Evictions, foreclosures ban back-play bills coming due for renters, homeowners

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Federal moratoriums on evictions and bans on mortgage foreclosures have helped ease the housing crisis during the COVID-19 pandemic, but a massive bill is coming due for renters, homeowners, landlords and taxpayers as the coronavirus crisis enters its second year.

An estimated 9.4 million households in the U.S. owe about $57.3 billion in back rent, utilities and late fees that they must pay eventually — an average of $5,600 per household. A federal moratorium on evictions for not paying rent is due to expire March 31.

About 2.7 million homeowners are enrolled in pandemic-related mortgage forbearance plans that defer monthly payments through June 30. President Biden extended the deadline last week. More than 10 million adults live in households that are behind on mortgage payments.

Washington provided $25 billion in aid for renters and landlords in a $900 billion relief package approved in December. Renters must show that their hardship is related to the pandemic and that they are at risk of becoming homeless.

In addition to the federal aid, states and municipalities have protected tenants with a patchwork of eviction moratoriums that too often stick the bill with some landlords, said Oliver Dunford, a lawyer with the libertarian Pacific Legal Foundation. He said landlords still have mortgages, taxes and other costs to pay.

“They are making the landlords alone foot the bill in many of these schemes, which we think is unconstitutional,” Mr. Dunford said. “Even if you’re a small landlord renting to commercial tenants, they themselves have mortgage bills to pay.”

Eviction moratoriums do not waive tenants’ obligations to eventually pay their accumulated rent debt. But in California, state law allows tenants with pandemic hardships to have all of their accrued rent debt wiped away for the period from April 1 last year to March 31 this year. A landlord’s forgiveness of 20% of the debt is required. If the landlord agrees, then federal taxpayers cover the remaining 80%.

Mr. Biden’s latest $1.9 trillion COVID-19 relief plan would provide another $25 billion in direct rental relief to landlords, plus $5 billion for utilities, and would extend the federal eviction moratorium through September. It also would provide $10 billion in mortgage assistance, including homeowners’ property taxes, insurance premiums and utilities.

House Democrats plan to bring the overall package to the floor for a vote this week.

“Relief is on the way for renters and small landlords,” tweeted Diane Yentel, president and CEO of the National Low Income Housing Coalition.

But House Minority Whip Steve Scalise, Louisiana Republican, is urging party members to vote “no” on what he calls “Pelosi’s payoff to progressives.”

“This package will keep schools closed, bailout blue states, pay people not to work, and raise the minimum wage to $15/hour,” Mr. Scalise said Friday in a memo.

The president said at a town-hall meeting in Milwaukee last week that the nation can’t afford not to provide another bailout for tenants and homeowners.

“Look at all the people who are on the verge of being kicked out of their apartments because they cannot afford the rent,” Mr. Biden said. “What happens when that happens? Look at all the mom-and-pop landlords that are in real trouble if we don’t subsidize this in the meantime. Look at all the people are on the verge of missing — and how many people have missed — their last two mortgage payments, and are able to be foreclosed on? That’s why I took executive action to say they cannot be foreclosed on in the meantime — because look at what the impact on the economy would be. You think it’s bad now? Let all that happen. The vast majority of serious people say bigger is better now, not spending less.”

Emily Benfer, visiting law professor at Wake Forest University who has studied the eviction crisis, agreed with Mr. Biden that the consequences of not spending enough for short-term housing in the next bill would create longer-term problems. She co-authored a report that said evictions could accelerate the transmission of COVID-19 by increasing crowding in households.

She said homelessness also results in “literally taking years off of people’s lives and setting them on this downward trajectory that has no ladder back up.”

“Housing is one of the most significant pillars of resiliency,” she said. “When you wipe that out, it results in increased unemployment, in barriers to employment, in substandard housing conditions that increase poor health. It’s associated with dozens of severe negative health consequences, from physical health to mental health. It results in pre-term pregnancies and numerous associated conditions for children that are extremely devastating.”

Some landlords won’t accept tenants who have been evicted.

Ms. Benfer rejected the suggestion that landlords are losing more than others in the crisis. She noted that in Forsyth County, North Carolina, 170 eviction cases brought “primarily by very large property owners” were moving forward last week.

“I don’t think that the data is really comprehensive on who’s being hardest hit here, and which landlords are really suffering. Because the rental assistance is coming, and these forbearance and foreclosure programs are in place, I think we can be optimistic that they will be able to weather the storm as long as additional rental assistance comes through.”

Under the CARES Act approved last March and signed by President Trump, tenants can be protected from eviction if their landlord is receiving mortgage relief.

Ms. Benfer said the federal mortgage assistance is helping mom-and-pop landlords in many cases.

“This crisis is 100% solvable,” she said. “We know how to resolve it. We know where the harm is, we know where the highest risk is. It’s truly a matter of targeting investments into those communities and the rental assistance that’s needed, to keep the housing needed to keep the housing market afloat.”

The current mortgage forbearance program applies only to homeowners whose mortgages are government-backed — about 70% of single-family home mortgages.

Forbearance allows homeowners to pause or reduce mortgage payments in the short term, but homeowners are responsible for back payments when the grace period ends.

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