New federal eviction moratorium

By: J. David Chapman/September 10, 2020

A new federal eviction moratorium went into effect Sept. 4 and will last until Dec. 31 unless extended. Oddly enough, this moratorium came at the suggestion and promotion of the Centers for Disease Control and Prevention. Its justification for the moratorium was an effort to keep renters in their homes through the end of the year in an effort to slow the spread of COVID-19.

The CDC reckons that keeping these individuals in homes they can’t and aren’t affording will keep them out of homeless shelters, family members’ homes, or off the streets. Apparently, there is a fear among the feds that outbreaks will be created with overcrowding in households and homeless shelters should people not paying rent face eviction.

Obviously, the questions that have been coming my way are from landlords, owners, and property managers of apartments and homes asking how they are expected to maintain properties and pay their mortgages and bills should renters decide not to pay rent. Earlier in the year, the federal government issued a 120-day moratorium on eviction that covered only those tenants living in federally subsidized housing. In turn, there was a provision given to those owners and landlords for mortgage forgiveness and foreclosure forbearance during the eviction moratorium.

This new moratorium is much more broadly based and will affect significantly more real estate owners and landlords. Most of the landlords and owners I know have been working with residents in an effort to keep them in their homes. The problem is these moratoriums don’t eliminate the debt, they only prevent the landlord from taking action by evicting the tenant. The renter will still be responsible to pay back all back rents once the moratorium ends. In effect, this program simply “kicks the can down the road” and puts a burden on the tenants that we all doubt will be able to repay and stay in their current home. It also puts a burden on owners of rental property to find a way to continue to pay mortgages without rents, possibly facing foreclosure.

If the CDC feels it necessary to keep renters in homes, it must find a way for landlords to continuing paying their mortgages and bills without rent income, period.

J. David Chapman is an associate professor of finance and real estate at the University of Central Oklahoma (jchapman7@uco.edu).