WASHINGTON (SBG) — With just over a week until federal moratoriums on evictions and foreclosures are scheduled to expire, President Joe Biden’s administration is racing to put resources in place to ensure low-income families do not lose their homes, but housing policy experts say the government’s efforts might not go far enough.
The moratoriums have been extended several times since they were first imposed last year, but the White House has so far resisted calls from low-income housing advocates to push the deadline beyond July 31. Officials maintain the economy is recovering quickly enough and sufficient federal assistance is available that the blanket prohibition on evictions and foreclosures is no longer necessary.
A federal appeals court ruled Friday that the Centers for Disease Control and Prevention exceeded its authority by implementing the ban on evictions. The immediate practical effect of that ruling is unclear — the Supreme Court rejected a previous attempt to lift the moratorium prematurely — but, at the least, it makes another extension even less likely.
As the end of the moratoriums looms, the White House announced new actions Friday by federal agencies that back mortgages to stave off a potential wave of foreclosures. Those initiatives include allowing qualified homeowners to reduce their monthly principal and interest payments by 25% and extend the term of their mortgage.
“Homeowners with government-backed mortgages that have been negatively impacted by the pandemic will now receive enhanced assistance, especially if they are looking for work, re-training, having trouble catching up on back taxes and insurance, or are continuing to experience hardship for another reason,” a White House statement said.
These loan modification and repayment options will be available through the Department of Housing and Urban Development, the Department of Agriculture, and the Department of Veterans Affairs. Similar flexibility is already available to borrowers whose mortgages are backed by Fannie Mae and Freddie Mac.
“As our country recovers and rebuilds from the economic devastation brought on by the pandemic, VA and the Biden-Harris administration continue to make every effort to help veterans keep a roof over their head as they get back on their feet,” VA Secretary Denis McDonough said Friday.
In addition, the administration noted $10 billion was allocated under the American Rescue Plan for homeowner relief that can be used for mortgage payments, insurance, utilities, or other costs. The Government National Mortgage Association has also announced it will soon offer government agencies the flexibility to extend mortgage terms to up to 40 years to reduce monthly payments.
According to the White House, nearly 7.2 million households took advantage of programs allowing them to pause mortgage payments over the last 18 months, but 1.75 million Americans remain in forbearance. The deadline to enroll in a forbearance program has been extended through Sept. 30 for eligible borrowers.
The spike in COVID-19 infections driven by the highly contagious delta variant, with a 53% increase in cases over the last week, has sparked new fears the end of the pandemic might be further away than it seemed. CDC projections released Wednesday indicated there could be 92,000 to 803,000 more cases in the U.S. over the next four weeks.
The CDC argued the eviction moratorium was justified to keep people in homes and out of crowded settings like homeless shelters where COVID-19 could spread. Given that public health rationale, some say lifting the bans while the virus is surging could increase risks.
“The impact on the spread of disease could be significant if we see large-scale displacement or a rise in homelessness,” said Benjamin Henwood, an expert on health and housing services at the University of Southern California. “Ultimately, this will depend on whether other government assistance is robust enough to stabilize those who are precariously housed when moratoriums are lifted.”
As the Biden administration shores up protections for borrowers threatened by foreclosure, it is facing even greater difficulties ensuring millions of renters do not face eviction in the coming weeks. Congress has authorized $46 billion in emergency rental assistance, but very little of that money appears to have made it into the hands of renters and landlords so far.
Data released by the Treasury Department earlier this week showed $1.5 billion in rental assistance was distributed to more than 290,000 eligible households in June, more than in all previous months combined. Still, only 6.5% of the money allocated by Congress had reached grantees by June 30.
“While more households are getting help, in many states and localities, funds are still not flowing fast enough to renters and landlords,” the department warned. “Treasury is continuing an all-out effort, in coordination with the White House and interagency partners, to get the word out about the availability of rental assistance and to support grantees in ramping up their efforts.”
At a House Financial Services Committee hearing earlier this week, Housing and Urban Development Secretary Marcia Fudge faced harsh criticism for the slow distribution of rental assistance funds. She acknowledged state and local governments have struggled to set up the infrastructure to deliver the aid, but she insisted the process was improving “exponentially.”
“This is the poster child for why hardworking taxpayers are so critical of big government, bureaucratic programs like this,” Rep. Andy Barr, R-Ky., said.
Biden administration officials have blamed delays on a complicated and confusing process inherited from the Trump administration, but complaints have mounted for months. Polls suggest many renters and landlords were still unaware assistance was available as recently as a few weeks ago, and others might not be able to meet all the eligibility requirements.
Since the money was delivered directly to state and local governments, assistance programs have varied widely in their procedures and their efficiency. In Georgia, for example, some counties have capped grants at as little as 60% of a renter’s debt, and they have still dispersed only a fraction of the aid they received.
“We have to do everything we can to prevent heartbreak for families and economic distress for landlords,” Biden adviser Gene Sperling said at a White House Eviction Prevention Summit Wednesday.
Some states and localities have implemented their own moratoriums or safe harbors for those who have applied for rental assistance that will run through August or September. Most have not, though, and the aid program is on track to fall tens of billions of dollars short of meeting the nation’s needs by July 31.
According to the Center on Budget and Policy Priorities, one in seven renters was behind on rent in late June, including one-quarter of Black renters and nearly 20% of Latinos. That figure represents a significant drop from January, when 15 million renters were not caught up, but more than 10 million people were still behind.
“We know lots of people are still struggling to afford rent I think states should be doing everything they can to be getting them rental assistance as soon as possible,” said Will Fischer, senior director for housing policy and research at CBPP.
According to the National Equity Atlas, total rent debt nationwide is more than $21 billion, and people of color and low-income households face the greatest hardships. The National Low-Income Housing Coalition cautioned in a recent report that the economic recovery could leave millions of renters behind if they do not receive more help.
“It’s great to see increasing numbers of people accessing rental assistance, but there are still many people who are vulnerable and have not,” Henwood said.
The imminent end of the eviction and foreclosure moratoriums could force many families to confront a challenge that was building long before the COVID-19 pandemic struck. Housing has become unaffordable for low-income households in much of the country, with many spending well over 30% of their income on rent, and prices are spiraling higher this year at far faster rates than usual.
President Biden’s American Jobs Plan proposal included $213 billion to build, preserve, and retrofit more than 2 million “affordable and sustainable places to live.” Democrats in Congress are still working out how much of Biden’s agenda to fund, but some money is likely to be allocated for housing in a $3.5 trillion reconciliation package they are crafting.
Fischer said the reconciliation bill allows Congress to address some of the underlying issues that contributed to the crisis low-income households are now facing. Federal housing vouchers are currently available to only 25% of those who should be eligible, and the lack of a federal housing assistance system is what has made distributing emergency aid so arduous.
“This story would have been very different if we had started the pandemic with a strong federal rental assistance program,” he said.
House Financial Services Committee Chairwoman Maxine Waters, D-Calif., introduced legislation last week that would direct $600 billion to affordable and accessible housing, transform housing vouchers into a federal entitlement program, and provide down payment assistance to first-generation homebuyers.
“For the first time in a generation, we have a real opportunity to fix these deep-rooted issues in our housing system,” Waters said. “We can end homelessness. We can make rental housing affordable. We can provide the American dream of homeownership.”
The price tag on Waters’ plan is likely too steep for moderate Democrats, but Henwood said a solution on that scale might be necessary to guarantee millions are not left on the verge of homelessness the next time the nation is rocked by a pandemic or other emergency.
“No state has an adequate supply of affordable housing for low-income households,” he said. “To the extent that the pandemic has put a spotlight on how housing insecurity can negatively impact public health, I’m hopeful that we will see an increased investment in affordable housing.”