Skip to main content

Freddie Mac Examines The Impact Of Moratorium Policies

Katie Jensen
Jul 01, 2021

Economists estimate it will take between $8.4 and $53 billion to prevent a new wave of evictions.

KEY TAKEAWAYS
  • Economists estimate it will take between $8.4 and $53 billion to prevent a wave of evictions following the expiration of the eviction moratorium on July 31, 2021. 
  • 5.8 million households have a total of approximately $18.6 billion in rent debt. This equates to an average of $3,200 per household.
  • 51.4% of renters surveyed owed back rent, with 49.3% owing between $1,000 and $4,999.
  • California and New York were both underfunded by approximately $1 billion, according to the renter population concentration.

A new whitepaper from Freddie Mac Multifamilies studies the impact of ending eviction moratoriums and rental assistance as the country recovers from the economic impacts of the pandemic. Although moratoriums and enhanced unemployment benefits helped many survive throughout the past year, economists estimate it will take between $8.4 and $53 billion to prevent a wave of evictions following the expiration of the eviction moratorium on July 31, 2021. 

“While the steady return to normal pre-pandemic routines brings a sense of optimism, the economic impact of COVID-19 will have a lingering effect, particularly on renters who owe back rent and were protected by eviction moratoriums,” said Corey Aber, senior director of Mission, Policy, and Strategy. “We found that there is likely enough rental assistance available, and the deployment and accessibility of these funds is vital to supporting renters and property owners in need as the country transitions to a post-pandemic normal.”

In the whitepaper, Freddie Mac discusses the public policy actions taken to protect renters from eviction during the COVID-19 pandemic. The CARES Act eviction moratorium, which ended on July 25, 2020, mandated that property owners could not file notices to vacate for non-payment of rent throughout the moratorium period. Afterward, property owners would be required to provide at least 30 days' notice to vacate. 

However, the CDC moratorium took over on September 4, 2020, in which eviction filings would be allowed, but the property owner may not evict if the renter provides a declaration that they are seeking government assistance. The program was initially set to end in December of 2020 but was extended to July 31, 2021. 

In states and cities tracked by the Eviction Lab at Princeton, eviction filings were down 58% from March 2020 to May 2021 compared to the historical yearly average. When the CARES Act moratorium ended, state and local moratoriums were put in place. During that time, eviction filings increased but not to pre-pandemic levels. 

States and localities that did not enforce moratoriums had higher eviction filings. In Phoenix, Arizona, there has been no local moratorium in effect since August 2020. This led eviction filings to jump to 80% of their pre-pandemic monthly average in December 2020 and March 2021. 

Yet, for the most part, eviction filings were significantly lower throughout the pandemic compared to monthly averages from 2014 to 2019. In April 2021, eviction filings were down 84% compared to the average filings over the past five years.

However, the potential back rent owed is a growing concern. Although moratoriums prevented evictions, renters are still responsible for paying back their rent. If renters are still delinquent by the time the moratorium ends, they are at risk of being immediately evicted. 

The amount of potential back rent owed by all those who were protected by the moratorium is difficult to know. Estimates from the Federal Reserve, banks, and other economists range between $8.4 billion to $52.6 billion. 

According to the National Equity Atlas Rent Debt Dashboard, which gets updated every two weeks, 5.8 million households have a total of approximately $18.6 billion in rent debt. This equates to an average of $3,200 per household. Currently, the report finds that 51.4% of renters surveyed owed back rent, with 49.3% owing between $1,000 and $4,999.

The federal government has already allocated about $47 billion in Emergency Rental Assistance, which should be an ample amount of support for both renters and property owners to transition out of the moratorium. However, gaining access to and distributing these funds are more complicated. 

Under the ERA Acts, at least 90% of the funds must be used for direct financial assistance, including rent, utilities, housing energy costs, and other housing-related expenses. The remaining funds are dedicated to program administrators for housing stability services. 

In considering how to allocate these funds, the study finds it may be beneficial to distribute larger portions of the funding to states with higher renter populations. For example, New York contains 7.85% of the renters in the country, yet only received 5.39% of the funds in 2020. Conversely, Wyoming contains .15% of the renters in the country and received .83% of the funds. Overall, California and New York were both underfunded by approximately $1 billion according to the renter population concentration. 

Download the whitepaper to learn more about Freddie Mac’s findings, including tables and graphs. 

Published
Jul 01, 2021
First American: Real House Prices Up Yet Again

The monthly RHPI report said potential sellers are unlikely to lose all the equity they have gained.

Analysis and Data
Nov 28, 2022
Redfin: Pandemic Boomtowns Are Cooling

Home-price growth has slowed fastest in pandemic boomtowns like Austin, Phoenix and Boise, with inflation and high mortgage rates to blame.

Analysis and Data
Nov 28, 2022
Mortgage Application Payments Rose 3.7% In October

Mortgage payments are up by $629 in the first 10 months of the year, a 45.5% increase.

Analysis and Data
Nov 22, 2022
Investor Interest In Housing Market Cools

Investors lost market share for the second quarter in a row.

Analysis and Data
Nov 22, 2022
Share of Loans In Forbearance Ticks Up In October

MBA estimates that 350,000 homeowners are seeking assistance.

Analysis and Data
Nov 21, 2022
A Third Of Pending Home Sales Canceled In October

Redfin says deal cancelations, price cuts hit record highs.

Analysis and Data
Nov 21, 2022