The Federal Eviction Ban Has Expired. What’s Next?

Photo by Anders Holm-Jensen via Unsplash

Millions of American renters are staring eviction in the face, as the often extended federal eviction moratorium first initiated by the Centers for Disease Control and Prevention (CDC) 11 months ago expired Sunday. Expiration unleashed a flurry of responses from both sides of the landlord-renter debate.

“While the moratorium has been beneficial to many (residents) who have been unable to work and pay rent during the COVID pandemic, it has imposed an undue hardship on landlords who must continue to pay the operating expenses and mortgage payments throughout the moratorium,” Gary M. Tenzer, principal & co-founder of real estate capital advisor George Smith Partners, told Multi-Housing News.

He added that had the moratorium been extended, it would have led to increased loan defaults as lenders became less willing to forbear reduced debt service payments. The result, he said, would have been “inevitable foreclosures.”

On the other hand, in a statement late last week, White House Press Secretary Jen Psaki noted the moratorium allowed hundreds of thousands of renters to avoid “the heartbreak, homelessness and health risks that too often emanate from evictions, particularly during a pandemic . . . The president calls on Congress to extend the eviction moratorium to protect such vulnerable renters and their families without delay.”

A study by the nonprofit organization The Aspen Institute has found 6.5 million American households behind on their rent obligations. The average debt is in excess of $3,000. Across the U.S. renters owe approximately $20 billion to their landlords. More than 15 million people live in households with overdue rental payments.

“We still aren’t out of the woods,” added Dudley Benoit, executive vice president of Alliant Capital Ltd., an LIHTC investment firm focused on tax credit syndication for the development and financing of affordable housing and multifamily development. “The Delta variant could lead to additional economic contraction. If unemployment worsened because business had to shut down again, we would need additional support for workers. But would that be supported in the current political environment?”  

Unfunded mandate

Among organizations strongly opposing legislation to extend the eviction moratorium are the National Multifamily Housing Council (NMHC) and the National Apartment Association (NAA), both of which issued statements late last week.

The former noted it led national real estate trade groups in urging Congress not to extend the eviction moratorium, and to accelerate distribution of the Emergency Rental Assistance Program (ERAP) financing Congress provided earlier this year.

“The economic support delivered through COVID relief measures has provided a path to stability and recovery for individuals and businesses alike,” the NMHC said in a statement. “We agree with the Biden Administration and many in Congress that the time is long overdue for states and localities to remove unnecessary red tape and speed the deployment of ERAP benefits to those in need.”

The NAA issued a stronger statement. “An extension of the eviction moratorium equates to an unfunded government mandate that forces housing providers to deliver a costly service without compensation, and saddles renters with insurmountable debt,” noted the statement from Bob Pinnegar, president & CEO of the organization.

The NAA statement went on to note only $3 billion of the existing $47 billion in rental assistance through the American Rescue Plan and the CARES Act has been distributed, and the remaining $26 billion of the $73 billion in rent debt remains unfunded. “Get rental assistance flowing,” the statement urged.

Small landlords have been hurt the most by the extensions of the eviction moratorium, a number of observers have noted. The pandemic’s impact has forced 12 percent of small landlords out of business, said Paraag Sarva, CEO of Rhino, a licensed insurance agency giving renters alternatives to security deposits.

“Landlords were still responsible to pay for (residents) who lost jobs or were unable to pay their rent over the past year and a half, and will continue to have difficulty filling empty properties once the moratorium ends. To put it bluntly, the moratorium has been a band-aid solution to address a much bigger issue that requires systemic changes.”

Paul Getty, CEO of First Guardian Group, an investment advisor and licensed real estate broker, noted moratoriums are “incredibly burdensome on mom-and-pop landlords . . . These are everyday people who heavily rely on collecting rent from their few (residents) to make ends meet. Landlords often try to be amenable, but they’ve been put in an extremely tight spot for quite some time.”

Help for renters

A patchwork of local and state assistance programs has helped renters. But in many locations, getting money to residents and landlords has proven a challenge, Benoit noted.

States including California, New York, Washington and Oregon have local moratoriums set to expire after the CDC order, said Tenzer, citing the Marcus & Millichap 2021 Multifamily Midyear Outlook. For instance, California’s eviction moratorium extends to Sept. 30, and New York’s to Aug. 31.

In some instances, property managers themselves have extended moratoriums.

In San Francisco, one of the largest managers of apartments in the city announced its own voluntary extension of an eviction moratorium. Veritas Investments announced in June is would extend its eviction moratorium until Dec. 31.

Amid the uncertainty, some retain hope. “Rental assistance programs have supported financially troubled (residents), and plentiful job openings should help many find sustainable income after unemployment funds dry up,” Tenzer noted, adding that according to the NMHC rent payment tracker, at least 93 percent of payments were made in each of this year’s first five months, “down only marginally from years past.”

The Council of Large Public Housing Authorities (CLPHA) issued a statement affirming its intention to use “every tool and resource available” to ensure residents remain housed safely. “The good news is the Treasury-administered Emergency Rental Assistance Program has increased the speed of its fund distribution,” said CLPHA executive director Sunia Zaterman.

“We know more can be done to streamline access to funds by partnering with local housing authorities to help those assisted households in need.”