Some crisis programs may do more harm than good
2ne problem with government emergency actions is that the polit ical class never wants them to end. :itness the Biden $dministration’s extension of the eviction and fore closure moratoriums, which by now are creating more trouble than they’re worth.
The &onsumer )inancial Protec tion Bureau this week proposed a rule that would effectively prohib it foreclosures through December. It has also threatened to penali]e mortgage servicers and landlords who don’t take action to prevent a surge in “avoidable foreclosures” and evictions when government for bearance programs end.
In short, the government is blud geoning private businesses to fix a problem it created. Suspension of rent and mortgage payments was justifiable last spring when states locked down and some 22 million workers lost jobs. But the jobless rate has dropped to 6 from 14.8 , and employers are desperate to hire.
The &ares $ct from last March let borrowers with federally backed mortgages pause payments for 360 days. The law also imposed a 120 day moratorium on evictions in housing developments supported with federal funds. $fter the &ares $ct eviction moratorium ended, the &enters for Disease &ontrol and Prevention in September extended it through December and expanded it to all rental housing. +ouseholds making up to 198,000 qualify as long as they say they lost income due to the pandemic.
The &D& invoked the 1944 Pub lic +ealth Service $ct, which allows the agency to take measures to pre vent the spread of communicable diseases between states. People who get evicted might move in with fam ily or friends and spread the disease, the &D& explained. :hat diktat couldn’t the &D& justify under this expansive rationale"
Landlords say they increasing ly can’t afford their mortgage pay ments, utilities, and maintenance costs because they can’t remove nonpaying renters. District courts have rendered conflicting decisions on the order’s legality that are being appealed. Meantime, the Biden $d ministration has extended the mora torium through -une.
Most people hurting financially amid the pandemic have received plenty of relief from the government including direct payments² 2,000 per person since December²re fundable tax credits and 300 in enhanced weekly unemployment benefits. They should also be able to find jobs.
The same goes for homeowners taking advantage of government mortgage forbearance. The )ederal +ousing $dministration in )ebruary extended the deadline for requesting forbearance through -une, which will let many skip mortgage pay ments through the fall. $bout 17.5 of )+$ insured mortgages are de linquent or in forbearance.
These crisis programs are dis torting the housing market. +ome values have soared in the past year amid increased demand, so some borrowers currently in forbearance could avoid foreclosure by selling. Government forbearance may be contributing to a housing shortage by keeping people in homes they can’t afford and limiting supply for potential buyers.
The Biden $dministration wants to maintain the air of pandemic cri sis so it can take credit for coming to the rescue. But on housing, as on other things, it is now doing more economic harm than good.