The Looming Debt Trap Facing Renters

The Looming Debt Trap Facing Renters

The looming debt trap facing renters post comes from Growing Homes Together, a project of the National Multifamily Housing Council.

By Growing Homes Together

While the CDD and state and local governments are issuing eviction moratoriums these “do nothing to help renters pay their rent or deal with the financial distress households are facing,” Growing Homes Together writes in its most recent blog post.

“Eviction moratoriums of varying degrees have been implemented across the country in well-intentioned, but short-sighted attempts to shield renters from the economic fallout of the COVID-19 pandemic. While on the surface eviction moratoriums may seem like attractive policy tools to help renters facing prolonged unemployment or reduced income, they actually can cause more harm than good.”

Kicking the can down the road

The eviction moratoriums make it increasingly difficult for housing providers to meet their financial obligations and continue to provide shelter to those who need it most, Growing Homes Together writes.

“Renter households already owe unsustainable amounts of back rent and that figure can only be expected to grow by degrees of magnitude the longer the eviction moratorium drags on.”

Eviction moratoriums “merely kick the can down the road and make it increasingly difficult for housing providers to meet their financial obligations and continue to provide shelter to those who need it most.”

Most landlords and other housing providers in the U.S. are small businesses or individuals not equipped to absorb months of unpaid rent. “This financial downturn also runs the risk of bankrupting small housing providers. Without support, the units they maintain could be removed from the market – making the country’s housing shortage even more severe.

“Very soon, this health and economic crisis could become a housing and financial crisis,” Growing Homes Together writes.

“Saddled with months of back-rent and accumulating credit card debt, renters throughout the U.S. could be forced to turn to bankruptcy at a scale we have not seen in decades. The ensuing defaults would have rippling effects throughout our entire economy, and our financial system could be facing another 2008-like downturn.

Growing Homes together points out that the CARES Act helped renters stay current during the early days of the pandemic. But those funds have run out leaving a debt trap facing renters.

Washington needs to help with the debt trap facing renters

“While housing is local, the financial challenges facing renters and the apartment industry are of a national magnitude. Eviction policies are best left to state and local officials who better know the intricacies of their housing markets and can tailor protections to the varied and unique eviction laws and judicial processes across jurisdictions.

“The CDC’s blanket eviction moratorium fails to take this into consideration and threatens to make a bad situation worse by luring renters into a debt trap few will be able to climb out of unassisted. However, what is clear is that the federal government has a critical role to play by providing rental assistance to those who need it and prevent the eviction process from even beginning.

“The most effective way to avert a housing crisis is to keep renters current. To do so will require bipartisan agreement on a stimulus package that includes meaningful rental assistance.”

Read the full post here.

About the author:


Growing Homes Together (GHT), a project of the National Multifamily Housing Council (NMHC), is a resource center designed to spark discussions at the state and local levels about policy solutions to improve America’s housing crisis. NMHC is a national organization of more than 1,100 member firms involved in the multifamily housing industry.

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