The REALTOR community recognizes the importance of helping people enter and remain in the housing market as both a way of battling homelessness and as the first step towards homeownership.The housing crisis is particularly critical for very-low and low-income renters.
According to HCD, nearly half of all renters paid more than 30 percent of their income on housing. With rents and housing prices rising, the crisis is creating a permanent class of renters, families that are not going to attain the dream of homeownership. It is essential that REALTORS help renters to find the right sources of assistance so that they can remain in their homes and eventually become homeowners. There are several types of rental assistance programs that REALTORS can get involved with: security deposit, counseling, eviction prevention, and moving. Both non-profits and the federal and state government have already developed working models of such programs.
Non-governmental Rental Assistance Programs
Non-profit organizations help households become renters through several programs. In general the programs have the objective of providing financial assistance (security deposit, moving and eviction prevention/emergency rent payment) or education (counseling) to renters. The ultimate objective is to transition them into a successful responsible tenancy.
Security Deposit Guarantee Program
Rental property owners require some type of security deposit from new renters. Often, the amount of the security deposit is equal to two month’s rent. For many low- or moderate-income people who live from paycheck to paycheck, the required security deposit is a large up-front cost that they cannot afford, even if they can afford to pay monthly rent. A security deposit guarantee program provides these would-be renters with the means to move into rental housing. Its main characteristics are:
- Security deposit is payable in installments
- Landlord is guaranteed to receive the full amount of the security deposit
- Prospective tenants are screened to determine their financial standing
- A written agreement guarantees the payment of the deposit to the landlord
- A standby Letter of Credit is issued to the landlord in the amount of the security deposit in the event that the tenant defaults its security deposit agreement.
Localities offering security deposit assistance programs:
- Alameda County Eden Council for Hope and Opportunity, Inc. (ECHO): http://www.alamedaco.info/resource/agencydetail.cfm pid=ECFHAOI_2_0&page=2
- City of Monterey Housing Advocacy Council of Monterey County Renter’s Assistance http://www.monterey.org/housing/rentassist1.html The Council can counsel other organizations on how to establish a security deposit assistance program and offers local eviction prevention and rental counseling programs. Contact Marilyn Dorman at (831) 424-9186.
- City of Santa Cruz http://www.hacosantacruz.org/programs.html
- Marin County http://www.hud.gov/offices/pih/programs/hcv/wtw/ppp/learning/marin_ca.cfm
- San Diego County: List of rent Deposit Guarantee Program http://sandiego.networkofcare.org/aging/resource/tax_list.cfm sw=BR-300.725-&ageGrp=all&cat=14
- Stanislaus County Community Services Agency Security Deposit Guarantee Loan Program: Contact Carol Wright, Phone: 209 558.2863, Fax: 209 558.2558, Email: firstname.lastname@example.org
Security Bond is used instead of a security deposit. The renter pays a one-time non-refundable premium, that could be carried anywhere in the US within participating companies. The premium represents a fraction of the security deposit that the leaser would normally charge in order to get into the rental unit. This program has the advantage of being a one-time voluntary option for the resident and according to the company, and applies to both ends of the rental market, luxury and low-income.
The benefits to the property owner are: increased pool of renters, damage or lease violations protection and administrative cost reimbursement for dispensing the program. So far, SureDeposit is the only known company to be offering its services in California.
Security Deposit Insurance is a nation-wide insurance program that provides coverage for owners and property managers in the event of loss for resident damage to the property. It also protects against loss of income in case a resident vacates without paying last month s rent. The renter pays low monthly insurance premium that takes the place of the security deposit and which can be lowered if the tenants holds a good performance record. The benefits for the property owner are: increased pool of renters, and damage and lease protection. Deposit Saver is the only know company in the market offering these insurance services.
Emergency Rent Payment or Eviction Prevention Program is designed to assist families in distress by providing them with direct rental assistance to prevent their eviction. Strict guidelines apply in order to guarantee that the recipients are facing and unforeseen emergency. This program is critical in preventing homelessness and can be combined with a counseling program, aimed at helping the household in budgeting or rental issues.
Educational Counseling Program or tenant counseling is offered to help renters know their rights and obligations when leasing a property. Counseling can also encompass arbitration when disputes or disagreements arise in the tenant-landlord relationship. This program can be used in conjunction with homelessness abatement or with homebuyer educational programs, thus providing REALTORS with an excellent opportunity to provide people with knowledge on how to become future homeowners. Local rental organizations are the best source to find established educational/counseling programs. A word of caution: Some of the rental organizations sponsor ren t control, thus not making it a good match for working with REALTORS because of opposing policy objectives.
Moving Assistance can be part of transition from homelessness program or security deposit program. Moving costs are also a barrier for people to get into rental units, as they naturally add up to the deposit costs. Unlike the security deposit guarantee, funds have to be continually replenished. This is a very simple program to structure since it can rely on the screening and other administrative tasks performed by other organizations. It also provides with a very needed service for renters that very few organizations provide.