Category: COVID Coronavirus

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COVID Coronavirus Evictions Housing policies

CDC Eviction Moratorium Order is in Effect

https://www.govinfo.gov/content/pkg/FR-2020-09-04/pdf/2020-19654.pdf

The earlier CDC release stated that tenants did not have to provide proof with the declaration, but the landlord could request/challenge it.

The published rule, but of course it is not a rule, but an order,  as rules have rules, does not appear to have a mechanism to challenge the validity of the tenants’ declarations. (see below)  Instead, I guess you have to report the tenant to the FBI if you feel they lied. 

It is uncertain what an owner must do to be found in violation.  Do you actually have to evict after receiving a declaration, which courts should prevent from occurring?  Or would issuing a summons after receiving a declaration trigger a violation?  But how do you challenge the validity of the declaration if not in court?

I do not see specifically that issuing a 5-Day notice is a violation, but I’m sure that will be argued.

https://www.nytimes.com/2020/09/02/your-money/eviction-moratorium-covid.html
A lawyer can also help if a landlord tries a different approach. For instance, a landlord might try to sue in small claims court over partial payments, without filing an eviction notice that might be illegal under the order, Mr. Dunn said.


The sample declaration form does not say anything about whether I need to prove my hardship to my landlord. Should I attach bank statements or other documents?

No, not to the declaration — at least not at first. The way the order is written means you need not lay out specifics in your declaration, said Emily Benfer, a visiting professor of law at Wake Forest University.

If the landlord challenges your initial assessment, however, you should provide “reasonable” specifics to prove your eligibility, according to senior administration officials who helped write the order.

This last sentence was in the CDC press release two days ago but is absent now.

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COVID Coronavirus Evicted - Matt Desmond Evictions Housing Stats

NYT Op-Ed on Eviction Moratoriums

Matt Desmond’s op-ed piece in today’s NYT is a prime example of the over-emphasizing of relative differences in eviction filings:

“In the last week of July, eviction filings were 109 percent above average levels in Milwaukee.” 
— https://www.nytimes.com/2020/08/29/opinion/sunday/coronavirus-evictions-superspreader.html

If one narrows the range enough, picking and choosing that which fits their predefined scenario, one can use otherwise factual data to say anything. 

A more accurate reflection of what is happening in the Milwaukee rental market is eviction filings are down by 26.6% YTD through 07/31/2020, despite an anecdotal 8-12% greater than normal non-payment. Rent has always been the financial elasticity in the “C” market, be it Christmas gifts, car repairs, or job loss.

If too many owners fail because they cannot collect enough rent to cover expenses, housing opportunities will only become more restricted and expensive. Municipalities will also fail as they “eat” three to four times more rent dollars in property taxes and municipal utilities than typical owners receive for their efforts and return on investment. 

Many scholars are warning of such widespread failures in the rental market. One example: Tenant Rights, Eviction, and Rent Affordability (July 4, 2020). Available at SSRN: https://ssrn.com/abstract=3641859 or http://dx.doi.org/10.2139/ssrn.3641859

In national interviews dating back to 1991, I’ve pointed out the near impossibility of paying rent for those with limited income. While the older articles are not online, here is a NYT interview from a decade ago:

“On $673 a month, how do you buy tennis shoes for the kids, clean shirts for school and still pay your rent?” Mr. Ballering said.” ($673 was the W2, welfare, cash benefit at the time)
— https://www.nytimes.com/2010/02/19/us/19evict.html

Sadly nothing has changed in these 30 years. 

I fully agree with Desmond’s statement buried near the end of the op-ed, “Eviction is not a solution to landlords’ fundamental problem of maintaining rental income. Rent relief is.”  I would have been pleased to see this as your closing call to action.

The COVID crisis presents an opportunity for housing advocates, whether from the tenant or property owner perspective, to jointly push for a long term solution, which Matt Desmondinitially advocated for; portable housing vouchers.

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Collections COVID Coronavirus Evicted - Matt Desmond Evictions Housing policies Industry stats

Tenant Rights, Eviction, and Rent Affordability

A published research paper that found:

“Our research shows that in order to keep rental housing affordable and sustainable for low-income families, lawmakers have to walk a fine line in determining what will benefit the tenant and what may ultimately be detrimental to them,” Shen said. “On the surface, strict landlord regulation sounds good for tenants, but our paper points out, the solution isn’t that simple. The research suggests that conventional thinking on the issue of more regulation may have the opposite effect on tenants.”

“Though advocating for tenant rights seems noble and the right thing to do, the resulting consequences could have a devastating impact on this vulnerable population,” Shen said. “Our research indicates that if landlords aren’t allowed to evict, rent will likely increase to compensate for their losses. The housing supply would diminish, though the demand would still exist. These landlords may choose alternative investments if owning property is no longer feasible. A reduced housing supply would mean less competition, which would drive up the cost of rent for everyone.

Coulson, N. Edward and Le, Thao and Shen, Lily, Tenant Rights, Eviction, and Rent Affordability (July 4, 2020). Available at SSRN: https://ssrn.com/abstract=3641859 or http://dx.doi.org/10.2139/ssrn.3641859
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Collections COVID Coronavirus Evictions

NYT on rent payment and evictions.

I grabbed a few of the more pertinent paragraphs, but he article is a worthy read in its entirety.
 
https://www.nytimes.com/2020/08/21/business/economy/rent-tenants-evictions.html

  • Instead of an avalanche, the appropriate metaphor might be a receding tide that is exposing layers of financial insecurity.
  • Even before the pandemic, about 25 percent of tenants were paying at least half their pretax income for housing.
  • Even as corporate landlords report little change, smaller landlords are reporting declining collections and in many cases expect to use loans and personal savings to cover shortfalls.
  • Partly this is because these landlords have less access to capital than large corporations, but buildings like duplexes and triplexes — the kinds of properties that many small landlords own — tend to be more affordable, so they attract lower-income tenants, who have been hit the hardest by the pandemic. 
  • Several tenants haven’t paid rent. Others are making partial payments and asking for extended payment plans. “At the beginning of the pandemic, I expected what I’m seeing now,” [the landlord] said.
  • Avail, a platform that helps small landlords manage their properties, recently surveyed about 5,000 tenants and landlords and found that 42 percent of tenants and 35 percent of landlords were pulling money from savings and emergency funds to make it through the pandemic.
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COVID Coronavirus Government Behaving Badly Housing policies

An Extraordinary Dilemma

HT: Joe Murray

https://www.governing.com/next/Legislative-Watch-Addressing-Americas-Eviction-Crisis.html

It’s an extraordinary dilemma, in which public health risks weigh so heavily that government is compelled to require forbearance from landlords and mortgage holders. While contagion may be held at bay, property owners are not the only ones who will suffer. Property tax revenue will be affected, and those who provide water and sewer service, gas and electricity will also feel the strain. 
 

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COVID Coronavirus Evicted - Matt Desmond Evictions

Eviction counts

July saw Milwaukee evictions up less than 4% over last year, despite local owners reporting 8-18% less rent collected than normal.

Statewide, July evictions are down 10%

The big story is January through July saw statewide and Milwaukee evictions both down just under 27% over last year, again despite the industry suffering well above normal rent losses.

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COVID Coronavirus Evictions

A Chilly Forewarning – Properties with the most affordable rent at highest foreclosure risk

A chilly forewarning from Bloomberg:

While landlords at the priciest, amenity-rich apartments have collected most of their rent payments during the pandemic, owners of older, less fancy units — the backbone of the nation’s affordable housing supply — haven’t fared as well.

The CEO of the National Apartment Association tells Bloomberg in the same article

Further erosion in those rent payments would endanger America’s affordable housing supply and put mom-and-pop landlords at the biggest risk of mortgage default. Should their buildings go into foreclosure, the buyers may not keep them affordable, or even as rentals, said Robert Pinnegar, chief executive officer of the National Apartment Association, a landlord advocacy group. High construction costs make adding any new supply unlikely.

“If we lose this product through the crisis, we’re never going to be able to build it again,” Pinnegar said. “We risk making the affordability crisis much worse on the other side.”

This all makes sense.

Lease Lock and others are reporting a 16% decline in July collections over pre-COVID rates in the below-median rent segment of the market. The National Apartment Association and the US Census put the net operating income of rental properties at 7-9% gross rent, with the NAA showing the higher rate of return.

If collections are down 16% and owners were only receiving 7-9% pre-COVID, it is easy to see how properties will be financially upside down in short order.

If you go back to the US Census research you will find that 73% of the nation’s rental housing is owned by individuals.  That number is probably much higher as many small owners hold title as LLCs.

For a more in-depth view of the economics and potential for a massive housing crisis on the other side of this read, Tenant Rights, Eviction, and Rent Affordability, a published research paper

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COVID Coronavirus Evicted - Matt Desmond Evictions Government Behaving Badly Housing policies Section 8

PBS Interviews Desmond on Evictions

https://www.pbs.org/newshour/show/could-federal-investment-prevent-an-eviction-crisis

DESMOND: In June, cities like Cleveland and Milwaukee saw evictions spike 30 to 40 percent above normal level when moratoriums expired.

[Ignores a greater than 30% overall decrease in 2020 evictions Year to date through June 30th. – Tim]

DESMOND: And it also doesn’t solve the landlord’s financial problems. You know, eviction right now, though, is kind of the only tool we’ve given to landlords, right? We haven’t seen a serious investment in housing from the federal government.

[Agreed – Tim]

DESMOND: And so when you’re a landlord and you’re in a pinch, you kind of reach for that pink slip.

[No landlord wants or wins when there is an eviction, rather they generally never recover the money lost. An eviction is either failure to screen or the tenant met with circumstances afterward. – Tim]

DESMOND: You know, we need a national moratorium on evictions. We need to say, look, in this pandemic, the home is medicine. The home is safety. And we have to protect that. Americans deserve that level of protection. Property owners need to pay their bills, too. And so we don’t just need moratoriums. We also need rent relief.

[There is no need for a moratorium if proper need-based rent subsidies are in place. Agreed that property owners need to pay their bills. The outcome if they can’t is chronicled at https://bit.ly/MoratoriumImpact – Tim]

DESMOND: We need a serious investment from the federal government with the recognition that everyone needs a stable, affordable place to live in normal times and especially during this pandemic. That’s true.

[Agreed – Tim]

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COVID Coronavirus Evictions

Trump’s Executive Order on Evictions

Executive Order on Fighting the Spread of COVID-19 by Providing Assistance to Renters and Homeowners

https://www.whitehouse.gov/presidential-actions/executive-order-fighting-spread-covid-19-providing-assistance-renters-homeowners/

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COVID Coronavirus Evictions Government Behaving Badly

No Equal Justice for Landlords

The Virginia State Supreme Court extended yesterday the judicial moratorium on eviction proceedings for another 28 days. 

While it is VA, the arguments apply universally.

https://www.baconsrebellion.com/wp/no-equal-justice-for-landlords/

Justice Kelsey finds the following faults with the majority’s approach:

  • The judicial-emergency statute exists to help folks who can’t avail themselves of the courts, or to meet schedules or time deadlines. He concludes that “Exactly the opposite will be true under this ex parte order” (italics his). This order impedes a landlord’s access to the courts, even while the courts are capable of adjudicating their claims. The majority cited tenants who might suffer from health conditions that prevent them from coming to court. This dissent calls that an unwarranted generalization, one that landlords are powerless to contest on a factual basis in each case.

  • The legislature passed in April a bill that provides relief to tenants facing evictions, giving them an of-right 60-day continuance. That provision lasts as long as the Governor’s declaration of emergency does, so as Justice Kelsey points out, it’s still in effect. By entering this order, the court has stepped into the legislative and executive arena. He concludes, “Whether this legislative response to the housing crisis is adequate or not, we have no authority under separation-of-powers principles to issue an ex parte judicial order expanding the statutory remedy.”

  • Next, the dissent points out that this order singles out and targets one type of litigant: landlords. And it deprives those landlords of a remedy while doing nothing to prevent a tenant, even one who hasn’t paid rent since March, from suing the landlord for breach of some lease provision. Justice Kelsey argues that the order “rests on a wholly untested factual assumption,” namely, that tenants would have paid their rent but for the pandemic. What about those tenants who didn’t lose their streams of income? What about those who received alternative income streams, such as CARES Act payments? They get relief, too, and landlords have to sit on their hands and fume.

  • The dissent next notes three “constitutional concerns” that the order ignores. First, no one has the power to suspend the execution of generally applicable laws. But this one does that, hampering landlords to the benefit of tenants, in a specific class of cases. It matters not to Justice Kelsey that the judiciary, rather than the executive, is doing the suspending. Next, he posits something that I’ve mused about: This deprivation of a remedy may be a taking of private property for a public purpose, triggering a landlord’s right under Art. I, section 11 for just compensation. And third, this order at least appears to impair the obligation of contracts.