Congress must help find a faster solution to pay 10 Million past due rents

It’s been over six months since the Center for Disease Control and Prevention issued its original federal eviction moratorium in an effort to curb the spread of COVID-19,but as a result, there’s been an economic crisis brewing. This week’s extension provides just three more months to subdue its impact.

The current eviction moratorium was originally enacted on the basis that evictions lead to family members living together in greater numbers, accelerating the spread of COVID -19. The policy put in place might have prevented thousands of deaths, and it can continue to save lives.

However, the economic consequences of this action have left many tenants and landlords alike in need of better access to support, a sentiment that this week’s extension of the moratorium seems to echo. While directives from the White House are a step in the right direction, we have just 90 days to get aid to those in need.

A recent U.S. Census Bureau’s Household Pulse Survey showed about 30 percent of renters were either deferring their rent or had no or only slight confidence in their ability to pay next month’s rent.

For many renters impacted by the pandemic, there is now a year-long backlog of rent due on the other side of the eviction ban. In fact, the latest Census Bureau estimates state that nearly 10 million Americans are behind on rent payments. The $44 billion pool of rental assistance provided by the federal government through fiscal stimulus packages is a good first step to support qualifying renters, but alone, it’s not enough, and we need to see much swifter action from our government to get the assistance in the hands of renters and ensure the funds are used to pay past due rent and housing-related costs.

The clock is ticking for policymakers to deliver decisive federal guidance to get this money to renters and ensures the funds to be used solely to supplement housing needs. Extending the eviction moratorium beyond the end of March is not sufficient. The $44 billion in rental assistance should not be held hostage by an ineffective and inefficient distribution mechanism.

On the other side of the equation, landlords, need rent payments to pay their staff, cover debts and expenses and keep to this critical source of affordable housing available to working Americans.

America’s retirement savers are significantly invested in the nation’s multi-family housing sector and their financial security is adversely impacted when rent isn’t paid. About 22.7 million units in 16.7 million rental properties are owned by individual investors. Even more Americans have exposure to real estate through investment vehicles, such as REITs or interval funds.

The federal rental assistance program is being run through the Treasury’s Emergency Rental Assistance Program. It provides grants to the states, and large cities and counties, to conduct rental assistance programs. It permits eligible renters, as well as landlords and utility providers, to apply to the state or local programs for assistance.

As many members of the Institute for Portfolio Alternatives who serve as landlords have observed, the challenge lies first in having the renters qualify under the program and also in having a program at the state or local level to effectively distribute the funds.

As the eviction moratorium is eventually lifted, both renters and landlords face significant losses. As a result, both parties agree: there must be a way to access the emergency funds more efficiently through the state and local programs to minimize the economic toll the pandemic has exacted across the residential rental system.

As a first step, it’s imperative that Rep. Maxine Waters  (D-Calif.) and the House Financial Services Committee initiate hearings immediately to examine the flow of rental assistance — and other federal stimulus programs — to those in need and identify the gaps that prevent more efficient system-wide distribution mechanisms. We also expect rigorous oversight from Congress to ensure the $44 billon on the table gets to those in need now in order to avoid another delay in our return to normal.

We also ask the Treasury Department and Congress come together and act swiftly to build a mechanism to access the funds available and provide critical guidance to state and local program managers to get essential rental assistance — already approved by Congress — into the hands of Americans.

Anthony Chereso is the president & CEO of the Institute for Portfolio Alternatives.