United States President Joe Biden extended a federal moratorium on foreclosures and mortgage forbearance policies on Tuesday, giving the more than 10 million homeowners who are behind on payments additional months of assistance as the coronavirus pandemic continues to ravage the US economy.
Biden’s announcement extends the moratorium on foreclosures through the end of June after it was due to expire at the end of next month. The policy also extends the mortgage forbearance window until June 30 and provides up to six months of additional mortgage payment relief for the 2.7 million Americans who are already receiving it, the White House said in a statement.
Not everyone is covered under the policies announced on Tuesday, however. The current forbearance programme only applies to Americans whose mortgages are government-backed — about 70 percent of existing single-family home mortgages.
Forbearance allows homeowners to pause or reduce their mortgage payments for a time, but it doesn’t forgive the debt itself. Homeowners will still be responsible for back payments when the forbearance period ends.
The policy is designed to keep Americans in their homes at a time when public health experts have warned that a wave of evictions and foreclosures could make the spread of COVID-19 worse.
Lifting eviction moratoriums between mid-March and early September resulted in an estimated 433,700 excess COVID-19 cases and 10,700 excess deaths nationwide, found researchers from Johns Hopkins University, Boston University, Wake Forest University School of Law, the University of California, Los Angeles, and the University of California, San Francisco.
Their paper examined eviction moratoriums and COVID-19 cases from March 15 to September 3 in 44 states, including 27 states that lifted their moratoriums during that time. The study is awaiting peer review.
People with private-market mortgages aren’t eligible for the relief announced on Tuesday, which is why Biden has proposed a $10bn Homeowners Assistance Fund as part of his $1.9 trillion stimulus package. The package would also extend both the eviction and foreclosure moratoriums, as well as mortgage forbearance programmes, until September 30. It would also provide $30bn in rental and utility assistance for renters and small landlords.
Biden’s stimulus plan is still making its way through Congressional committees, and Democrats have vowed to pass it even without Republican support.
One in five tenants is currently behind on rent payments, the White House said, and the current eviction moratorium is set to expire on March 31. Tenant protections were not part of Tuesday’s announcement.
Keeping Americans in their homes is a key priority for Biden and Treasury Secretary Janet Yellen, who have repeatedly cited the Great Recession of 2007-2009 — which saw a wave of foreclosures — as evidence of what happens when the government does not provide enough stimulus to help the economy fully recover.
Like the Great Recession, the current crisis has not affected all homeowners equally. In announcing the extended foreclosure moratorium and forbearance policies Tuesday, the White House said homeowners of colour are in need of critical support and “make up a disproportionate share of borrowers with delinquent loans and loans in forbearance due to COVID-related hardship”.
In advocating for the Biden administration’s $1.9 trillion plan, Yellen has cited the enormous impact the COVID-19 crisis has already had on Americans of colour — and urged that more must be done “to make sure that this pandemic isn’t another generational setback for racial equality”.
Tenants of colour are also struggling at a higher rate: 30 percent of Black renters, 22 percent of Asian renters, and 21 percent of Latino renters said they were behind on rent payments, compared to 12 percent of white renters, the non-partisan Center on Budget and Policy Priorities found. Collectively, American tenants owe $25bn in back-rent payments.
The pandemic has exacerbated long-standing inequities in the housing system. Even before the crisis, more than half of Black and Latino people were housing cost-burdened — defined as spending more than 30 percent of their income on housing — compared to 42 percent of Asian and white households, according to Harvard University’s Joint Center for Housing Studies.
And despite the federal moratorium on evictions, tenants have continued to lose their homes during the pandemic. Since the COVID-19 crisis began, landlords have filed for 245,999 evictions in the five states and 27 cities tracked by Princeton University’s Eviction Lab.
Because protections and relief are not automatically granted and must be applied for, many struggling homeowners and renters who may qualify for assistance aren’t currently getting it, the White House said Tuesday, which is why the Biden administration also rolled out a centralised clearinghouse for housing relief help through the Consumer Financial Protection Bureau.