacations like crazy to take advantage of low prices to visit
places they always wanted. So I suspect there will be a lot of travel again in
the near future.

------
tinza123
As a passive real estate investor I'm seeing bidding on new sales has actually
been more competitive than ever in my area (Atlanta GA). A lot of houses are
selling above asking prices with 8-10 offers on the table. I am not sure if
people genuinely think it is a good time to buy, or is it mostly FOMO.

~~~
caseysoftware
I've been watching 20+ properties around Austin, some out of genuine interest,
others for a baseline. Zero of them moved in March and April despite asking
price coming down every couple weeks. Now in the last couple weeks, 8 of them
have had offers. I can't tell if they just dropped back into a "reasonable"
range or some segment of the market has turned but it's fascinating.

~~~
conductr
My understanding is real estate was not essential here in Texas. Agents tried
to do virtual showings but, come on, most people want to see a home before
they submit an offer.

------
tjomk
I'm likely out of touch here, but at least for the person mentioned in the
article, why does he need a huge SUV? If the crisis hits and you cannot re-pay
the bills, that would be the first thing I'd get rid of. It doesn't look like
he needs it for work, and he could just get away with a used Honda Civic or a
similar smaller car that doesn't require much gas, expensive insurance, and
most importantly monthly loan payments.

During the last financial crisis I sold lots of stuff that was dear to my
heart but wasn't essential like motorbike, mtb, etc.

Is it the cultural gap that I'm not seeing as a European? Or something else?

~~~
MandieD
If he's like a lot of Americans, he's "upside down" on the truck - as in, he
still owes more on the loan than he could realistically sell the truck for.
That would leave him still in debt, but now without a vehicle, even if he
could be content with a 10 year old Civic or Corolla.

The wisdom of having purchased such a large vehicle on credit to begin with is
another discussion entirely. Americans are, on average, far more relaxed about
owing a lot of money on a vehicle than, say, Germans. I grew up assuming a car
payment was just part of adult life; my husband, a German, was raised to
believe that borrowing for anything other than property was foolish. I've
since come around to his point of view, and am the reasonably content co-owner
of a 12 year old Fiesta, though considering our upgrade options as we have a
baby on the way.

Why a large truck in the first place? A lot of American men, especially in the
South (where this guy is), consider small sedans to be unmanly. If they're
overweight like most Americans, they also think they're going to sit more
comfortably in a larger vehicle. Plus, SUVs and trucks are less expensive in
the US than they are over here - for what I'd have to pay for a new Corolla
hybrid station wagon (my current coveted car) in Germany, I could get a Toyota
Highlander mid-sized SUV in the US, which Toyota doesn't even bother trying to
sell here.

~~~
tjomk
Gotcha! Thanks for a thorough explanation

------
yalogin
Will this effect the economy and the stock market at some point? That is not
clear to me. The way the stock market is going it makes me quite scared. The
whole thing might just collapse under its own weight at some point.

------
sytelus
Meanwhile stock market is preparing to for its record high :).

~~~
gshubert17
> Meanwhile stock market is preparing to for its record high :)

Yes, and I don't understand it. The S&P500 is within 8% of its all-time high
(3393). Even without a second wave of coronavirus cases and deaths, the
current levels of unemployment, defaults, and bankruptices, I can't see what
supports these asset price levels. Any ideas?

~~~
nikanj
The average P/E ratio for SPY companies is around 15. The price of the stock
today is built on the earnings of the next 15 years, and most investors seem
to believe we'll bounce back in a year or two.

~~~
sytelus
Good investors don't rely on P/E ratios. At this point, GAAP earnings are
basically becoming smoke and mirrors:

[https://www.forbes.com/sites/greatspeculations/2018/11/19/pe...](https://www.forbes.com/sites/greatspeculations/2018/11/19/pe-
ratios-are-misleading-especially-right-now/#312932502281)

------
opportune
I imagine a huge cash crunch is coming up soon as deferred payments come home
to roost.

We can’t continue kicking the can down the road forever. If people are over
leveraged or insolvent we have to bear the pain eventually. It’s part of the
credit cycle and it’s how savers get their foot in the door regarding asset
ownership. Otherwise we will have basically embraced some absurd worst-of-
both-worlds kind of socialism in which we bailout the people who are leveraged
and over-exposed-to-risk at the expense of future generations and savers.

The Fed/Government can probably kick it down the road until November though.

~~~
MattGaiser
For mortgages I don't see why the deferrals are a problem as long as they are
just tacked on to the end of the mortgage.

It is going to be a major problem for renters.

~~~
opportune
If people don’t have their jobs immediately come back after all the
restrictions are lifted then they’ll still be unable to make future payments.

Correct though that renters will be hurt more, though it will likely have less
systemic effects.

------
JackPoach
This is one of those cases when delaying solving a problem can turn out to be
a good thing. And in the end, a jubilee (debt forgiveness) might be
inevitable. Which is likely to be a good thing too, especially if it covers
student loans and other things that aren't cleared by bankruptcies.

------
api
I know people who are skipping payments just to be in solidarity with people
who can't pay. They see it as an act of protest not only of inequality
generally but of the fact that no matter what happens the financial industry
will get a limitless bailout at the expense of everything else. Not paying is
a way of getting a piece of that bailout.

I agree with the latter point. We've seen in the past 10 years or so that the
regular economy will be sacrificed to save the financial industry. This has
resulted in a complete decoupling of the two. The regular economy can be in a
state of total collapse and the stock market goes up.

(By "the financial industry" I mean top politically well connected banks, not
necessarily smaller private equity or smaller financial institutions. Those
will crash and burn and be sold off in fire sale prices to larger banks that
get bailed out, just like 2008.)

If we ever have real leadership again, one of the tasks before that real
leadership is going to be undoing the loss of integrity and trust created by
the 2008 bailouts. Like the second Iraq war, people have yet to even grasp how
much damage was done in those years.

~~~
pengaru
> I know people who are skipping payments just to be in solidarity with people
> who can't pay.

So they're donating what would have been spent on rent to an appropriate
cause? Surely they're not keeping the money if it's _just_ that. /s

~~~
rabidrat
Yeah they're donating the money to their self-in-3-months, who has even less
than they do now, with no job and no prospects and no bailout on its way.

~~~
api
Exactly. They're thinking of it as an act of simultaneous self-preservation
and civil disobedience to the fact that bailouts are only for huge banks and
corporations. The perception, which is at least somewhat true, is that Wall
St. and DC will be saved and the rest of the country can burn.

From what I've seen, the 1% vs the 99% is catchy but wrong. The reality is
more like the 0.01% vs the 99.99%.

We are probably nearing the point where we will see actual change, since we're
approaching a place where the wealth distribution hockey stick is so steep the
upper middle class and "merely rich" will start seeing themselves as "the
99%." You'll see working class and hippies marching with lawyers, doctors, and
owners of businesses that make "only" a few hundred million a year (and don't
have lobbyists).

Wish it didn't have to get that bad, but that appears to be the case. We'll
probably do something about CO2 when NYC is underwater.

------
seanconaty
How many HN readers are landlords?

------
xbmcuser
This is the main reason I have been scratching my head thinking how the hell
is NASDAQ going up. Though might just be sour that I didn't go back in after
getting at the right time

------
amiga_500
Seems like working in IT isn't enough, judging from the number of landlords on
this post. Almost as if all productivity gains flow into land in our current
system!

------
0x8BADF00D
Yet the S&P500 is still green. The Fed continues to print in order to delay
the inevitable. Either a currency crisis or hyperinflation.

~~~
cft
I wonder who downvotes this and why.

~~~
MattGaiser
QE has been going on for years since 2008. Still waiting on that inflation.

[https://www.usinflationcalculator.com/inflation/historical-i...](https://www.usinflationcalculator.com/inflation/historical-
inflation-rates/)

QE contains an easy break on inflation. If it starts surging, the market can
just have the assets the fed holds added back to it.

~~~
viklove
You're looking in the wrong place. QE doesn't go to families, so it doesn't
increase the cost of milk, apples, or eggs. It went to the wealthiest banks
and corporations, and wouldya look at that -- asset prices are inflated,
"startups" have absurd valuations, and the wealth gap is larger than ever
before.

The inflation is there, clear as day. You're just not looking in the right
place and you think you're so smart because of it.

~~~
losteric
THIS, so much this ... for years people said bottom-up stimulus plans would
inevitably cause inflation. Injecting the money on top changes little, now
it's just trickle-down inflation.

(and if this doesn't hold, I would love to understand why)

~~~
MiroF
It doesn't hold because people get the money via loans at low interest rates
and then spend more.

Fed policy has a clear impact on AD.

------
rhexs
Guy has what looks like a luxury truck and is apparently having trouble
deciding between food and his car payment.

Sell the car, get a cheap used beater, reduce expenses, keep looking for a
job. Not sure what NPR wants me to take from this example.

~~~
hamandcheese
Many people finance expensive cars with no money down and are immediately
underwater on their loan. In a situation like that, you can’t offload your
vehicle easily without also coughing up thousands to cover the difference
between the car’s sell value (who is even buying right now?) and the cars loan
balance.

~~~
londons_explore
Auto loans should allow you to return the vehicle and walk away... They should
be more "rent-to-own".

In fact, in my opinion, all secured loans should be this - you should be able
to hand over the security to the lender, and walk away without penalty.

~~~
_jahh
what happens if you crash it first it or ding it up or run it as an uber and
have lots of trash passengers? you're talking about leases vehicles which
already exist.

~~~
quickthrower2
Well look at it this way: hiring a car is a thing. Avis etc. They sell lower
excess too.

------
elevenoh
Skipping payment != need to skip payment.

------
person_of_color
Yet the stonks go up.

------
Throwaway8588
The impact of this is going to be extremely bi-modal.

Working class people are going to be decimated. No income and the cost
deferral cliff.

Middle class (office workers are least) and upper class people will do very
well. They still have their jobs and their costs have collapsed.

I am no longer paying for gas, childcare, bussing fees, car insurance, and all
manner of other things. I can shop at Costco now that I have more time, saving
me even more. Nobody is buying lunch out as we now have tons of saved time to
make food ourselves. I used the crisis to squeeze by suppliers of internet and
cell phone and whatnot. We now save 40% of our take home pay.

Personally the crisis has been great for me.

~~~
novok
How did you get cell phone and internet discounts?

~~~
thephyber
Many companies have advertised that "our customers who are affected by COVID
can contact customer support for ..." type of PR messages announcing
discounts/deferments.

I actually started collecting the URLs, but there are so many it's not worth
centralizing.

Verizon:
[https://www.verizonwireless.com/support/covid-19-faqs/#bill](https://www.verizonwireless.com/support/covid-19-faqs/#bill)

AT&T:
[https://about.att.com/pages/COVID-19.html](https://about.att.com/pages/COVID-19.html)

Cox Cable: [https://www.cox.com/residential/support/coronavirus-
response...](https://www.cox.com/residential/support/coronavirus-
response.html#coronavirusFrequentlyAskedQuestions)

Comcast Xfinity:
[https://www.xfinity.com/prepare](https://www.xfinity.com/prepare)

------
troughway
US and Canada are going to soon realize that all the govt did was buy
temporary peace.

Not sure how either country will lift from this without having a negative
impact, as not only was it giving emergency funds to people, but in a lot of
cases giving up to 200-300% of what they earned prior.

It will be a shitshow.

