* By: Gabriel Bildirici
Housing insecurity has increased drastically since the onset of the coronavirus pandemic last year.[1] Millions have lost their incomes, forcing people to fall behind on rent.[2] At this point, there is a federal eviction moratorium[3]and many states and cities[4] have their own eviction moratoriums aimed at stopping evictions during these critical months as the United States is combating the highest amount of cases and deaths across the nation.[5]
With a Biden administration and a Democratic House and Senate, there is tremendous opportunity to advance housing policy. Even before the pandemic, there were growing homelessness problems across US cities[6] and a shortage of affordable housing across the nation.[7] Households were struggling to meet rental payments, and the pandemic and economic crisis has only exacerbated the housing crisis for the working class.[8]
Low interest rates and the trend to move away from urban centers increased single-family home sale purchases and prices in suburban areas,[9] but has largely benefited a small portion of people while millions more are struggling to pay rent, or are months and years behind in rent.[10] The temporary bans on evictions only delay the inevitable, leaving unpaid debt piling up, creating problems for the future.[11] Landlords (dealing with decreased rental income[12]) and homeowners will also likely face an acceleration of increasing property taxes as local governments struggling with budget deficits will try to raise tax revenue.[13]Already tight on operating margins, landlords will face greater default risks from their lenders.[14] Some jurisdictions have allowed mortgage forbearances for certain types of landlords,[15] while others largely ignored the needs of landlords and are leaving them to face the burdens of the pandemic alone.[16]
Already, court systems were clogged before the pandemic,[17] and with the lockdowns and the restrictions, courts have been operating at a significantly lower capacity, if they were even open to some extent.[18] In addition, states dealing with budgetary issues are turning to their court systems to shave some expenses.[19] Lastly, with so many circumstantial changes in the economy, there will be an influx of case filings and disputes that will clog courts for years, if not decades.[20]
With all of these challenges, the usual methods for remedies in the justice system for tenants and landlords will basically be functionless.[21] Thus, we turn our hopes to the legislative branch and a new presidential administration. There is a great opportunity for progressive housing policy on the federal level which can trickle down to state and local governments.[22]
President Biden suggested an idea to expand Section 8 vouchers to provide them to all who are eligible.[23]Section 8 housing vouchers are arguably the most effective way to get people into housing units.[24] Those who are eligible could get a voucher subsidized by the Federal program to pay for housing.[25] It is not cash, but a voucher that goes directly to the management as rental payment.[26] However, due to a shortage of funds, only 25% of those eligible for housing vouchers actually receive them.[27] Expanding the program would offer more funding to provide for families who are eligible but have not yet gotten Section 8 vouchers.[28] Other federal programs, like Medicare and Medicaid, are mandated by law to anyone who is eligible.[29] However, those eligible for Section 8 housing are not guaranteed the vouchers by law and are forced to remain on waitlists for years without any update on their status.[30]
Last month New York passed sweeping legislation extending their eviction moratorium until, at least, May 1.[31]Those who face financial hardships qualify and cannot be evicted.[32] On the landlord side, with reduced rental income, they also face financial hardships as they struggle to meet their operating expenses and mortgage payments.[33]Landlords with 10 or less units qualify for mortgage forbearance whereby they can delay their mortgage payments and not have the delay effect their credit.[34] But this piece of legislation largely ignores the plight of landlords with more than 10 units and puts the financial burdens of the pandemic on the landlords who are themselves encountering financial hardships.[35]
Other jurisdictions, such as the United Kingdom, have allowed landlords with more than 10 units to qualify for mortgage forbearance without credit score consequences.[36] Regardless, any forbearance or delay in eviction proceedings delay the inevitable of unpaid debt piling up from both tenants and landlords facing financial hardships.[37]If the federal government expands their housing assistance, along with Section 8 vouchers, it may provide financial relief to those who were already facing housing insecurity before the pandemic. Subsidizing unpaid rent arrears will also allow tenants to get back on their feet without worrying about owing months of back-rent.
Further, stimulus checks are helpful, but are not necessarily targeted to pay for basic necessities such as food and housing. Cash is more likely to be used for consumer staples and other products that inject stimulus into the economy or into a savings account.[38] Moreover, these payments have been one-time payments and often unpredictable on when they will arrive, and it is uncertain if, when, and how much it will be when Congress passed another relief legislation that will include additional stimulus checks. Housing vouchers guarantee the payment of rent to landlords and management, allowing them the security of receiving consistent rental income, ensuring tenants have housing stability and management has consistent cash flow to plan for necessary maintenance and repairs to the housing units. Vouchers also ensure that the money designated for housing is used for housing as opposed to stimulus checks which can be used for anything one chooses, which may range from a new pair of shoes, to stock of TSLA,[39] or a new AC unit that has been broken for months or years.
The United States Department of Housing and Urban Development is charged to lead housing efforts on the federal level.[40] Under budget, the agency has largely ignored housing needs for years if not decades.[41] With a new administration, and a new Secretary leading the agency, Marcia Fudge, perhaps the American people can see politicians putting politics aside for the sake of progress in housing security. Marcia Fudge has experience as a congresswomen leadings changes in food and nutritional programs.[42] With experience working in a similar area of people’s most basic needs of food and now in housing, there are high hopes for the Secretary to make pushes for progressive housing policy that keeps tenants in their homes and on their feet and landlords from losing their buildings and livelihoods.
Investing in housing is not only to fill an immediate need but is a long-term investment which will enable households to have a strong foundation as they seek to rebuild their lives after the turmoil that the pandemic brought. Secure and stable tenancies is a social investment; it contributes to household development, and enables people to invest in long-term development of their community, through education, job and skills training, homeownership, business ownership, financial securities, and so on.[43] Where education is the basis for a productive labor market, socially equal housing and stable tenancies is the foundation of strong community networks comprised of committed members of society who will help each other maintain safe, secure, and stable neighborhoods[44] and build back our economy.
Gabriel Bildirici is a second-year law student at Cardozo Law School. He has an interest in the distressed real estate space, where he sees tremendous opportunity to invest and rehabilitate communities and resolve affordable housing issues. Gabriel holds a B.S. in finance and economics from New York University’s Stern School of Business.
__________________________________________________________________________________ [1] Julian Castro & Dorian T. Warren, American’s Housing Crisis: How President Biden Can Bring Equity to Renting, Home Ownership, USA Today(Feb. 11, 2021), https://www.usatoday.com/story/opinion/2021/02/11/how-joe-biden-can-deliver-equity-home-ownership-renting/4466705001/; Rachel Fee & Hakeem Jeffries, How to Fix American’s Housing Crisis: It’s Time For Bold Federal Solutions, NY Daily News (Feb. 13, 2021), https://www.nydailynews.com/opinion/ny-oped-how-to-fix-americas-housing-crisis-20210213-s4bu7teborc4bbmefinglx24xa-story.html. [2] Id. [3] Ann O’Connell, Emergency Bans on Evictions and Other Tenant Protections Related to Coronavirus, NOLO (Feb. 16, 2021), https://www.nolo.com/evictions-ban. [4] Id. [5] Lazar Gamio, U.S. Coronavirus Cases Are Down but Eclipse Spring and Summer Peaks, N.Y. Times (Feb. 5, 2021), https://www.nytimes.com/interactive/2021/02/05/us/covid-peak-comparison.html. [6] State of Homelessness: 2020 Edition, National Alliance to End Homelessness, https://endhomelessness.org/homelessness-in-america/homelessness-statistics/state-of-homelessness-2020/. [7] Dan Emmanuel, The National Need for Affordable Housing, National Low Income Housing Coalition (2020), https://nlihc.org/sites/default/files/AG-2020/1-04 The-National-Need-for-Affordable-Housing.pdf; see generally Alfred M. Clark III, Homelessness and the Crisis of Affordable Housing: The Abandonment of a Federal Affordable Housing Policy, 25 J. of Affordable Housing & Community Development L. 85-88 (2016). [8] Castro & Warren, supra note 1. [9] Chris Arnold, More Space, Please: Home Sales Booming Despite Pandemic, NPR (Aug. 28, 2020), https://www.npr.org/2020/08/28/906725372/more-space-please-home-sales-booming-despite-pandemic-recession; Kathy Orton, Experts Predict What the 2021 Housing Market Will Bring, Wash. Post (Jan. 11, 2021), https://www.washingtonpost.com/business/2021/01/11/2021-housing-market-predictions/; Matthew Haag, New Yorkers Are Fleeing to the Suburbs: ‘The Demand is Insane,’ N.Y. Times (Aug. 30, 2020), https://www.nytimes.com/2020/08/30/nyregion/nyc-suburbs-housing-demand.html. [10] Castro & Warren, supra note 1. [11] Andrew Khouri, Depleted Savings, Ruined Credit: What Happens When All The Rent Comes Due, L.A.Times (Feb. 2, 2021), https://www.latimes.com/business/story/2021-02-02/rent-debt-worries-grow-covid-strains-tenants. [12] Landlords and Tenants Face Difficulty Making Ends Meet with Mortgages and Rent, Rental Housing J. (Aug. 25, 2020), https://rentalhousingjournal.com/landlords-and-tenants-face-difficulty-making-ends-meet-with-mortgages-and-rent/; Katy O’Donnell, The Flip Side of Trump’s Eviction Ban: Landlords Face Big Crunch, Politico (Sept. 11, 2020), https://www.politico.com/news/2020/09/11/trump-eviction-ban-hurts-landlords-412740. [13] Elaine S. Povich, Tax Hikes in a Pandemic: Some States, Cities Say Yes, PEW (Jul. 17, 2020), https://www.pewtrusts.org/en/research-and-analysis/blogs/stateline/2020/07/17/tax-hikes-in-a-pandemic-some-states-cities-say-yes; Jeff Ostrowski, Local Governments Are Hurting During the Pandemic. When Will It Hit Your Property Taxes?, Bankrate (Oct. 16, 2020), https://www.bankrate.com/mortgages/why-property-taxes-will-not-rise-quickly/; Dana Rubinstein & Jesse McKinley; Virus Siphons $2.5 Billion in N.Y.C. Property Tax Revenue, N.Y Times (Jan. 14, 2021), https://www.nytimes.com/2021/01/14/nyregion/budget-coronavirus-nyc.html. [14] O’Donnell, supra note 12; Kyle Swenson, ‘No Safety Net’ and Little Sympathy: Some Small Landlords Struggle Under Eviction Moratoriums, Wash. Post (Dec. 9, 2020), https://www.washingtonpost.com/dc-md-va/2020/12/09/small-landlords-struggle-under-covid-eviction-moratoriums/; Abby Vesoulis, The Looming Eviction Epidemic, Time 30, 32 (Mar. 1 2021). [15] Jaclyn Diaz, New York Approves Eviction Moratorium Until May, NPR (Dec. 29, 2020), https://www.npr.org/sections/coronavirus-live-updates/2020/12/29/951042050/new-york-approves-eviction-moratorium-until-may (The law also stops residential foreclosure proceedings until May 1. Homeowners and landlords who own 10 or fewer residences can also file hardship declarations with their mortgage lender or a court to prevent a foreclosure.). [16] Subrina Hudson, Landlords Berar Financial Burden of Eviction Moratoriums for Renters, Las Vegas Review J. (Jan. 22, 2021), https://www.reviewjournal.com/business/housing/landlords-bear-financial-burden-of-eviction-moratoriums-for-renters-2262869/. [17] Renator Mariotti, Stuck in an Overwhelmed Legal System, Civil Suits, Criminal Defendants and Trump’s Tax Returns, Politico (Mar. 20, 2020), https://www.politico.com/news/magazine/2020/03/20/stuck-in-an-overwhelmed-legal-system-civil-lawsuits-criminal-defendants-and-trumps-tax-returns-139579/; Alan Feuer, et. al, N.Y.’s Legal Limbo: Pandemic Creates Backlog of 39,000 Criminal Cases, N.Y. Times (Jun. 22, 2020), https://www.nytimes.com/2020/06/22/nyregion/coronavirus-new-york-courts.html. [18] New York Courts to Cut $300 Million as State Deficit Grows, Bloomberg Law (Sept. 30, 2020), https://news.bloomberglaw.com/us-law-week/new-york-courts-to-cut-300-million-as-state-deficit-grows. [19] Id. [20] Phillip Bantz, What In-House Counsel Should Know About New COVID-19 Litigation, Law.com (Jan. 14, 2021), https://www.law.com/corpcounsel/2021/01/14/what-in-house-counsel-should-know-about-new-covid-19-litigation/. [21] Beth Fertig, As Tens of Thousands of New Yorkers Struggle to Pay Rent, Eviction Filings Are Down, Not Up. How Come?, Gothamist (Dec. 1, 2020), https://gothamist.com/news/tens-thousands-new-yorkers-struggle-pay-rent-eviction-filings-are-down-not-how-come; Claudia Irizarry Aponte, NYC Families Caught in Rent Aid Catch-22 Sue to Sidestep State Blockade, The City (Feb. 8, 2021), https://www.thecity.nyc/housing/2021/2/8/22273589/nyc-families-caught-in-rent-aid-catch-22-sue-to-sidestep-state-blockade. [22] The CARES Act Provides Assistance for State, Local, and Tribal Governments, U.S. Dep’t of the Treasury, available at: https://home.treasury.gov/policy-issues/cares/state-and-local-governments; Chairman John Yarmuth, State and Local Governments Are in Dire Needof Federal Relief, House Budgetary Comm. (Aug. 19, 2020), https://budget.house.gov/publications/report/state-and-local-governments-are-dire-need-federal-relief. [23] Castro & Warren, supra note 1; The Biden Plan for Investing In Our Communities Through Housing, JoeBiden.com, [hereinafter The Biden Plan], available at: https://joebiden.com/housing/ (Biden’s approach is straightforward: the Section 8 rental housing assistance program should be fully funded so that everyone eligible gets the assistance they need to pay their rent for a safe home.). [24] Laura Sullivan, Section 8 Vouchers Help The Poor – But Only If Housing is Available, NPR (May 17, 2017), https://www.npr.org/2017/05/10/527660512/section-8-vouchers-help-the-poor-but-only-if-housing-is-available; Kriston Capps, How a Section 8 Experiment Could Reveal a Better Way to Escape Poverty, Bloomberg (Aug. 4, 2019), https://www.bloomberg.com/news/articles/2019-08-04/a-cheap-powerful-tool-to-beat-housing-segregation#:~:text=With%20housing%20choice%20vouchers%2C%20low,troubled%20experiment%20with%20public%20housing; see generally, Housing Choice Vouchers Program Section 8, U.S. Dept of Housing and Urban Development,https://www.hud.gov/topics/housing_choice_voucher_program_section_8#:~:text=The%20housing%20choice%20voucher%20program,housing%20in%20the%20private%20market.&text=A%20housing%20subsidy%20is%20paid,behalf%20of%20the%20participating%20family./. [25] Housing Choice Voucher Program (Section 8), Benefits.gov, available at: https://www.benefits.gov/benefit/710. [26] Id. [27] Three Out of Four Low-Income At-Risk Renters Do Not Receive Federal Rental Assistance, Center on Budget and Policy Priorities, available at: http://apps.cbpp.org/shareables_housing_unmet/chart.html. [28] The Biden Plan, supra note 23. [29] With Medicare, all of the elderly are guaranteed the right to traditional coverage – basically a “fee-for-service” system. What is the “Medicare Guarantee”?, Comm. For Econ. Dev’l. available at: https://www.ced.org/blog/entry/what-is-the-medicare-guarantee. Medicaid is an “entitlement” program, which means that anyone who meets eligibility rules has a right to enroll in Medicaid coverage. Policy Basics: Introduction to Medicaid, Center on Budget & Policy and Priorities (Apr. 14, 2020), https://www.cbpp.org/research/health/policy-basics-introduction-to-medicaid. [30] Will Fischer & Barbara Sard, Chart Book: Federal Housing Spending is Poorly Matched to Need, Center on Budget & Policy Priorities (Mar. 8, 2017), https://www.cbpp.org/research/housing/chart-book-federal-housing-spending-is-poorly-matched-to-need?fa=view&id=4067; The Long Wait For A Home, 6 Housing Spotlight 1, 9-10 (National Low Income Housing Coalition, Fall 2016), https://nlihc.org/sites/default/files/HousingSpotlight_6-1.pdf. [31] Dana Rubinstein, New York Bans Most Evictions as Tenants Struggle to Pay Rent, N.Y. Times (Dec. 28, 2020), https://www.nytimes.com/2020/12/28/nyregion/new-york-eviction-ban.html. [32] Id. [33] O’Donnell, supra note 12; Swenson, supra note 14; Vesoulis, supra note 14. [34] Rubinstein, supra note 31 (Landlords who own 10 or fewer apartments, are allowed to file similar financial hardship declarations with their mortgage lenders, to delay foreclosure proceedings. The law also applies to foreclosures involving tax liens.). [35] Id. (Jay Martin, the executive director of the Community Housing Improvement Program, said that while he understands the legislators’ desire to focus on smaller landlords, the law is unnecessarily narrow. “The reality is a majority of renters in this city get their housing from what the legislature would consider non-small operators,” said Mr. Martin, whose organization represents landlords of rent-stabilized buildings. “Even a four- or five-story walk-up has more than 10 units in New York City.”). [36] The mortgage holiday has been extended, with applications open to 31 March 2021. Borrowers, including those with a Buy to Let mortgage, who have been impacted by Coronavirus and have not yet had a mortgage payment holiday will be entitled to a 6-month holiday, and those that have already started a mortgage payment holiday will be able to top up to 6 months without this being recorded on their credit file. Guidance for Landlords and Tenants, Ministry of Housing, Communities & Local Gov’t (Feb. 19, 2021), https://www.gov.uk/government/publications/covid-19-and-renting-guidance-for-landlords-tenants-and-local-authorities/coronavirus-covid-19-guidance-for-landlords-and-tenants. [37] Khouri, supra note 11. [38] Aine Doris, How Effective Were Stimulus Checks in the US?, Chicago Booth Review (Aug. 17, 2020), https://review.chicagobooth.edu/public-policy/2020/article/how-effective-were-stimulus-checks-us. [39] Henry Khederian, Got $600? Investors Are Buying Stock in Tesla, Nio and Pfizer With Stimulus Checks, Yahoo Finance (Jan. 10, 2021), https://finance.yahoo.com/news/got-600-investors-buying-stock-155058569.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAHXaPCs6YPfKY65BZrE1oO8MimP5dlWR4JC5IZqweOE0WvZLnzBK4YkvoWS2eWC50EiX68c_N4XmGfnH5nKCAUMzl-Z6bZbvHJEbr3TcpjoCMqQiR4MLVZ9VgjlidlR5QTWwv6i8bMzZ3TTCX-E4FxmnVsBKh9jPqTqzwfo8NlN-. [40] See generally, 42 U.S.C. § 3531. [41] Vanessa A. Bee, Why is Marcia Fudge Being Nominated to HUD, if Not Tokenism? The Intercept (Dec. 9, 2020), https://theintercept.com/2020/12/09/biden-hud-marcia-fudge/. [42] Katy O’Donnell, Tyler Pager, & Megan Cassella, Biden to Tap Marcia Fudge to Lead Housing Agency, Politico (Dec. 8, 2020), https://www.politico.com/news/2020/12/08/biden-to-tap-marcia-fudge-to-lead-housing-agency-443767. [43] Michael Sherraden, Asset Building as Social Investment, 45 J. Sociology & Soc. Welf. 35, 37-8 (2018). [44] Id. at 39-40.