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The Lurking Crisis: Foreclosures and Evictions in a Post-COVID America

The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization.

By Jonathan Sternesky
November 20, 2020

The Coronavirus Pandemic of 2020 has had a major impact on nearly every aspect of everyday life and appears to be poised to have second and third order impacts well in 2021, even if the most generous timelines for vaccine development and distribution are met. That is because once the health crisis ends or comes close to ending, existing moratoriums on foreclosures and evictions are likely to be lifted and a cascade of filings and judgments is set to begin.

In the Spring of 2020, weekly initial joblessness claims peaked just shy of 7 million and have remained heightened through the fall in comparison to pre-pandemic numbers. Viewed through the perspective of John W. Kingdon’s processes of agenda setting, the problem of evictions and foreclosures in a pandemic appeared to rapidly shift the politics at both the state and federal level into acceptance of a moratorium on evictions and foreclosures. After the foreclosure moratorium set forth in the CARES Act expired, the CDC issued an emergency order halting evictions on the basis of protecting public health lasting until December 31, 2020. Since March, each state has been designing their own series of policies, protections and orders to put a moratorium on evictions and foreclosures. This amounts to a wide variance in type of protections, length of protection and breadth of protection offered by each jurisdiction.

However, all of these protections are based solely on addressing the issue presented directly in front of the policymakers, and in effect are offering a temporary stay on the judgment of the proceedings, rather than addressing the root issue, which predates and has been exacerbated by the pandemic. According to a 2018 article by Sean Veal and Jonathan Spader of the Joint Center for Housing Studies of Harvard University, 22.5% of homeowners and 47.4% of renters were cost-burdened, which is when a household pays more than 30% of their gross income towards housing costs, which further reduces their ability pay for healthcare, nutrition and other key necessities that factor into social determinants of health.  Lower income and minority households compile a disproportionate share of the pre-pandemic families dealing with housing cost-burdens and those dealing with pandemic related job-losses.

With the economic fallout disproportionately hitting more vulnerable families and populations, the pandemic is exacerbating long-standing inequalities in the housing market. Nearly half of all low-income households have reported issues with paying bills and just under one-third have indicated difficulties with rent or mortgage payments. Not only were lower-income and minority employees more likely to be laid off initially, but they are also more likely to remain unemployed when compared to middle-income and white families. The burgeoning issue of foreclosure and eviction has stopped the foreclosures and evictions from occurring now, but with 20% of renters unable to make at least one payment during the pandemic and 64% concerned about future payments, according to a recent Marketplace-Edison Research Poll, the underlying problems are worsening.

The problem has been identified by numerous advocacy organizations, and the impact of its occurrence is likely to reverberate across the political system in a manner similar to the Great Recession. It seems increasingly likely that those two streams are going to cross at a period of great turbulence, having just come out of the other side of a year-long pandemic and a contentious electoral season. There are numerous policy options that will be readily available for how to address this, including shifting the burden of the losses onto the mortgage holders, shifting the burden losses on the landlords, keeping the burden on the renters or stabilizing the market through loss mitigation reimbursements to one or more of the impacted stakeholders. Hybrid options may arise, as well. However, the go-to-technique of moratoriums will no longer be available, as the losses and stress for all of the stakeholders continue to build, making a future pause on the issue an untenable position over the long-term.

Public administrators should be aware of these factors and actively preparing to policy remedies for their elected officials to consider, as absent significant federal intervention, it is exceedingly likely the problem is going to crescendo around the time of the pandemic’s waning days with many of the protections expiring, resulting in a political response requiring a policy to address it. If public administrators are not preparing responses or working with advocacy organizations on proposals that meet their community’s needs, the scope of the problem and the associated political backlash is likely going to overwhelm the administrator’s ability to actively participate in shaping the final proposals.

Given the historic scope of the problem, the proposals are likely going to need to be of an unprecedented size and scope. There is already precedent in this pandemic response for previously underheard of levels of government intervention. This presents the possibility that, with due consideration, the ability to address pre-existing disparities in housing may be politically feasible. However, it should also be noted that, without due consideration, the responses may exacerbate the pre-existing disparities in housing, as happened after the Great Recession.

Author: Jonathan Sternesky is a DPA student at West Chester University of Pennsylvania, an instructor at Middlesex County College and a public policy analyst in New Jersey with experience at the state and local level. His experience with housing and economic development policy influences an interest in social equity and the policy process. He may be reached at [email protected]

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