President Biden could have done more

Eviction armageddon creeps closer

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During the pandemic, this once-per-month newsletter may be split into two issues: one monitoring developments related to the COVID-19 pandemic, and one for other news on housing justice.

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In every single issue we’ve put out since Housing for All’s launch, we’ve linked to stories about the gaping holes in the eviction moratorium. Or rather, we’ve linked to a small selection of articles we’ve come across, because across the country, news outlets are reporting countless stories on landlords finding loopholes in the moratorium: people being evicted for owning a trampoline, having an extra cat, or not trimming hedges (when the real reason they are being evicted is because they can’t pay their rent). Some judges are simply ignoring the moratorium, and countless tenants have been evicted simply because they were unaware of the moratorium or how to access it. Many tenants are getting thrown to the streets when their landlord refuses to renew their lease. This issue had the most detailed discussion of loopholes in the federal eviction moratorium.

These stories are so common that President Biden surely knows that the eviction moratorium is fundamentally broken. So why didn’t he fix it? Capturing the disillusionment of housing advocates, Diane Yentel of the National Low Income Housing Coalition had sharp criticism of President Biden: “It’s especially disappointing because the Biden administration knows very well what the flaws and the shortcomings are and still failed to correct any of them.”

The point of the eviction moratorium is to prevent the spread of COVID-19. Without doubt, evictions lead to more infections, and the coronavirus doesn’t care if you were evicted for nonpayment of rent (what the moratorium does cover) or because your 1-year lease term expired (something the moratorium does not cover). If it’s possible to stop evictions for nonpayment of rent, then it’s surely possible to stop them for some other reason, and President Biden could have directed the CDC to close some of the gaping loopholes of the moratorium.

Prosecute, or at least make an example or two

In addition to failing to close the well-known loopholes in the moratorium, Biden had several tools he could have used to enforce the moratorium, but chose not to.

First, disobeying the moratorium is a criminal offense -- meaning CEOs of corporate landlords could have seen a jail cell. The financial fines are also stiff: disobeying the moratorium carries a penalty of a year in jail and a $200,000 fine, though the fine jumps to $500,000 if the evicted tenant died as a result of the eviction. Yet -- in spite of clear evidence that landlords are indeed disobeying the order -- the Biden Administration has not brought a single prosecution.

Even a single prosecution could have a dramatic effect as landlords think twice about the consequences of filing bad faith evictions. The Hill reported that federal prosecutors in Texas and North Carolina asked the Biden Administration for guidance on making such prosecutions, indicating there are federal prosecutors ready to take on cases.

Welfare for me, not for thee

A second option for President Biden was to leverage the fact that a huge portion of rental housing was bought using loans heavily subsidized by the federal government. Many are surprised to find out that nearly all rental housing has been heavily subsidized by the federal government, and that the private rental housing sector simply could not exist in its current form without government subsidy; we discuss this at length in the fourth episode of the Housing for All podcast. The point we kept coming back to was that -- even though private rental housing could not exist in its current form without government subsidy -- the government asks for nothing in return, turning a blind eye to the real estate sector’s massive profits.

In this way, the American rental housing system operates under extraordinary hypocrisy in ordinary times. But an open letter to the Biden Administration cosigned by the National Housing Law Project, National Low Income Housing Coalition, and Private Equity Stakeholder Project highlights the extremes to which this hypocrisy has been stretched during the pandemic. They point out that America’s largest corporate landlords have been openly defying the federal eviction moratorium, despite accepting federally subsidized loans from Fannie Mae and Freddie Mac. They point out that the Biden Administration could put a stop to this -- if they wanted to. First, they could refuse to offer any more federally-subsidized loans to landlords who flaunt the moratorium; as episode 4 of Housing for All makes clear, this is something they simply could not allow to happen. All large landlords are dependent on federally subsidized loans.

President Biden also could have threatened to seize all the properties with federally-backed loans by finding the landlord to be in “technical default” of their loans. A “technical default” occurs when the borrower (the landlord) makes their payments on time but violates some other terms of the loan; loan agreements give borrowers a short period of time to correct the technical default. Under threat of losing their properties, landlords surely would have changed tack and obeyed the moratorium.

Overall, President Biden had a lot of options to strengthen protections for renters in these extraordinary times, but chose not to.

Emergency rental assistance

On the positive side, under pressure from activists (especially the National Low Income Housing Coalition), the Biden Administration made several important changes to the Emergency Rental Assistance program. Most importantly, programs are now required to give money directly to tenants if the landlord refuses to participate in the program. You did not misread that; many landlords had been choosing to evict their tenants instead of accepting a lump sum of cash from the government to cover their unpaid rent (we discussed this in a previous issue).

Mission NOT accomplished

If you’re not a renter behind on rent, you probably assume that the $59.8 billion in emergency rental assistance has generally solved the problem of people behind on rent due to the pandemic. In fact, very little of the money has gotten to those who need it.

There is no complete data on how many tenants have been helped. But of the $17.6 billion awarded to state governments, 20 percent is going to states not yet taking applications, though some local programs in those states are. Florida (which has $871 million), Illinois ($566 million) and North Carolina ($547 million) are among those that have yet to start.[…]

Accepting applications is only the beginning. With $1.5 billion to spend, California has attracted 150,000 requests for help. But of the $355 million requested, only $20 million has been approved and $1 million paid.

Texas, with $1.3 billion to spend, started quickly, but the company it hired to run the program had software failures and staffing shortages. A committee in the state House of Representatives found that after 45 days, the program had paid just 250 households.

The article argues that this slow pace is not necessarily a bad thing:

Not everyone is troubled by the pace. “Getting the money out fast isn’t necessarily the goal here, especially when we focus on making sure the money reaches the most vulnerable people,” said Diane Yentel, the director of the National Low Income Housing Coalition.

Given the challenge, she said, “I think it’s going OK.”

She points toward a program in Santa Clara County, Calif., that won praise for its outreach last year. Many of the people it served spoke little English or lacked formal leases to submit. Now, with $36 million to spend under the new program, it opted for weeks of additional planning to train 50 nonprofit groups to find the poorest households

“Giving away money is actually quite hard,” said Jen Loving, who runs Destination: Home, a housing group leading the campaign. “All the money in the world isn’t going to matter if it doesn’t get to the people who need it.”

This relaxed perspective of experts is probably not matched by tenants who actually need this money, not knowing if they will get desperately needed aid before the moratorium expires or their landlord finds a loophole to throw them to the street. Tenants behind on rent must be terrified.

Why do we know so little about how emergency rental assistance is going? The federal government doesn’t actually distribute emergency rental assistance; instead, they give cash grants to state and local organizations, which then distribute the aid to needy tenants. The National Low Income Housing Coalition identified over 900 programs that received these grants. There is simply no way to see how these programs are doing without extraordinary labor.

Eviction armageddon approaches

We started this issue with updates on the eviction moratorium and the emergency rental assistance program because these two are counterposed in a race against time to prevent an eviction armageddon. Despite the many problems of the eviction moratorium, there is no question that millions of households are behind on rent and only remain in their homes due to the moratorium. The most recent estimate of the number of renters behind on rent comes from an April 21 report from the National Equity Atlas, which combined data from the Census Bureau Household Pulse survey and the USC Understanding Coronavirus in America survey. They found that 5.7 million renter households are cumulatively behind on rent by $19.75 billion, or about $3,400 per household.

The eviction moratorium is set to expire on June 30; President Biden has now extended it twice, and may yet do so again as the June 30 deadline approaches. Since the start of the pandemic, there have been three rounds of emergency rental assistance totaling $59.8 billion ($37.4 billion by President Trump; $22.4 billion by President Biden). But as we have seen in previous issues, there has been extraordinary difficulty getting those first two rounds out the door, with some egregious cases, like money getting diverted to fund the Pennsylvania Department of Corrections. And, as discussed above, the current round of rental assistance is slow to get out. Will the current round of emergency rental assistance get to tenants in time to prevent an eviction armageddon? Without exaggeration, millions of lives hang in the balance.

Eviction Lab’s pandemic analysis

Eviction Lab published their report on 2020 evictions; you can find their summary here. Some of their major findings:

  • There was a two-week period in late August to early September when there was no federal ban on evictions. During this time, eviction filings shot back up to pre-pandemic levels. They write: “This increase suggests that many landlords were acutely aware of moratoria and ready to file for eviction as soon as was permitted.” Clearly, this is an ominous sign of what’s ahead when the eviction moratorium finally ends.

  • Though the federal eviction moratorium gets the most press, some states and cities had their own eviction bans. Cities and states with stricter bans had fewer eviction filings, sometimes dramatically so. Eviction filings in cities with the strictest bans slowed to a trickle, to just 12.6% of pre-pandemic levels. Stricter eviction bans supplementing federal moratoria really did work.

  • By looking only at cities during times when there were no state or local eviction bans in place, it is clear that the federal eviction moratorium was implemented very differently in different places. In some cities, judges allowed few proceedings to occur; in other cities (like Tampa and Jacksonville), the moratorium had no effect on the number of evictions filed because judges played fast and loose in interpreting the language of the moratorium.

  • Black and Hispanic renters were the most likely ethnic groups to be evicted, and female renters were far more likely than male renters to be evicted. This was the case prior to the pandemic, which generally accelerated existing inequalities.

    • While the pandemic didn’t seem to affect the demographics of who gets evictions filed against them, the amount of back rent demanded by landlords in eviction court grew substantially. Obviously, with the economic catastrophe caused by the public health catastrophe, people got farther behind on rent more quickly.

Miscellaneous updates on rental housing and the pandemic

The National Housing Law Project has started a campaign to pressure the Consumer Financial Protection Bureau to prohibit debt collectors from reporting rent debts accrued during the pandemic. Because unpaid rent remains on a person’s credit score for 7 years, millions of people may have an economic anchor dragging them down for years to come. Currently, 143 organizations have signed on.

King County, Washington used some of its allotment of emergency rental assistance money to fund the Large Landlord Program. This program distributed a total of $22.2 million in rental assistance to the county’s largest landlords. The program specifically targeted landlords rather than individual tenants who were behind on rent, who may have lacked the knowledge or technology to apply. In addition to covering all tenants (rather than helping only those tenants with the knowledge or skills to apply), taking this approach allowed the county to negotiate on behalf of tenants. In exchange for accepting a total of $22.2 million in emergency rental assistance, landlords in this program agreed to cancel $3.1 million in back rent. In other words, King County was able to cancel more than 12% of all back rent owed to these landlords.

In just 27 counties, corporate landlords have filed a shocking 70,000 evictions since the start of the pandemic. That includes Invitation Homes, which had $200 million in profits in 2020, its most profitable year ever. That’s just 27 counties; the US has more than 3,000 counties.

Since the CDC eviction moratorium was instituted in September, Pretium Partners -- one of the largest landlords in the US -- has filed to evict a shocking 2.3% of all households in their portfolio.

Paul E. Williams argues that landlords’ rental practices will have to change. The vast majority of landlords reject applications where a tenant was in eviction court (even if they weren’t ultimately evicted). With massive numbers of renters about to be evicted, the pool of renters without contact with eviction court is about to get much smaller. Large, corporate landlords can surely afford some vacancies and continue to turn away anyone who has been to eviction court. But smaller landlords can’t afford vacancies and will have to start renting to people with evictions on their records.

The mayor of Rochester, NY estimates that a full quarter of the city’s renters are behind on rent.

The Fort Worth Star-Telegram makes the case that Texas has been the worst state for renters during the pandemic.

Billionaire Charles Koch spends hundreds of millions of dollars to acquire rental housing, then millions of dollars on court challenges to fight the CDC eviction moratorium.

Household Pulse continues!

Our whole team at H4A rejoiced at the news that the Census Bureau will continue its Household Pulse survey indefinitely. We lamented the end of this program in our previous issue as we reported on what were to be the final data published by the program. Fortunately, the Census Bureau recognized its immense value (eg, there is no other dataset tracking Americans’ ability to pay for housing) and decided to continue the program. Here’s what we learned from the most recent data (covering April 28-May 10):

  • People are still losing jobs: 19% reported that they or a household member lost employment income in the last 4 weeks, and 14% expect they or a household member will lose employment income in the next 4 weeks.

    • The previous Household Pulse found that a shocking 44% of households had a loss of employment income at some point in the pandemic

  • A shocking 44% of renters said it was “very likely” or “somewhat likely” they would be evicted in the next two months

    • 19% of homeowners said it was “very likely” or “somewhat likely” they would be foreclosed on in the next two months

  • Only 54% of people who pay rent for their housing reported “high confidence” in their ability to pay next month’s rent

    • Homeowners are doing much better; 75% of people who make mortgage payments reported “high confidence” in their ability to pay their next mortgage payment

  • Only 46% reported it is “not difficult at all” to afford normal household expenses

  • 29% of households (35% of households with children) with reported not having enough to eat or cutting back by buying foods they don’t like to make their budget go farther

Miscellaneous

After reporting on months of impending doom, the latest data indicate that we may likely avert a foreclosure armageddon. If only news on the eviction armageddon were so promising.

In our inaugural issue and again in a later issue, we posed a question: how much did the pandemic affect renters’ ability to pay rent? The only relevant dataset we know of argues that the impending eviction catastrophe is actually the normal functioning of our very broken rental housing system. Now, a new set of data, from the NYC Furman Center and others, supports the idea that the pandemic is simply business as usual for a broken housing system.

We look at the most recent ruling on the CDC eviction moratorium. The short version: nothing will happen until a mess of conflicting rulings are resolved by a higher court, and this might not even happen before the moratorium expires.

America’s homeowners might be winning the race against time

Some excellent news about the impending foreclosure armageddon from Black Knight’s most recent data:

  • After flatlining for months, the forbearance rate fell by a whopping 11%: that’s more than a million people who had to put their loan into a forbearance program, but were able to exit in late March to early April.

    • The bulk of households leaving the program had entered forbearance early on. Since households get 18 months of forbearance, that’s great news; these households were approaching the end of their forbearance plans, when they would have been expected to resume their mortgage payments whether they could afford to or not.

    • Homeowners entering forbearance reached the lowest levels since the onset of the pandemic.

  • 671,000 households behind on their mortgage got caught up in March alone.

  • Overall, more than 2/3 of homeowners who entered forbearance have been able to leave.

Nonetheless, more than 2.3 million American households are still in forbearance. It’s a race against time: can homeowners right themselves financially before the foreclosure moratorium expires on June 30 and they exhaust their 18 months of forbearance? After months and months of very bad news, this is extremely encouraging.

How much of our housing crisis is the pandemic and how much is our housing systems’ normal functioning?

We posed this question in our inaugural issue and again in a later issue: how much did the pandemic affect renters’ ability to pay rent? As we pointed out in those two issues, one dataset (from NMHC) argues that the pandemic had almost no effect on tenants’ ability to pay rent. A huge share of tenants struggle to pay rent and are always in crisis; the difference is that we suddenly have data showing how bad things are. Those data are the Census Bureau’s new Household Pulse survey, which only began after the pandemic. Shockingly, we haven’t had reliable data on renters’ inability to pay rent.

Now, a study of subsidized housing residents in NYC by the NYU Furman Center and other partners supports the conclusion that the pandemic had very little effect on tenants’ ability to pay rent. In fact,the shocking statistics showing millions of renters unable to pay rent is actually just business as usual (emphasis added):

In 2019, before the economic crisis, the share of tenant households that had some amount of rental arrears hovered around 50 percent (Figure 3). That share increased after the onset of COVID-related shutdowns in March 2020, with a decline in July, only to increase again starting in August (when $600 per week unemployment supplements ended). Overall, the share of households with rental arrears increased by 3 percentage points (from 52% to 55%) between September 2019 and September 2020.

Six months before the pandemic started, just over half of low income renters had unpaid rent. Six months into the pandemic, just over half of low income renters had unpaid rent. The difference was just three percentage points.

The major theme of the pandemic has been inequality: the negative effects of the pandemic have been concentrated on the already disadvantaged, while those in a better position prior to the pandemic have been by and large sheltered. That’s what happened here: the percentage of renters behind on rent may not have changed much, but those with overdue rent fell behind by larger and larger amounts:

In other words, the amount of back rent owed increased dramatically, even though the number of renters who owed back rent did not. A small majority of renters were behind on rent before and after the pandemic arrived. Clearly, though the pandemic made things worse, our housing system was irreparably broken well before the pandemic arrived.

Of course, these data are very limited in scope: they are for New York renters living in subsidized housing (so a subset of a subset of a subset of renters). Nevertheless, it’s one of our few glimpses into the question of how much the pandemic actually affected renters’ ability to pay rent. All the data argue forcefully that our housing system was fundamentally broken before the pandemic shattered it.

Court challenges to CDC eviction moratorium

Almost since the federal government instituted an eviction moratorium, there have been lawsuits to get it overturned.* Numerous lawsuits have led to numerous, conflicting rulings in US district courts. Most recently, a district court in D.C. ruled that the entire moratorium was unconstitutional, concluding that evictions are not economic events (and therefore the federal government has no authority to regulate them). This is absurd: people who are evicted are more likely to also lose their job as a result, as well as have difficulty getting another apartment. Evictions also make it more difficult to get credit for a car, home, or other loan. No one is more capable of making this case than Matthew Desmond (Of Evicted fame), as he did in this amicus brief, but if it is indeed unconstitutional for the federal government to protect tens of millions of people from homelessness during a once-per-century catastrophe, then maybe the problem is the Constitution.

Currently, orders overturning the eviction moratorium are stayed -- meaning the moratorium remains in effect -- until a higher court makes a decision. The US Court of Appeals is one level higher than the district courts (and one level lower than the Supreme Court); they need to hear the case to resolve the conflicting district court rulings. However, the moratorium expires on June 30; unless the Biden Administration extends it, it’s unlikely the cases will be reviewed by the US Court of Appeals by then.


*shared sacrifice

Image: Joe Biden’s Presidential portrait

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