Partial Housing Cost Forgiveness: Spreading the Cost of the Housing Repercussions of COVID-19

Isaiah McKinney

The COVID-19 pandemic has altered the lives of many Americans this year.  For some people, this change means working from home or attending online classes, while for others, it means losing their jobs and the majority of their income. Without moratoriums like the one issued by the Centers for Disease Control and Prevention on September 1, 2020, many people who have lost their income and are unable to afford their rent would be at risk of eviction.[1] This moratorium freezes rent payments for individuals who expect to earn $99,000 or less in 2020, are unable to pay rent because of the coronavirus, and would likely lose their housing without assistance.[2] While a moratorium through the end of the year can help save people from being displaced, these moratoriums are not without issues.

First, moratoriums do not forgive rent; rather, they toll the payment of it until a later date.[3] Eventually, the moratoriums will be lifted, and a large bill will come due in the form of months of unpaid rent. Because these moratoriums are only granted to people experiencing financial hardship, many of these people will be unable to pay the back rent that they will owe once the moratoriums are lifted. These moratoriums create a situation similar to that of a payday loan. When someone is in such dire straits that they need a payday loan, they likely are not in a sound financial position to be able to pay it back.[4] Thus, rather than solving the problem, these moratoriums are pushing it off until a later date, at which the tenants will likely still be unable to pay their rent.

Second, while an eviction moratorium saves renters’ housing, it can cost landlords theirs. Almost half of all rental properties in the United States are owned by individuals rather than corporations,[5] and these mom and pop landlords rely on rental income to pay both the mortgage on their rental properties and their own living expenses.[6] Landlords are being deprived of their livelihood because others are experiencing the same financial impacts of the virus.[7] As a society, we should not allow the housing burden to be passed on to landlords. However, simply extending moratoriums to landlords is likely to shift the financial burden onto lending institutions, interest rates, and the economy. While there are provisions in the Coronavirus Aid, Relief and Economic Security (CARES) Act to extend payment timelines for homeowners, and other commercial lenders have forbearance programs in place to delay mortgage payments,[8] we do not yet know how deferring payments will impact the financial sector and affect the economy.

There is no simple legal solution for this problem. In a perfect world, everyone would come together to help each other by paying what they can and writing off what is owed to them. Unfortunately, however, policy decisions are not made on the assumption that people will be neighborly. Whether there should be government involvement in the rent payment issue at all is another issue, but if the government is going to address this issue, eviction moratoriums may not be the  right solution. Instead of postponing the inevitable inability to pay rent with eviction moratoriums, perhaps the solution is to spread the costs across all members of the housing market. Rent and mortgages could be forgiven on a percentage basis for both renters and landlords based on an individual’s current income as compared to their pre-COVID-19 income. This way, everyone must still pay, but payments will be adjusted based on the percentages of their normal income that they are currently earning. This would spread the costs across tenants, landlords, and banks. If each party pays and forgives what they are able, everyone will be hurt in some way, but no one will completely bear the costs.

If the government chooses to continue down the path of moratoriums, tenants will still be required to pay back rent eventually. Moreover, due to the current economic climate, even when the economy recovers, tenants and landlords are going to lack the economic capital to pay past rent and mortgage payments.[9] Moratoriums are only postponing these evictions. And then, once evictions start, landlords will be faced with another challenge—struggling to find tenants because many of the people looking for housing will be unable to pay. Eviction moratoriums provide short term relief, but they also increase the consequences later down the road. Rather than continuing moratoriums, it would be more efficient and helpful to forgive rent and mortgages on a percentile basis, so no one loses their housing and the economic impact is borne by everyone, rather than just one segment of the economy.  


[1] Sarah Hansen, Trump Administration Announces New Eviction Moratorium, Effective Immediately, Forbes (Sept. 1, 2020, 6:17 PM), https://www.forbes.com/sites/sarahhansen/2020/09/01/trump-administration-announces-new-eviction-moratorium-effective-immediately/#a2e8f8621ab1 (federal eviction moratorium is extended until the end of the year).

[2] Id.

[3] Sarah Schindler & Kellen Zale, How the Law Fails Tenants (and Not Just During A Pandemic), 68 UCLA L. Rev. Discourse 146, 150-51 (2020).

[4] Payday Loan Facts and the CFPB’s Impact, Pew,  https://www.pewtrusts.org/en/research-and-analysis/fact-sheets/2016/01/payday-loan-facts-and-the-cfpbs-impact (last updated May 26, 2016).

[5] U.S. Dep’t of Hous. and Urban Dev., Message from PD&R Senior Leadership: Landlords,  https://www.huduser.gov/portal/pdredge/pdr-edge-frm-asst-sec-061118.html (last visited on Sept. 11, 2020).

[6]Robert Farrington, What an ‘Eviction Freeze’ Means for Mom and Pop Landlords, Forbes (July 15, 2020, 7:44 AM), https://www.forbes.com/sites/robertfarrington/2020/07/15/what-an-eviction-freeze-means-for-mom-and-pop-landlords/#2181228a7061. See also Abby Vesoulis, How Eviction Moratoriums Are Hurting Small Landlords—and Why That’s Bad for the Future of Affordable Housing, Time, (June 11, 2020, 10:08 AM) https://time.com/5846383/coronavirus-small-landlords/.

[7] See Jacob Passy, ‘Landlords are just trying to pay their bills like everyone else.’ The coronavirus could hit mom-and-pop landlords hard as tenants miss rent payments, MarketWatch, (Mar. 26, 2020, 2:17 PM), https://www.marketwatch.com/story/landlords-are-just-trying-to-pay-bills-like-everyone-else-the-coronavirus-could-hit-mom-and-pop-landlords-hard-as-tenants-miss-rent-payments-2020-03-25.

[8] Karen Ho, Missed rent and mortgage payments are rippling across the economy, Quartz, (April 30, 2020) https://qz.com/1844447/missed-rent-and-mortgage-payments-are-leading-to-forbearance-and-defaults/.

[9] Vesoulis, supra note 6.

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