How to navigate housing concerns after job loss

SALT LAKE CITY — For those navigating unemployment after recent federal layoffs, housing payments may be top of mind.

Some impacted by the layoffs may qualify for unemployment benefits and severance packages, but what if it’s not enough?

Options if you can’t pay rental housing

Paul Smith, the executive director for the Rental Housing Association of Utah, said if you need to get out of a lease, the first step is to negotiate with your landlord.

“Oftentimes your landlord will provide you a buyout fee or if you explain what you’re going through, they might say, ‘I’ll release you from your lease,'” Smith told Dave & Dujanovic. “But you can’t do arbitrarily, you have to negotiate with your landlord.”

If you make an agreement, get it in writing, Smith recommended.

But if you can’t work something out, Smith said to move out and return the keys.

“What that does is it starts a clock. In Utah, landlords are required to mitigate damages for their tenants by re-renting as quickly as possible.”

You’re still responsible for paying the remaining amount of your lease, but Smith said not to pay it all upfront.

“What you do is you say, ‘I’m out. You have an obligation to re-rent it as soon as possible.'” Smith said. “And hopefully, they do so that you don’t have to pay all of the six months.”

If the unit is re-rented, it’ll shorten the amount of time you’re obligated to pay.

“As soon as they get it re-rented, your liability ends.”

Smith said the market is very tight right now and landlords should be able to re-rent the apartment quickly.

If you do this, Smith said to leave the unit empty, clean and easy for the landlord to be able to re-rent. Smith also recommended getting documentation that you’ve returned your keys.

“Send the keys, take pictures, have witnesses, it’s always helpful to document it.”

Options for mortgage payments

Jeff Stout, president of mortgage company Fink & McGregor, said there are two options for people struggling with mortgage payments — forbearance and loan modification. But they come with consequences.

“A forbearance basically means that you’re going to skip some payments and pay them back later,” Stout said.

The months that you skip will be tacked onto the end of the loan.

“So during those three or six months, there’s no payment but the interest is accruing. And then at the end of the loan, then you pay them or they may come up with a repayment plan that you pay them in the next year… That’s between you and the lender.”

You’ll also have to show documentation to prove you’re in a tough spot.

Stout noted that forbearance will damage your credit.

“It depends on what the lender reports to the credit bureaus, but from what I’ve seen… they do report them as late payments and even a default.”

The second option, a loan modification, will also damage your credit. A loan modification changes the terms on your loan.

“So you’re modifying the note on your loan and sometimes that can mean a lower rate. Sometimes it means that they’re going to add years to the loan to lower your payment.”

Stout warned that loan modifications can go wrong. Lenders will often tell you to stop making payments while they look at the modification request.

“Sometimes they (lenders) come back and say, ‘It’s not approved, your loan is in default, we’re starting foreclosure.” 

Stout said he doesn’t like loan modifications but has seen it work for some people.

For homeowners who are still employed but at risk of getting laid off, Stout said it might be time to consider refinancing or getting a HELOC.

“If you’re up to your neck in debt and you don’t have any savings, you’re at risk. And if you’re sitting on a house right now and you have equity, now might be a time to look at either a refinance or a HELOC so that you have a cushion for when (layoff) that happens.”

Other options for housing help

Both Smith and Stout said churches are often willing to help members of their community.

“Sometimes your church may be able to help you with some payments,” Stout said.

Stout also said you can borrow money from your 401(k) and it won’t damage your credit.

“You can use that to make payments until you get on your feet.”

Beyond that, Smith recommended calling 211 to get connected with social services.

Help is also available, Smith said, through organizations like Utah Community Action, or through local programs through your cities and counties.

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