Two weeks ago, in this space, we discussed the unemployment tax and insurance system and how employers are likely to be hit with a significant and automatic rate increase at the end of this year.
For many nonprofit employers, the system works differently. Tax-exempt 501(c)(3) charities (like the Tax Foundation of Hawaii) may “self-insure” against unemployment claims. That means a nonprofit sector employer doesn’t need to pay the unemployment tax that for-profit employers need to pay, but if a nonprofit sector employee gets laid off and makes an unemployment claim that the State pays, the State bills the employer and doesn’t take the money out of its unemployment insurance trust fund. Some of the larger nonprofits have cash reserves and can pay the bill. Others buy unemployment insurance from insurance companies selling only to the nonprofit sector and find that their premiums are quite a bit less because they are not sharing losses with high-cost seasonal businesses.
With employees in the nonprofit sector dropping like flies just as in the private sector, nonprofits have good news and bad news. The good news is that the huge rate increase that is likely to hit at the end of the year won’t affect them. The bad news is that they need to get out their checkbooks now to pay the unemployment claims that they are being charged with.
One provision of the CARES Act, section 2103, is supposed to help with that situation. It says that the federal government is going to cover half of the unemployment benefit costs that self-insured employers need to pay to the State for weeks of unemployment beginning on or after March 13, 2020 and ending on or before December 31, 2020. But, according to the U.S. Department of Labor, the employer needs to pay DLIR first, the federal government reimburses half the cost, and then DLIR then repays or credits the employer for the federal money received. (The CARES Act says that the state workforce agency can’t use the money for any purpose other than reimbursing the employers, so it can’t keep the money.) The trouble is that these reimbursement processes “take a while,” and by the time the State receives the federal funds and gets around to repaying the nonprofit employer, the employer either may have closed for good or may be overwhelmed with penalties and interest if they couldn’t pay the full amount of the unemployment benefits when they were billed.
When I spoke with the Employer Services Section at the DLIR, the good folks there were aware of the federal provision but hadn’t yet received guidance from their leadership on how the State was going to implement it. (Translation: They either haven’t figured out what to do or haven’t yet been convinced that they have to do anything.)
I can’t help but wonder if the DLIR feels like it is being forced to do something it doesn’t want. It’s certainly more work for DLIR to keep tabs on its self-insured employers, put together claims to the federal government, and then dole out the money to the employers when the federal money appears. DLIR doesn’t get separately paid to do that. And it does seem that they already have their hands full fighting the backlog on individual unemployment claimants.
DLIR, please hang in there. The public needs you and the nonprofits do too!
Buying Your First Home: Some Things You Must Know
Imagine having to pay your next house $ 10,000 too much because you had incorrectly filled out your purchase offer. Worse, imagine being taken by surprise with a house whose entire basement needs to be redone, without any legal recourse. The kind of renovation that can easily climb to $ 15,000 and more. This type of situation can happen if you are misinformed. In this article are some points that you absolutely must know before buying your first home so that the transaction proceeds as smoothly!
Estimate your ability to pay for the purchase of a house
Note the title of this paragraph, it is about its ability to pay, not its ability to borrow. These are two very different things. Payment capacity is based on your budget. Borrowing capacity is based on what the bank can lend you. You might be tempted to think that if the bank wants to lend you $ 400,000, you will be able to make the monthly payments. Think again, some banks are very generous in their loans. What they take into account in their calculation is above all their profit.
Getting your first mortgage lender can be difficult. I said earlier that some banks were generous in their mortgage loans. And the reverse is also true, some banks are cautious when it comes to lending money for the purchase of a first home. Above all, don’t be discouraged by a refusal. Even if it is the bank with which you have been doing business for several years. Another bank that calculates risk and profit differently may well accept you. As an indication, some banks do not like self-employed workers, workers without permanent status, properties with income, down payments of less than 10%, workers who have a new job … other banks will have no fear of lending to these same customers. In other words, if your bank says no, a new bank would probably be very happy to count you as a new customer.
Facilitate financing with a mortgage broker
Receiving a bank refusal is never pleasant. You have to disclose your salary, debts and assets to a banker. Besides being a long process, it can be daunting. If you don’t feel like exposing your financial situation to several bankers, I suggest you consult a mortgage broker. The latter knows the banks and their preferences very well. He will be able to study your particular situation and send it to the bank which prefers your type of file. So you only have to report on your finances once. Plus, the mortgage broker is paid by the bank, so you won’t have to pay it.
Reserve your mortgage rate in advance
Even if you plan to buy your first home in just 3 or 4 months, it is a good idea to start shopping for your mortgage immediately. Indeed, it is possible to book a mortgage rate up to 120 days in advance with a pre-approval. This is to your advantage because if the rates go up, your rate is already booked. So you will get a lower rate than the market rate. On the contrary, if the rates fall, you will have the right not to use your reserved mortgage rate and to take the market rate which is the lowest. In other words, you never lose out on booking your advance rate!
We hope you can find your first home easily with these tips!
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