Why do we make things so hard for renters?
For struggling homeowners in the pandemic’s first year, there was hope early on that these hard times would not put people with mortgages out in the street.
Thanks to quick governmental action, homeowners quickly got word that most of them could put off monthly payments for as much as 18 months — and even have the option to make them up as much as 40 years later.
Renters weren’t so lucky. Sure, there were federal and regional eviction moratoriums, but it took nearly a year for Congress to come through with actual payment assistance, and that has only trickled out so far. Plus, it came with a host of restrictions and hurdles to clear — heaped on top of a population where millions were already in a precarious financial position.
We should say it out loud: When it comes to public policy, people who do not own their own homes are treated like second-class citizens.
If you can’t afford to buy (or choose not to), you miss out on numerous tax incentives. Then, when an extended crisis hits, your very ability to have a roof over your head is subject to the sort of sloppy political brinkmanship that allowed the eviction moratorium to expire before it was partially restored.
So how did this happen and why? And what will we learn from it?
Let’s begin with the baseline: For decades — and for pretty good reasons, given the wealth-building possibilities that come from homeownership — the federal government has goosed the mortgage market in a variety of ways. Lenders have the backing of the federal government, and homeowners can get deductions for their monthly payments, plus favorable tax treatment on any longterm appreciation of a home.
But whether for lack of imagination or lack of will, little national infrastructure exists to help the majority of renters. It is a glaring deficiency exemplified by this year’s slow-as-molasses distribution of $47 billion of rental assistance. Only about $3 billion had been handed out by the end of June.
Many mortgage borrowers, at least in theory, have access to a one-call-does-it-all payment pause button via their mortgage servicer. Their relative good fortune is an improvement born of the mess that was the last financial crisis. Back then, the collapse of the housing
market led to a crushing wave of foreclosures, in part because people seeking loan modifications faced unfathomable complexity.
Renters, however, now face something that policy experts have come to call an “administrative burden.”
The phrase refers to a harrowing series of hurdles that tenants — often low-income people — must meet when accessing any sort of assistance, like the rental aid that has moved so glacially.
In their book on this phenomenon and other scholarship, Georgetown University professors Pamela Herd and Donald Moynihan outline three of the leaps that are necessary to overcome such burdens.
First is awareness. To get help, you need to know that it’s available in the first place. As of May, months after rental aid came into existence, 57% of tenants and nearly 40% of landlords didn’t even know about it, according to an Urban Institute survey.
Then, there is eligibility. Rental assistance comes with rules, which aren’t always easy to navigate. It becomes even harder if you’re frazzled because of unemployment, shuttered child and elder care, or illness.
It can be difficult to find someone who can explain it all. Homeowners have their mortgage servicers to assist. Businesses that received the forgivable and relatively expedient loans from the Paycheck Protection Program had their bankers. Many precarious renters have no such help.
“For someone who is facing eviction, trying desperately to figure out how to apply, which forms to fill out, where you need to go, you can quickly see how that is just kind of brutal,” Herd said.
Finally, there is compliance. The forms have to be complete and submitted correctly. And in the case of rental assistance, landlords in many places have to cooperate by agreeing to accept the money the government is offering.