When some of the world’s largest and interconnected financial institutions collapsed in September of 2008, the financial crisis soon became a foreclosure crisis, as the shoddy lending practices of those institutions ended up leaving many homeowners out in the cold. Today, the coronavirus pandemic, a public health crisis, is having similar economic effects, and, like the financial crisis of 2008, it too will soon turn into a housing crisis as well.
In the wake of the financial crisis, banks got bailouts and homeowners got tossed out. That same result must not be allowed to happen again to the nation’s renters. Sen. Elizabeth Warren (D-Mass.) has introduced the “Protecting Renters from Evictions and Fees Act of 2020,” which halts evictions through March of next year across the country, making a patchwork of uncertainty a blanket of protection for most residential tenants.
This is a good start. But more could be done, and the foreclosure crisis of the last decade did not hit until long after the beginning of the financial meltdown in September of 2008.
Dramatic intervention is still needed, and right way, to ensure that the public health crisis is not made worse through millions of evictions, predominantly in communities of color. Failing to act would not just exacerbate the public health crisis but also the racial justice crisis in housing, making a third crisis – the current homelessness crisis – only worse.
While the financial crisis affected mostly homeowners, the corona crisis is likely to have a greater impact on renters. They find themselves at the center of several crises that pre-existed COVID-19. But these crises are likely to all converge at once to make the coming months a period in which evictions and homelessness run rampant through low- and moderate-income communities unless something is done immediately to prevent that from happening, and Warren’s bill would go a long way toward halting evictions, for now.
Before the pandemic hit, many low- and moderate-income families faced a problem of severe housing insecurity. Many of these families paid at least a third, and sometimes as much as one half, of their monthly income toward rent. The places they live are often where housing conditions do not meet basic health standards. Any disruption in their income often means they cannot pay their rent.
As a result, every year, two million American families are evicted from their homes. For some, they can find other housing that is of even lesser quality. For many, as we are seeing in communities across the country, they end up homeless, living on the streets or in shelters.
Much of this is a result of growing economic inequality, as flat wages cannot keep up with increased housing costs in many communities. But this economic inequality also has a racial component to it. Housing instability and housing conditions are far worse in communities of color. Decades of housing policies that institutionalized housing segregation along racial, ethnic and economic lines meant that fewer families of color were able to see their wealth grow through housing investments, leaving the median African-American family with roughly 1/10 of the wealth of the median white family.
What is another factor contributing to this disparity? The fallout from the last financial crisis cost African-American families roughly half of their wealth, and we know the pandemic’s effects are being felt hardest in communities of color already.
All of these are pre-existing conditions that plagued low- and moderate-income rental housing before the pandemic hit. And the public health crisis is going to make matters worse, wreaking havoc on renters. In the case of the foreclosure crisis of the last decade, many homeowners who lost their homes became renters. For renters, few have other options if they cannot pay their rent.
In New York, Gov. Cuomo extended the eviction moratorium to August 20, but it came with some significant changes. While there are prohibitions on evictions and foreclosures in other communities, and where a landlord receives certain types of federal support, many of those are also due to expire in the coming weeks and months, making the legislation proposed by Senator Warren a critical intervention that can help prevent evictions across the country. This will help ensure the public health and economic crises do not become a homelessness crisis (that will only make fighting the virus even harder), at least for now.
But even a moratorium does not deal with the fact that tenants will have rent arrears build up while the moratorium is in effect. That leads to a second intervention. The federal government and philanthropy should consider teaming up to provide temporary income supports to cover back rent for anyone who falls behind on their payments due to the pandemic. We see this sort of partnership in many communities. A tenant facing eviction may qualify for rental support from a government entity, but his or her rental arrears mean that the tenant could still get evicted, even with a future ability to pay rent. Foundations could step in to satisfy at least a portion of a tenants’ back rent obligations; and perhaps landlords could be encouraged to forego at least a portion of those obligations.
Finally, without the eviction moratorium, or even once one is lifted, there will still be evictions, and landlords will likely bring cases against renters, but such renters may have strong defenses to those evictions. A growing movement across the country is ensuring a right to an attorney to low-income families facing eviction, with cities like New York, Newark, Philadelphia and San Francisco leading the way.
Once evictions resume, a national right to counsel for low- and moderate-income families facing eviction due to the pandemic would likely go a long way toward preventing eviction across the country. With federal financial assistance, local governments, already straining to meet the costs of battling the pandemic, would not have to fund these programs themselves. There is one bill pending in the House, “The Eviction Prevention Act of 2019,” which would provide support to local governments to provide low-income tenants with representation in evictions. Legislation like this is desperately needed because most low-income tenants currently face eviction without a lawyer. And yet research shows that a tenant facing eviction who has representation is far more likely to win her case than one who does so without a lawyer.
Timely and effective interventions in the rental housing market can help address some of the racial and economic inequities that existed in this market prior to the pandemic. The virus has only made these inequities more dramatic. And before the public health crisis turns into a homelessness crisis, which will only make the virus harder to fight, dramatic change is needed to help support the nation’s renters in real and meaningful ways.
Ray Brescia is a former tenant’s rights attorney and is currently a professor of law at Albany Law School and the author of “The Future of Change: How Technology Shapes Social Revolutions.”