Minnesota job losses stoke fears of how people will pay rent, mortgages

ST. PAUL — As layoffs mount in Minnesota amid the coronavirus pandemic, concerns are growing that displacement will be soon to follow.

Scores of unemployment claims have been filed with the state Department of Employment and Economic Development since Gov. Tim Walz ordered bars, restaurants and other businesses across the state to close on Monday, March 16.

By Thursday night, March 19, approximately 95,300 applications had been submitted, roughly a third of which came from the hospitality and entertainment industries.. Department officials have said that only about 500 applications are normally submitted each day at this time of year.

In a Friday, March 20 press conference, DEED commissioner Steve Grove said the volume of applications submitted this week was "historic." Roughly 85% of them came from people who have never sought benefits before.

Without steady, full-sized paychecks, the ability of some Minnesotans to afford their homes or make rent may be in jeopardy.

"Historically, the No. 1 reason for foreclosure that people cite is loss of income," said Julie Gugin, president of the Minnesota Homeownership Center. "If people don’t have the income to make their mortgage payment, to pay their power, to keep their water on, their housing is precarious."

Because of the financial stress that the pandemic has created, private and municipal utility companies across the state and nation have already pledged to not shut off service even for customers who can't pay their bills. Gugin said her organization, which has called home ownership essential to community building, is looking to see if mortgage lenders will explore similar options.

Regulators at the federal level have moved to provide homeowners some relief. Freddie Mac, which is overseen by the Federal Housing Finance Agency, on Thursday, March 18 announced that it would lower and even suspend payments for some of its qualifying mortgage borrowers.

The company has also paused its foreclosure sales and evictions proceedings.

Also this week, U.S. Department of Housing and Urban Development announced a similar moratorium on evictions and foreclosures for borrowers of some single-family home loans and reverse mortgages. The moratorium only applies to homeowners who have borrowed from HUD and tenants of rental properties owned by HUD borrowers.

A spokesperson said more than 8 million Americans have mortgages through HUD's single-family loan program, but did not specify how many of them are in Minnesota.

For the most part, such breaks have not been extended to rental property tenants. A bill introduced in the Minnesota House earlier this week could change that.

Authored by Rep. Michael Howard, D-Richfield, the bill would forbid landlords from filing eviction actions against their tenants during public health crises. Details are being hammered out now in a legislature that has all but shut down in response to the outbreak, which as of Friday afternoon sickened 115 people in Minnesota.

Howard on Friday said that he has met with other legislative caucuses and housing interest groups in an effort to build support for the bill, which could be taken up next week.

"I think we’re able to incorporate the feedback we’re hearing that should work for renters and landlords," he said.

In hashing out the bill, Howard said that rental property managers have asked for it to make clear that only tenants whose ability to make rent has been affected by the outbreak of COVID-19, the respiratory illness caused by the novel coronavirus, be given the break. Legislators are still trying to work out whether and when the bill would sunset, he said.

The economic havoc wrought by the disease, meanwhile, threatens to strain agencies and organizations that are busy caring for those who already have no place to stay. Some have already started to dip into their funding reserves in preparation, according to Minnesota Coalition for the Homeless executive director Rhonda Otteson.

"The reality is that we have thousands of people who are unsheltered,” Otteson said.

If more people lose their homes or apartments, she said, it could further encumber an already overburdened homeless services system. Should the crisis continue for much longer, Otteson said she hopes that state regulators will extend protections to Minnesotans similar to those offered in the Cold Weather Rule, which can lower winter heating bill payments for qualifying low-income residents.

It's not clear when the pandemic will subside, though fewer new cases of COVID-19 have been reported in China, where the coronavirus first broke out. The World Health Organization reported on Thursday, March 19, that approximately 209,000 cases have been confirmed worldwide.

To find a housing counselor, call HUD at (800) 569-4287.

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