Renters at Risk as COVID Assistance Plans Expire: CFPB

Millions of individuals who rent apartments or homes nationwide are at risk of “economic harms” as programs created to help individuals during the COVID-19 pandemic are coming to an end, according to a report issued by the Consumer Financial Protection Bureau, and companies in the accounts receivable management industry might want to take notice of the data and be aware of it during their calls with consumers who have unpaid debts.

Renters, more so than homeowners, reaped the rewards of government programs during the pandemic, according to the CFPB, and thus are more susceptible to financial hardships now that those programs are ending. The average credit scores for renters increased more than homeowners and delinquency rates, credit card usage, and credit card debt levels decreased for renters during the pandemic.

Prior to the pandemic, the average credit score for a renter was 86 points lower than those of individuals with a mortgage and 106 points lower than those who neither rented nor had a mortgage, according to the CFPB. Renters are more likely to have student loan debt and to have used alternative financial services, such as payday loans or title loans. “Our results suggest that renters’ finances are likely vulnerable to the cessation of these supports,” the CFPB wrote, citing the end of additional unemployment benefits and the end of an eviction moratorium. “Similarly, our results suggest that renters’ finances will be sensitive to the amount and timing of funds from the Child Tax Credit (CTC) and distribution of rental assistance in the coming months.”

Renters were also far more likely to have had difficulty paying for a bill or expense in the 12 months leading up to the start of the pandemic, compared with non-renters. Renters are also far more likely to have some debt in delinquency, and while that figure dropped during the pandemic, it is showing signs of rising again, according to the CFPB.

“As pandemic-related recovery continues and these programs phase out, our results suggest that renters’ finances may begin to deteriorate as they did after the cessation of previous pandemic policy interventions,” the CFPB wrote.

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