The Consumer Financial Protection Bureau (CFPB) on Monday unveiled a rule ordering debt collectors to inform tenants about their rights under a federal eviction ban if they’ve been unable to pay rent during the pandemic.
The rule would order any third party debt collector, including attorneys, attempting to collect owed rent on behalf of a landlord to tell tenants that they may be protected from eviction under the Centers for Disease Control and Prevention (CDC) eviction moratorium. Debt collectors would have to inform tenants about their rights under the CDC ban no later than when the renter receives an eviction notice.
President Biden last month extended the CDC’s eviction ban through the end of June with millions of households still struggling to find their financial footing amid the coronavirus pandemic. While housing advocates have praised Biden for extending the Trump-era ban, they’ve also blasted the administration for failing to patch the various holes in the order.
While landlords that violate the ban can face a $200,000 fine and a year in jail, not one has faced federal charges for plowing ahead with evictions despite the order. Federal district courts in Ohio and Texas have also ruled against the CDC order, but it remains in place pending appeals.
The CFPB rule, set to take effect May 3, would attempt to hit the brakes on thousands of evictions of tenants protected by the ban that may otherwise go forward.
“With COVID-19 killing hundreds of Americans every day, kicking families out into the street during this pandemic may literally be a death sentence,” said CFPB acting Director Dave Uejio.
“No one should be evicted from their home without understanding their rights, and we will hold accountable those debt collectors who move forward with illegal evictions,” he added. “We encourage debt collectors to work with tenants and landlords to find solutions that work for everyone.”
The CFPB estimated in December that 9 million households could be facing eviction once the CDC order lapses, with Black and Hispanic households at the highest risk given the disproportionate toll the pandemic has taken on communities of color.
The CDC in September prohibited evictions of renters — individuals who expected to make less than $99,000 in 2020 and joint-filing couples looking at less than $198,000 — if they failed to pay rent due to a pandemic-related job loss or expense. Tenants seeking protection under the ban must fill out a designated form and present it to their landlords.
Housing advocates say that it has been difficult to make sure all renters facing eviction are both aware of the ban and know how to invoke it to protect themselves, particularly those with limited Internet access or experience using the web. They also say that some landlords have mislead tenants about their rights under the CDC order.
“Conservatively, there are probably 1000s of families being evicted every week who are eligible for coverage under the CDC eviction moratorium and appear not to know that they can exercise their rights,” said CFPB senior advisor Diane Thompson in a call with reporters.
“Our hope is that by making it very clear that people have to be told before they’re evicted that they have a right under the CDC moratorium, we’ll see an increase in tenants accessing the rights.”
The CFPB has limited jurisdiction over the real estate industry. The Dodd-Frank Wall Street reform, which created the agency, bars the CFPB from regulating or supervising real estate brokers or landlords for activities that don’t directly involve financial products or debt collection.
Even so, Thompson said the CFPB was mulling further actions on evictions and cited the agency’s agreement to work with the Federal Trade Commission to enforce the CDC ban. She added that the CFPB is also working on educational materials about both the eviction ban and the Treasury Department’s rental aid program meant to help landlords cover the costs of lost rent.
Updated at 4:55 p.m.