Eviction Moratoriums Won’t Solve Housing Insecurity

The eviction moratorium, at least on the federal level, is finally over. The CDC’s moratorium was intended to be a temporary measure but was extended several times until the Supreme Court struck it down in August. The law generated heated debate and media coverage that was mainly focused on at-risk tenants and the millions of people who could be forced from their homes in the middle of a pandemic. While the moratorium was prompted by the pandemic, the talk of its effects reminded some of us that the affordable housing crisis in America is a dire issue, and it may be reaching a breaking point.

The debate over eviction moratoriums reached the nation’s highest court and pitted tenants’ rights groups against real estate trade groups. Now that the laws are mostly gone and we’re surveying the impact, some big questions are, “What was the effect of moratoriums (which are still applicable in some states) on small landlords with modest financial means?” and, “Now that the moratorium is gone, what’s next?”

There’s been debate about this, as well. Some are saying the eviction moratorium was devastating for small landlords, while others say they may have struggled a bit, but were able to get by. So-called ‘mom and pop’ landlords had their own struggles throughout the pandemic, as rental payments dried up, federal rental assistance funds never reached them or tenants, and some landlords racked up financial losses or were forced to sell off properties.

The saga of the eviction moratorium laws goes back to March 27, 2020, around the time the pandemic emerged. Congress temporarily prohibited evictions for 120 days for people on federal housing assistance or with federally backed mortgages. But that was only the beginning. After the original ban expired, the CDC issued a sweeping new national prohibition on evictions on September 4, 2020, which was extended several times. According to the National Housing Law Project, the most recent extension of the ban covered 80 percent of all renters in the U.S. and had an expiration date of October 3, 2021. But, as landlords surely know, CDC’s ban was struck down by the U.S. Supreme Court on August 26. 

Public health

CDC’s eviction moratorium, from one perspective, achieved its goal. Researchers at the Eviction Lab at Princeton University observed 368,398 eviction filings between September 4, 2020, and July 31, 2021, in the jurisdictions they monitor. That number was less than half (47.2 percent) of eviction filings the researchers said they’d expect over the same period in a given year. Overall, the Eviction Lab estimates the moratorium prevented about 1.55 million evictions nationwide. 

CDC issued the moratorium as ‘an effective public health measure’ to prevent the spread of COVID-19. By stopping evictions, people would less likely be forced into homeless shelters or other ‘congregate’ settings where the virus could quickly spread. In addition, given the economic impact of pandemic shutdowns, the moratorium combined with federal emergency rental relief funds was intended to assist struggling renters. 

But the flip side to eviction moratoriums was the impact on small landlords who rely on rental payments for a sizeable chunk of their income. Nearly $47 billion of federal aid was earmarked to help renters pay up, but only about a quarter of the funds had been distributed as of the end of September, according to the Treasury Department.

Mom and pop landlords could not evict non-paying tenants (in most cases), and they weren’t receiving relief funds, leading to considerable financial losses in some cases. The National Rental Home Council reported in the spring that 11 percent of landlords said they were forced to sell at least one of their properties to recoup losses. In July, Diane Yentel, President and CEO of the National Low Income Housing Coalition, said that 11 million Americans reported being behind on rent payments. Across the nation, the average renter owes $3,700, according to a July analysis by Surgo Ventures, a nonprofit organization dedicated to solving health and social problems. 

Much of this problem could be solved if federal rental relief funds were more quickly and efficiently dispersed, said Luke Wake, an attorney at the Pacific Legal Foundation, a nonprofit legal organization. “The feds basically made this pot of money, but then said the states could distribute it and develop their own rules and processes for getting the money out there,” Wake said. “And so there probably should have been a more efficient, more direct way of doing it.” 

Hundreds of state and local programs across the nation are charged with disbursing the federal rental assistance funds, and the process is often dizzyingly complex. For example, the vice president for research at the National Low Income Housing Coalition told CNBC he saw one fund application that was 45 pages long. The layers upon layers of red tape are meant to deter scammers, but it’s slowed the process to a crawl.

Small landlords have struggled 

About 40 percent of residential housing units in America are owned by small, individual investor landlords with modest financial means, according to data from the 2018 Rental Housing Finance Survey. Last year, a Brookings Institute report said mom and pop landlords depend on property income for up to 20 percent of their total household income. The CDC’s eviction moratorium, while well-intentioned, provided a substantial financial shock to these landlords.

Another study found that about 35 percent of small landlords have had to dip into their savings to cover costs usually covered by property income. Unlike large corporate property owners, smaller landlords have struggled to keep up with their own financial obligations, such as mortgage payments, insurance, property taxes, and maintenance costs for their units.

Recent research from JPMorgan Chase & Co. gave a more varied picture of the moratorium’s effect on landlords. The research found that rental income losses were widespread throughout the pandemic for landlords, but it may not have been as catastrophic as some think. According to JPMorgan, the median landlord ended 2020 with a modest 3 percent shortfall in rent. Many landlords were also able to cut their expenses to help weather the storm, taking advantage of mortgage forbearance programs and sometimes deferring maintenance in their properties. While rental relief funds have been slow to reach tenants and landlords, direct cash payments from stimulus checks and extended unemployment benefits also allowed many tenants to keep up with rent payments. The research showed that many landlords also offered rent reductions and forgiveness and were willing to work on payment plans with their tenants.

But the problem remains that deferring costs could catch up to many small landlords, JPMorgan’s research indicates. Landlords that skipped their own mortgage payments simply accrued debt, and the same goes for deferring maintenance on their properties. Landlords will have to make these repairs eventually, and it could also mean they won’t be able to collect as much in rent if their properties are now in shoddy condition.

“Tenants are ultimately going to disappear owing these landlords thousands of dollars, and the landlords are never going to get it,” said Scott Abernathy, President of Property Management Inc., which manages real estate assets in Tennessee. “I don’t see how the government will pay for all that, although the government has paid for a whole lot that I didn’t think they would. To make it fair for everyone, if it’s clear the tenant will never pay back that debt, the landlord needs to be made whole on the debt they still have to pay.”

Landlords do have a few legal options to collect on back rent that piled up during moratoriums. If security deposits don’t cover the amount of rent in arrears and tenants don’t agree to repayment plans, some states allow landlords to sue tenants in civil court to collect the debt. Gregory Diebold of Northeast New Jersey Legal Services told NorthJersey.com that this practice is becoming more common recently because of the moratoriums.  But Diebold noted that civil cases are more complicated than evictions, they take longer, and they don’t always result favorably for landlords. 

After the Supreme Court’s ruling in August, CDC’s eviction moratorium is no longer in place, but some state and local bans still are. For example, in Minnesota, an eviction ban still protects renters who have pending COVID-19 rental assistance applications, and it runs until June 2022. New Jersey also has an eviction ban that runs until December 31, 2021, and California, New Mexico, New York, and Washington also have extended their bans.

With the CDC moratorium ending, some people are warning of a wave of evictions nationwide. According to a recent Census Bureau survey, about six percent of renters across the country (3.5 million people) say they’re ‘likely’ or ‘very likely’ to face eviction because of the pandemic. But fears of mass evictions haven’t come to pass, at least yet. Court eviction filings were up 8.7 percent in September from August, according to the Eviction Lab, but that was only roughly half the average pre-pandemic September rate. 

Moratoriums are a band-aid, not a solution

Moving forward, getting federal rental relief funds into the hands of renters and, subsequently, landlords is a priority. Eviction moratoriums were always meant to be a temporary measure for the effects of the pandemic, and they’re definitely not a long-term solution for housing insecurity. In late August, the White House and Treasury Department announced they would accelerate efforts to get funds to at-risk renters. This would mainly be done by allowing eligible renters to self-attest their needs without cumbersome documentation, providing advances while paperwork is processed, and increasing the flexibility for what the funds can be used for.

Meanwhile, many states and cities across the country are addressing how evictions are handled in their court systems. According to Pew Charitable Trusts, so far in 2021, 16 states have adopted bills that affect how evictions are adjudicated. Connecticut and Washington, for example, will make legal counsel available to anyone who receives public benefits or meets minimum income requirements. Pew reports that access to legal representation leads to better outcomes for tenants facing eviction, but only about 10% of at-risk tenants have such access. Eviction diversion programs have also become popular in states and cities, which are a form of dispute resolution that helps avoid eviction judgments. 

COVID-19 has perhaps pulled back the curtain even more on widespread housing insecurity in America. For many tenants, it doesn’t take a pandemic to put them at risk of eviction. In a major city like Philadelphia, nearly 1 in 14 renters face eviction every year and, between 2000 and 2016, the Eviction Lab estimates there was roughly one eviction filing for every 17 renter households in the U.S. Moratorium laws may have saved many at-risk tenants, but they also hurt small landlords, sometimes rather significantly, and extending them any further will simply make tenant and landlord debt continue to pile up. The affordable housing challenge is a complex and monstrous problem, and there’s no magic bullet to solve it. Moratorium laws may finally be ending soon, but the problems of evictions and housing insecurity are still very much alive.

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