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Why are large corporate landlords with record-shattering profits collecting emergency rental assistance?
Profitable landlords should forgive their tenants’ unpayable back rents so aid can reach those who need it
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.
Together, the Trump and Biden administrations have passed three rounds of emergency rental assistance, totaling a whopping $59.8 billion. The justification behind this aid is that tenants face eviction if they don’t pay their rents, and landlords face foreclosure if they don’t receive rent payments (and thus can’t pay their mortgage).
What, then, to make of this report from CBS News?
However, a CBS MoneyWatch review of the financial statements and loan records of the nation's largest landlords suggests that the eviction moratorium, which has saved millions of Americans behind on their rent from becoming homeless during the pandemic, has done little to dent bottom lines. In fact, large property owners have predominantly been profitable during the pandemic…
Rents at Mid-America Apartment Communities rose 2.5% in 2020 on properties it owned pre-pandemic. Mid-America owns roughly 100,000 apartments, making it one of the largest landlords in the U.S.
The company had nearly $1.7 billion in revenue last year. Despite its having offered rent deferments to 8,000 of its tenants since the beginning of the pandemic, Mid-America's operating profits jumped to nearly $430 million in 2020. That was up 60% from the previous year, and by far the highest increase the company has ever reported.
You did not misread that; profits for one of America’s largest landlords increased an astonishing 60% during a global pandemic.
The report also points out that another massive corporate landlord, Invitation Homes, actually collected $50 million more in rent in 2020 than in 2019. In fact, the pandemic year of 2020 was Invitation Homes’ most profitable year since its founding in 2012.
Mid-America and Invitation Homes are far from unique; the report also points out that very few landlords are actually facing foreclosure:
A February report from real estate data firm Trepp found that owners of apartment buildings, unlike other property owners, were having little trouble making their mortgage payments. As of January, the delinquency rate for loans tied to apartment buildings was just 2.3%. Owners of hotels and malls were having a much harder time keeping up with their loans, with delinquency rates rising to 19% and 13%, respectively.
Now, some landlords clearly are struggling; here’s a story about landlords going door-to-door, offering to help their tenants apply for rental assistance. But most landlords are emphatically not in danger of foreclosure. Why should the public bail out landlords like Invitation Homes or Mid-America, when they are not facing an emergency but are in fact shattering records for profitability?
Instead, all unpayable back rents accumulated during the pandemic should simply be forgiven. Any landlords facing foreclosure should be able to apply for and receive emergency cash assistance to help make their mortgage payments and avoid losing their property in foreclosure. As we’ve reported since our inaugural issue, shocking numbers of Americans had to cut back on essentials like food due to the economic fallout of the coronavirus pandemic. It is simply outrageous for the public to shell out billions of dollars in aid to landlords with record-breaking profits when so many are struggling to meet their basic needs.
An act of god?
Jason Mays makes a similar argument at Shelterforce, pointing out that massively profitable corporate landlords like Invitation Homes or Mid-America are just as likely to get a cash bailout from the federal government as a small-hold landlord who really is struggling. That is an absolutely grotesque use of ‘“emergency’” funds, and Mays argues that if states passed an “act of god” clause for all rental leases, rents could be forgiven in a way that would be constitutional, and in fact well-established in case law.
A better way
Recognizing the human cost of the impending eviction armageddon, as well as the injustice of giving billions to landlords who don’t need it, Stomp Out Slumlords in D.C. has been working to force landlords to accept rent forgiveness through tenant rent strikes. For one building they targeted, Trivoli Gardens, the landlord has long since paid off the building’s mortgage and is in no danger of losing the property to foreclosure. At another building in August, after the tenants threatened a rent strike, “tenants were informed that if they had a balance, any rent they paid would count double and that if they paid monthly rent for October, November, and December, any other rent they owed would be forgiven.” Surely that’s a more sensible way forward than doling out billions to landlords who are not facing an emergency.
Image: Hopeful Thinking / Charles Stirton on Flickr
Rents have already risen to pre-pandemic levels — before the pandemic is even over
One shred of good news from the pandemic was that, after decades of steadily rising, the pandemic had pushed rents downward. But according to Apartment List, rents have risen so sharply in the past 3 months that they are already back up to pre-pandemic levels:
Our national rent index is up by 1.1 percent month-over-month, representing the second straight month of positive rent growth and the largest single month increase ever recorded in our estimates, which begin in January 2017. For comparison, in the previous three years, the average month-over-month rent growth in March was 0.6 percent. In other words, this month’s increase was nearly double the prior-year average for this time of year. This is the third straight month that rent growth has outpaced the average of recent years. This month’s increase wipes out the COVID dip in our national index[.]
Apartment List found rent increases in some unexpected places; Boise, Idaho saw rents shoot up a whopping 16% in a year, and Fresno, at 12%. It’s not just New York or San Francisco — rents are going up across the country.
Census Bureau continues to reveal extraordinary suffering
According to the most recent Census Bureau data:
Just 57% reported having enough to eat in past 7 days and not having to cut back by buying foods they don't like; for households with children, that was even lower, at 52%
Only 42% reported it was "not at all difficult" to pay for usual household expenses in the past 7 days
Just 74% of households with mortgage reported "high confidence" in their ability to pay their next mortgage payment
Only 54% of households who owe rent reported "high confidence" in their ability to pay rent next month
Shockingly, only 26% of renters reported it was "not at all likely" they would be evicted in the next 2 months
41% reported it was "very likely" or "somewhat likely"
44% of people reported loss of income (themselves or a household member) at some point during the pandemic
17% reported they expect themselves or a household member to experience loss of employment in next 4 weeks
Regrettably, the program collecting these data is being discontinued. In spite of a catastrophe that is clearly ongoing, these data are the last the program will publish.
Emergency Rental Assistance distribution and Eviction Moratorium continue to be fundamentally broken
Echoing stories we covered last issue, Texas’ rental assistance program has been able to make just three payments in its first month, and in Nevada alone, 12,000 renters were on a waitlist for rental assistance when the state ran out of money in December 2020, and another 9,000 have applied since then.
Kentucky’s Center for Investigative Reporting finds that a shocking fifth of landlords are refusing to accept emergency rental assistance, opting instead to evict their tenants — at times, forgoing thousands of dollars:
Jhala Fisher needed cash. Demand for home health aides crashed during the pandemic, and by May she had been laid off.
Fisher, a 26-year-old in Louisville, says she couldn’t attend job interviews. She didn’t have enough money for gas. She started selling her blood plasma just to keep the lights on.
By November, Fisher owed $2,994 in rent, and her landlord refused to accept partial payments. “I couldn’t help but to think how the heck I was going to be able to pay all of that upfront, in a lump sum,” she said.
Her landlord went to court to evict her...Although Fisher applied for [emergency rental assistance], her landlord, Southwood Apartments, declined to do so and proceeded with the eviction. Feeling she was bound for defeat, Fisher abandoned the apartment to preempt a judgment against her in eviction court.
Nationwide, journalists continue to document the gaping loopholes in the federal eviction moratorium, including an eviction for having a trampoline (when the eviction was clearly over the tenant falling behind on rent). There are so many stories in this vein across the country; we’re only highlighting a selection; see this issue for a more detailed discussion of the loopholes in the federal eviction moratorium, and every single issue we’ve put out since Housing for All’s launch has links to many more articles on these loopholes.
Forbearance rate still not improving
We outlined the two pandemic protections for homeowners (the foreclosure moratorium and the forbearance program) in our inaugural issue and discussed major updates to those protections in our most recent issue. Each month, we have been checking in with data from Black Knight, which tracks how many homeowners are utilizing the forbearance program (because they are unable to make payments on their mortgage).
Black Knight’s most recent data (covering February) continue to show a worrying trend: the number of homeowners who can’t make their mortgage payments has not improved since October. Unless something fundamental changes, there will be a catastrophic wave of 2.7 million foreclosures starting in late September when these protections are phased out.
A bill in Illinois would seal evictions that occurred during the pandemic — meaning landlords could not find out if a tenant applying for housing was evicted during the pandemic.
Eviction armageddon arrives early in Texas thanks to cruel court ruling
Judges in Texas have been directed by the state’s Supreme Court to stop enforcing federal eviction moratorium:
"We've had a failure of leadership that's going to result in tens of thousands, if not hundreds of thousands, of Texans becoming homeless in relatively short order," says Mark Melton, who heads up a pro bono team of 175 volunteer lawyers in Dallas...What has changed is that an emergency order issued by the Texas Supreme Court has just expired. It had required judges to enforce a federal eviction moratorium from the Centers for Disease Control and Prevention[.]
After the Texas Supreme Court didn't extend its directive, an advisory body to the Texas courts went further. The Texas Justice Court Training Center issued guidance essentially telling judges it's not their job to enforce the CDC's order.
"Courts are no longer authorized by the Texas Supreme Court to abate (put on hold) cases based on the CDC eviction moratorium," it reads.
...Even a major landlord group seems a bit baffled by the ruling. David Mintz, vice president of government affairs with the Texas Apartment Association, says he has been reaching out to the Texas Justice Court Training Center.
"We have asked them to clarify their guidance," Mintz says. "We believe that the courts do have the ability to consider CDC declarations that are provided to them."
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