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Manage episode 301491110 series 2915908
The eviction moratorium roller coaster continues. The U.S. Supreme Court ruled against the moratorium, saying: “it is up to Congress, not the CDC, to decide whether the public interest merits further action here.” And now, three federal agencies are asking state and local governments to implement eviction moratoriums or extend the ones they currently have.
Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review.
The Supreme Court issued an eight-page ruling on August 26th. (1) Realtor associations and landlords in Alabama and Georgia had sued, saying the CDC had gone beyond the reach of its authority.
Scotus Rules Against Moratorium
In the ruling, the justices said: “The moratorium has put the applicants, along with millions of landlords across the country, at risk of irreparable harm by depriving them of rent payments with no guarantee of eventual recovery. Despite the CDC’s determination that landlords should bear a significant financial cost of the pandemic, many landlords have modest means. And preventing them from evicting tenants who breach their leases intrudes on one of the most fundamental elements of property ownership—the right to exclude.” (2)
But they went beyond that saying that rental assistance funding has been made available but very little of it has been distributed. So what’s the problem? According to the ruling: “The Government has had three additional months to distribute rental-assistance funds to help ease the transition away from the moratorium.” Congress has also had time to put together new legislation, but has failed to do so. And now the moratorium is set to expire on October 3rd.
Where Are the Rental Relief Funds?
Why have emergency rental funds not already been distributed as landlords suffer the brunt of the moratorium? We reached out to Director of Business Intelligence, Doug Ressler, at Yardi Matrix about the delay. He told us:
“In most of the country: As of Aug. 26, state and local programs had (received) a little more than $5 billion of more than $46 billion in federal rent relief money out the door. Only about 10% of that money has reached renters and landlords. It's slowed from the federal government to states and counties and cities. There are over 500 different State and City programs and procedures. Some are doing a good job. They've gotten more than half the first round of money out the door. Others are having issues and have provided less than 5% of the monies available.”
States, Cities Asked to Implement Moratoriums
Now, there’s a call for moratoriums at the state, city, and local court levels. (3) The Secretary of Housing and Urban Development, Marcia Fudge, the Secretary of the Treasury, Janet Yellen, and Attorney General, Justice Merrick Garland sent a letter to state and local governments about the eviction moratorium. They say they are working together and with other agencies to “make rental assistance available to households in need.” And they are asking for help in several ways. They want state and local governments to:
1 - Enact eviction moratoriums for the rest of the health emergency.
2 - Encourage local courts to make it a requirement that landlords apply for Emergency Rental Assistance before they begin eviction proceedings.
3 - Prevent eviction proceedings to continue while the ERAs are being considered.
4 - Use ERA and other emergency funding to pay for tenant legal representation and eviction-diversion strategies.
5 - Help tenants through this whole process.
California has already extended its moratorium. According to the Rental Housing Journal, some judges are “slow-walking” eviction cases, while this situation plays out.
In a perfect world, rental relief funds would be coming through at a much faster pace, and both tenants and landlords would be getting relief, right now. Evictions are never something a landlord wants to do. But the moratorium strategy is not working -- for landlords. Something else needs to be done to address the issue of back-rent, and continued lack of rent payments from some tenants.
It’s Time for a New Rent Relief Strategy
President of the California Rental Association, Christine Kevane LaMarca, feels that legislators are not recognizing the financial burden that’s crushing some housing providers. In reference to the extension of California’s eviction moratorium, she told the Rental Housing Journal: “The state continues to extend the eviction moratorium with no distinction between residents who cannot afford to pay due to the pandemic and residents who can afford to pay their rent but are using the moratorium to violate their rental agreements.” (4)
These moratoriums have been going on for close to a year-and-a-half. President of the National Apartment Association, Bob Pinnegar, told the Journal: “The government must move past failed policies and begin to seriously address the nation’s debt tsunami, which is crippling both renters and housing providers alike.”
For many landlords, this isn’t a problem. They have tenants that are paying rents, especially those with single-family rentals. But for those who are, something needs to be done to make them whole.
If you’d like to read more about this, check for links in the show notes at newsforinvestors.com
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Thanks for listening. I'm Kathy Fettke.