Trump’s New Eviction Ban Leaves Tenants and Landlords Vulnerable
Trump’s new eviction ban will help some tenants delay the inevitable.
(Bloomberg) -- President Donald Trump’s expansive new eviction ban will help some tenants delay the inevitable. But it’s missing a key ingredient that only lawmakers can supply: money.
“Ultimately, it creates new urgent pressure on Congress to get back to work and pass a final Covid 19 relief bill,” said Diane Yentel, president and chief executive officer of the National Low Income Housing Coalition. “On its own, it’s a half measure.”
An eviction ban through the end of the year -- enacted with the authority of the Centers for Disease Control and Prevention and to slow the virus’s spread -- provides no new money for tenants, or for landlords to maintain their properties and pay their bills, including mortgages and local property taxes. It expands a CARES Act moratorium that expired last month, extending it to all properties, not just those financed with federal backing.
The order was immediately criticized by real estate industry groups but received some praise from the National Low Income Housing Coalition and other tenant advocates eager for some way to keep renters in place while the pandemic rages.
Rental Crisis
The U.S. is in the throes of a massive rental crisis that began with the spike in unemployment caused by coronavirus lockdowns that started in March. While Democrats in the House proposed $100 billion in renter relief, Congress has failed to agree on a plan to hold back evictions.
Roughly one in five American renters -- between 19 million and 23 million people -- are at risk of eviction by the end of September, according to an analysis by the Aspen Institute.
Trump’s move is terrible news for landlords who may struggle to keep tenants paying without even the threat of being able to evict those who don’t. About half of the 43 million rental units in the country are owned by small businesses that can’t survive long without money coming in.
Pushback came swiftly Wednesday from industry groups, including the National Multifamily Housing Council, the Mortgage Bankers Association and the National Association of Realtors.
If tenants don’t pay, landlords “will be unable to meet their mortgage obligations, make payroll to their own employees, maintain a safe and healthy living environment for their tenants,” Mortgage Bankers Association president Bob Broeksmit said in a statement. “The result would be a cascading reaction that would only exacerbate the current economic crisis, leading to more job loss, financial pain, and long lasting economic effects.”
Not ‘Life-Ending’
Others doubt that such a heavy-handed approach is needed, or that the most dire predictions will come to pass. Salim Furth, a senior research fellow at the Mercatus Center at George Mason University, said that landlords don’t want vacancies so they’ve largely been working things out with tenants during the first few months of the pandemic.
The CDC’s ban ensures that evictions will probably stay low going forward, but may encourage some landlords to sell their properties or try to evict renters for non-financial reasons, he said.
For some landlords, “this is going to be a year when they lose money,” Furth said. “But it’s not going to be life-ending.”
Under the soon-to-be published CDC action, tenants must apply for eviction protection by signing a form attesting that they lost income and expect to earn no more than $99,000 this year as an individual ($198,000 as a couple).
Tenants also have to declare that they attempted to pay the landlord as much as they can afford and tried to obtain “all” government rental assistance available, and if displaced, would be homeless or forced into a shared living situation.
‘Overhyped’
That’s a lot to ask of tenants, most of whom cannot afford legal representation, said Barry Zigas, a Senior Fellow at the Consumer Federation of America.
“The scope of the moratorium in practice is being way overhyped,” said Eric Kwartler, an attorney in Houston who works with poor clients. “One of the golden rules of providing access to justice for low-income clients is to make asserting their basic rights as simple and convenient as possible. The CDC’s order does the opposite.”
It also doesn’t relieve them of paying, with landlords permitted to pile on penalties with each passing month. And while the CDC gives authority to the Department of Justice to enforce the rules, landlords may choose to evict people anyway, Zigas said. Doing so could result in a fine up to $250,000 if a tenant is evicted and dies from covid.
Many U.S. states have imposed moratoriums or other measures to limit evictions. But the new order would supplant those that are less expansive and allow states to impose even stronger measures.
“It’s good that the administration moved to help tenants,” Zigas said. “But the way they went about it causes more problems for tenants in the future and it’s likely going to fail to help people most in need.”
Expect industry groups to fight back in court, said Lindsay Wiley, a health law professor at American University Washington College of Law.
The CDC order relies on a provision in the 1944 Public Health Service Act that allows for regulations that prevent the spread of diseases from foreign countries or between states. Opponents could argue that Congress did not intend for it to be broad enough to apply to an eviction freeze and if it was, that could violate the separation of powers, she said.
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