As the nation enters what is presumably the last month [1] of a Center for Disease Control moratorium on evictions, Freddie Mac releases a white paper examining the impact of the end of eviction moratoriums and the role of rental assistance. Authors—Freddie Mac's Corey Aber, Senior Director, Multifamily Mission, Policy and Strategy and Samantha Lerner, Policy Associate, Multifamily Mission, Policy and Strategy—also clarify certain actions property owners can take as some COVID-19- related protections expire. They also encourage property owners, as well as tenants, to "proactively understand and seek available rental assistance to help mitigate the remaining economic challenges as the country emerges from the pandemic."
"Property owners—especially smaller owners—have been affected by the pandemic as well, as loss of rental income affects their ability to stay current on their loans and continue to provide housing, so the transition period also includes uncertainty for property owners," the paper reads. "When will there be a return to pre-pandemic rental income levels and pre-pandemic sources of income—and what will rent payments look like in the meantime?"
The authors continue, "as eviction moratoriums come to an end, rent subsidies take on an increasingly important role in both keeping renters in their homes and property owners current on their mortgages. We find that, while there is likely enough funding available, the deployment and accessibility of these funds is vital to supporting renters and property owners in need as the country transitions to a post-pandemic normal."
Distribution of the estimated $47 billion in federal rental assistance will be the most significant challenge as the market attempts to transition to normalcy, Aber says.
"While the steady return to normal pre-pandemic routines brings a sense of optimism, the economic impact of COVID-19 will have a lingering effect, particularly on renters who owe back rent and were protected by eviction moratoriums," Aber said. "We found that there is likely enough rental assistance available, and the deployment and accessibility of these funds is vital to supporting renters and property owners in need as the country transitions to a post-pandemic normal."
The paper recognizes various renter protections, some of which have expired and others that remain in place, and what they mean for property owners.
The CARES Act [2] eviction moratorium, for example, ended last year on July 25. It mandated that property owners could not file notices to vacate for non-payment of rent during the moratorium. Thereafter, property owners are required to provide at least 30 days' notice to vacate.
The CDC eviction moratorium took effect September 4, 2020, the CDC announced an extension to July 31, and the Supreme Court turned down [3] a request to invalidate it.
Under the terms of the CDC moratorium, eviction filings are allowed, but the property owner cannot evict if the renter provides a declaration certifying that the renter is making best efforts to obtain government assistance, among other items, according to the paper.
A summary [4] of the white paper provided by Freddie Mac Multifamily highlighted the following additional key findings. The full paper is available here. [5]
- Eviction moratoriums prevented eviction crisis during pandemic: Policy actions taken in response to the COVID-19 pandemic led to a record low number of nationwide eviction filings in 2020 and the first quarter of 2021. In ordinary circumstances, the disruption of renter employment could have led to a substantial eviction crisis. In the states and cities tracked by Eviction Lab at Princeton [6], eviction filings are down 58% from March 2020 through May 2021 versus the historical yearly average.
- Potential back rent owed is a concerning factor going forward: While the moratoriums prevented evictions, renters are still responsible for paying rent. Depending on the state, unpaid rent can lead to an eviction, making the deployment of rental assistance funding critical in preventing evictions in the coming months.
- Adequate funding for renter support is available, but deployment critical: The federal government has allocated funding of approximately $47 billion to states for Emergency Rental Assistance. When viewed in the aggregate, it appears that there is adequate renter support in place to cover the need through the transition for both renters and property owners. However, access to and distribution of the allocated funds are vital to continue the eviction protection that renters received during the pandemic.
Abner and Lerner conclude the paper on an optimistic note.
"With any challenge—and set of solutions—of this magnitude, there are bound to be inefficiencies and missteps, but there are also bound to be valuable lessons and new innovations that can help not just the renters and property owners of today, but also those of tomorrow as we transition to a new post-pandemic normal."