WASHINGTON, D.C. – (RealEstateRama) — Tomorrow, the partial government shutdown over funding of a wall along the U.S.-Mexico border will become the longest shutdown in U.S. history— causing financial hardship for many of the roughly 800,000 federal employees who have been furloughed or working without pay since December 21, 2018.
According to a recent online report, unpaid federal workers already owe as much as $438 million in mortgage and rent payments this month. The Center for Responsible Lending (CRL) believes it is unjust and unfair for federal employees and contractors to be deprived of their paychecks and strongly encourages lenders to work with borrowers in this situation.
CRL strongly cautions those workers struggling to pay their rent or mortgages against taking out payday loans or other predatory products that carry high annual interest rates of up to 400 percent. Workers should be able to seek a forbearance from their lender until they resume work, and should also ask lenders not to report them as delinquent during this period. Furthermore, workers may want to consider looking to banks and credit unions that are offering low-interest or 0% interest loans during the government shutdown if they are in need.
CRL Executive Vice President Debbie Goldstein issued the following statement:
Predatory payday lenders may see this as a profitable opportunity to take advantage of government employees and contractors who are not currently receiving a paycheck to cover their rent, mortgage or bills. People are better off talking with their local bank or credit union to see if they qualify for a 0% interest loan, as many financial institutions have already begun offering such options. Additionally, mortgage lenders should grant federal employees and contractors forbearance and not penalize borrowers if they cannot make their mortgage payment during the shutdown. Banks should also forgive overdraft penalties as well as fees and interest on any other delinquent credit payments for affected workers and avoid reporting delinquencies that result from the shutdown.
If the shutdown persists, the Department of Housing and Urban Development (HUD) could also run out of its reserves to renew programs that fund rental housing assistance, which would hit vulnerable communities the hardest.
The government shutdown over the funding of a border wall is divisive, unnecessary, and it’s hurting the American people, particularly lower-income families and communities of color.
Source: Center for Responsible Lending