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A collapse in apartment rent collection during the pandemic is forging one of New York’s most unlikely political alliances, the Wall Street Journal reported. The Real Estate Board of New York, the property industry’s main lobbying group, has joined with New York’s Legal Aid Society, a nonprofit association that advocates on behalf of tenant rights. While these two groups are usually antagonists — and they are currently on opposite sides in a federal lawsuit over rent control — the pandemic has created common ground. Too many New York tenants can’t pay rent right now, which is making it harder for landlords to pay back their loans and causing tenant debt to pile up. Both sides want to address the issue with more government action, mostly in the form of streamlined rental assistance. Asking rents for one-bedroom apartments Manhattan have fallen almost 20% over the past year, according to listings website Zumper, after a number of renters fled the city for cheaper accommodations or more space while working from home during COVID-19. Many of those who stayed have fallen behind on their rent payments. A recent survey estimated that New York tenants may now be more than $2 billion in debt to their landlords. The joint industry and tenant lobbying effort includes other housing groups and goes by the name of “Project Parachute.” It was first organized by Enterprise Community Partners, Inc, an affordable housing nonprofit. It has been pressing its case with elected officials, such as state Sen. Brian Kavanagh, the chair of the state Senate’s housing committee.

New York’s apartment investors are suddenly waist-deep in distress. By December, they were behind on $395 million of debt backed by mortgage bonds, almost 150 times the level a year earlier, according to Trepp data on commercial mortgage-backed securities, Bloomberg News reported. Tenants in rent-stabilized units owe at least $1 billion in rent and wealthier ones are fleeing the city, leaving behind vacancies and pushing newly-built luxury towers into foreclosure. For years, as crime dwindled and rent climbed in New York, investors gobbled up apartment buildings. But with the city’s economy and culture crushed by COVID-19, mounting job losses have derailed the gentrification boom and put financial pressure on landlords. “The people who specialize in mortgage workouts are the busiest people in New York real estate,” said Barry Hersh, a clinical associate professor of real estate at New York University. The developers who are in the most trouble pushed hard into Harlem and the Brooklyn hipster hubs of Crown Heights, Flatbush and Bushwick, squeezing out working-class residents by building new expensive units. Now, they’re grappling with eviction bans and new tenant protections as rent falls across New York.

The apartment business has weathered the COVID-19 pandemic better than most of the real-estate sector. That is starting to change, according to a Wall Street Journal report. Owners of multifamily buildings are falling behind on loan payments. Banks view a greater number of rental loans as high risk, and fewer lenders are available to help struggling developers with financing. Eviction protections, lower rent collections and unprecedented declines in the asking rent in some urban markets are also taking their toll on apartment owners. Niche corners of the multifamily business that were popular with investors before the pandemic are now some of the worst off. Ratings companies have downgraded bonds tied to senior-housing and student-housing properties, and some co-living companies, where tenants lease rooms in shared apartments, are also struggling. Earlier this month, the co-living operator Quarters closed all of its U.S. operations, filing for 10 bankruptcies. But the traditional rental-apartment business is showing cracks, too. During the pandemic, the share of total apartment debt that banks place into their highest-risk categories has ballooned to 16.9% from 4.6%, according to a December report from Trepp LLC, a real-estate data firm that compiled risk ratings from more than a dozen major banks.

On his first day in office, President Biden signed a range of executive actions including two that will affect the financial lives of millions of Americans. One directs the Education Department to extend the pause on federal student loan payments, and the other directs the Centers for Disease Control and Prevention to extend the federal eviction moratorium, the Wall Street Journal reported. Both measures were put in place last year in response to economic hardships caused by the COVID-19 pandemic. The executive order for federal student loans directs the Education Department to extend the pause on principal payments and interest accrual for direct federal loans until at least Sept. 30, 2021. Loan repayments and interest accrual has been paused for borrowers with federal student loans since March 13, 2020. Collection on defaulted loans has been suspended as well. More than 22 million borrowers with direct federal student loans paused payments during this period, according to data analyzed by Mark Kantrowitz, publisher and vice president of research at savingforcollege.com. Many borrowers were hoping for an executive order from President Biden that would forgive some of their debt. During his campaign, Mr. Biden proposed forgiving $10,000 in debt for every American with federal student loans. In recent days, Mr. Biden and his transition team said he was unlikely to use executive action for loan forgiveness.

Manhattan’s retail pain is worsening as the pandemic drags on, with rents falling in every major shopping district, Bloomberg News reported. Soho was hit the hardest in the fourth quarter, with average asking rents dropping nearly 22% to $290 a square foot, according to a report by brokerage Cushman & Wakefield Plc. Rents in the area, known for its many fashion boutiques, have been sliding over the past four years. Asking rents tumbled 20% on lower Fifth Avenue — running from 42nd to 49th streets and dominated by big national chains. Upscale Madison Avenue saw a 16% decline. Manhattan’s retail woes have intensified over the past year as social-distancing measures and COVID-19 spikes continue to keep shoppers home. Few businesses are looking to expand, and many have closed, leaving the city with swaths of empty stores. The supply of space is surging in most areas, with availability rates in key districts such as Fifth Avenue, Soho and Meatpacking at 24% or higher, according to Cushman. Madison Avenue, from 57th to 72nd streets, had the highest availability rate for the second straight quarter, reaching almost 40% at the end of the year.

U.S. homebuilder confidence in the market for single family homes unexpectedly fell in January, pulled down by surging COVID-19 infections and more expensive lumber, though the housing market remains underpinned by record low mortgage rates, Reuters reported. The NAHB/Wells Fargo Housing Market index slipped to a reading of 83 this month from 86. Economists polled by Reuters had expected the index would be unchanged at 86. A reading above 50 means more builders view market conditions as favorable than poor. The index hit an all-time high of 90 in November. Demand for housing is being driven by cheaper mortgages and an exodus from city centers to suburbs and other low density areas as companies allow employees to work from home and schools shift to online classes because of the coronavirus pandemic. About 23.7% of the labor force is working from home.

The Treasury Department has decided not to restructure the taxpayers’ stake in Fannie Mae and Freddie Mac, effectively ending the Trump administration’s push to ensure that the mortgage giants are eventually returned to private hands, the Wall Street Journal reported. The announcement by the Treasury Department and the companies’ federal regulator leaves it to the incoming Biden administration to decide the future of the firms, which were put under government control during the 2008-09 financial crisis through a process known as conservatorship. Advisers close to President-elect Joe Biden have said he would be in no hurry to privatize the companies, which guarantee roughly half of the $11 trillion U.S. mortgage market. Instead, Biden would focus on ways to use the companies to boost housing affordability and promote homeownership, the advisers said. Under a more modest agreement announced yesterday by the Treasury Department and the Federal Housing Finance Agency, the mortgage companies will be allowed to retain more of their earnings, boosting their ability to absorb potential losses. FHFA is the companies’ independent federal regulator.