SUMMER/FALL 2020

Evidence Matters

Transforming Knowledge Into Housing and Community Development Policy

SUPPORTING

HOMEOWNERS

AND RENTERS

DURING TIMES

OF DISRUPTION

IN THIS ISSUE

The Federal Government Steps Up in

03 Times of Disruption

The Federal Housing Administration:

Bringing the Housing Finance System Out

12 of a Chaotic Situation

State Moratoria Support Households

20 Experiencing Financial Hardship

Photo credit: Brian Tomaino

Message From the

Assistant Secretary

The COVID-19 pandemic has greatly affected the lives and livelihoods of people

worldwide. In response to the pandemic, federal, state, and local governments;

businesses and nonprofit organizations; and private citizens have taken extraordinary

actions to preserve the safety and welfare of fellow Americans. An area of concern

during this crisis has been the impact of the COVID-19 pandemic on the housing

markets, one of the most important engines of the U.S. economy. Mortgage delinquen-

cies more than doubled, from a record low of 3.8 percent at the end of 2019 to 8.2

percent by mid-2020. This issue of Evidence Matters highlights federal and state

efforts to ameliorate the effects of the pandemic on housing markets and the ways in

which the Federal Housing Administration (FHA) may assist in the economic recovery.

The federal government, including HUD, has taken unprecedented steps to fight COVID-19 and its related economic turmoil. President Trump signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March 2020, which included economic stimulus payments and an expansion of unemployment insurance benefits. The CARES Act requires mortgage servicers to offer up to 12 months of forbearance to any borrower with a loan insured or guaranteed by a federal agency, such as FHA or the Government National Mortgage Association (Ginnie Mae), or purchased by a government-sponsored enterprise. Around 3.7 million loans were in COVID-19-related forbearance plans as of early September 2020.

Similarly, the eviction of renters residing in properties with covered loans or participating in federal housing assistance programs was prohibited through the end of August 2020. President Trump issued an executive order stating, “It is the policy of the United States to minimize, to the greatest extent possible, residential evictions and foreclosures during the ongoing COVID-19 national emergency.” Subsequently, FHA extended its foreclosure and eviction moratorium for insured single-family borrowers through the end of 2020. Most recently, in response to the President’s Executive Order, the Centers for Disease Control and Prevention (CDC) halted residential evictions of covered households through December 2020. Many states have also implemented their own foreclosure and eviction moratoria.

Taking such unprecedented actions did not come without challenges. Ginnie Mae, the Federal Housing Finance Agency, and the government-sponsored enterprises have worked with securities issuers and mortgage loan servicers still responsible for advancing principal and interest to investors even when homeowners do not make their monthly mortgage payments.

Landlords unable to collect rent from tenants may struggle to meet their own expenses. Knowledge and enforcement of foreclosure and eviction moratoria has been uneven across households and jurisdictions.

So far, the housing market has proven remarkably resilient, buoyed by record-low interest rates, pent up housing demand, and limited supply. Technological innovation on the part of the industry and regulators has allowed the market to function efficiently even in a primarily virtual environment. In July, new home construction surged to levels not seen since 2016.

A year ago, HUD presented a housing finance reform plan to better manage FHA’s risk and refocus the agency on its mission to promote homeownership and affordable housing for homebuyers who may not have access to affordable mortgage credit through traditional underwriting, including first-time, low- and moderate-income, and minority borrowers. The plan also recognizes the central role that Ginnie Mae plays in facilitating liquidity to support the U.S. government insured and guaranteed mortgage programs and supports Ginnie Mae’s continued modernization efforts. The plan also highlights the unique and important countercyclical role that FHA and Ginnie Mae have played since they were respectively established. With an economic net worth of $62 billion, FHA has taken several steps over the past decade to manage risk and build capital reserves to an all-time high. Depending on the depth and duration of the current economic turmoil, FHA and HUD may again prove vital to stabilizing the nation’s housing and mortgage markets. Although COVID-19 has impacted all aspects of our lives, this issue of Evidence Matters describes just one part of our response: our actions to stabilize the housing financing system and keep Americans in their homes.

— Seth D. Appleton, Assistant Secretary for Policy Development and Research

2

Editor’s Note

The housing market helps undergird the U.S. economy, and when the housing market faces challenges, it often generates far-reaching ripples of economic stress. As the COVID-19 pandemic creates new and unfamiliar uncertainties, it is more important than ever to ensure that the housing market and the larger economy remain the powerful engines for growth and prosperity that we have relied on for so many years. This issue of Evidence Matters examines the strains on, and supports for, the various actors in the housing market, including renters, homeowners, landlords, mortgage lenders, and investors.

The lead article, “The Federal Government Steps Up in Times of Disruption,” looks at how the current economic situation has affected the housing market and how the federal government has acted to support the market, from renters to end investors. The Research Spotlight article, “The Federal Housing Administration: Bringing the Housing Finance System Out of a Chaotic Situation,” walks through the origins of the Federal Housing Administration and the key role it plays in the United States, with a close look at its role during the Great Recession and what it is doing to blunt the potential negative impacts of the COVID-19 pandemic. In the In Practice article, “State Moratoria Support Households Experiencing Financial Hardship,” we dive deep into actions that Minnesota and Delaware have taken to protect vulnerable renters and homeowners.

This issue of Evidence Matters is set in the context of the initial months following the global outbreak of COVID-19.

The pandemic and the federal, state, and local responses to it are constantly changing. Therefore, this issue represents a point-in-time snapshot of the state of affairs at the time of publication, and we anticipate that the needs stemming from this crisis, as well as the governmental responses to it, will shift dramatically in the coming weeks and months.

We hope this issue of Evidence Matters is a thought-provoking and timely resource for our readers as the country faces

an unprecedented crisis. Please provide feedback on any of our issues at www.huduser.gov/forums.

—Heidi Joseph, Managing Editor

The Federal Government Steps Up

HIGHLIGHTS

ture

in Times of Disruption

n The onset of the COVID-19 pandemic

fea

in spring 2020 and the subsequent

economic disruption from measures

During periods of acute financial to the current situation; and the federal taken to curtail the spread of the and economic disruption, the fed-government’s immediate and longer-

virus have had significant health and

eral government has traditionally played

term actions to help renters, homeowners,

economic impacts, including implica-

a vital role in supporting housing markets,

landlords, mortgage servicers, and end

tions for housing.

particularly through the work of the

investors keep people housed and the

n Policymakers and practitioners

Federal Housing Administration (FHA)

mortgage finance system functioning

have drawn on lessons from past

and Ginnie Mae, along with the Federal

smoothly.

episodes of economic disruption,

Reserve and the government-sponsored

including the Great Recession and

enterprises (GSEs) the Federal National

A Distinct Disruption

natural disasters, to respond to

Mortgage Association (“Fannie Mae”)

The actions many state and local gov-

current housing-related challenges.

and the Federal Home Loan Mortgage

ernments took to control the spread

n The economy and housing market

Corporation (“Freddie Mac”). The onset

of the novel coronavirus — issuing

entered the pandemic in strong posi-

of the novel coronavirus pandemic in

stay-at-home orders, closing nonessen-

tions, and federal interventions to

early 2020 and state and local govern-

tial businesses, and restricting public

supplement income for those unem-

ployed and underemployed by the

ment efforts to address the subsequent

gatherings — led to a precipitous rise

pandemic, prevent evictions and

public health emergency have created

in unemployment. The seasonally ad-

foreclosures, fund various forms of

significant economic uncertainty. This

justed official unemployment rate rose

housing assistance, and provide liquid-

article explores the effects of current

from 4.7 percent in March 2020 to 14.7

ity to financial markets have largely

economic conditions on housing; lessons

percent the following month; by May,

kept people housed and kept the hous-

learned from the federal response to

the rate was 13.3 percent compared

ing finance system functioning well.

the Great Recession that can be applied

with 3.6 percent one year prior. The

3

in public housing, $12,500 for voucher

recipients, and $11,160 for tenants in

privately owned multifamily units com-

pared with $36,100 for all renters.4

Immediate Relief Actions

Given the magnitude and urgency of

the nation’s economic need, President

Trump signed the CARES Act into law

in March 2020. The CARES Act supple-

mented unemployment benefits with

an extra $600 per month through July

31, 2020, and authorized other forms

of assistance to help individuals cover

their housing bills, including an exten-

sion of state unemployment insurance,

unemployment insurance for workers

U.S. Department of Housing and Urban Development

not typically eligible, Economic Impact

Public housing residents who have had a decrease in income can arrange for an income recertification as soon Payments of up to $1,200 per adult

as possible to potentially prompt rent reduction or a hardship exemption.

earning less than $99,000 per year and

$500 per child under 17 years old, and

total unemployed, as well as all per-

2.1 million individuals receiving un-

the Paycheck Protection Program to

sons marginally attached to the labor

employment insurance benefits.2 As of

help small businesses continue to

force and those employed part time for

August 29, 2020, the United States had

pay their employees.5 These efforts,

economic reasons as a percent of the

29.8 million individuals receiving un-

targeted to different groups through

civilian labor force plus those margin-

employment insurance benefits — 13.3

different means, offered a temporary

ally attached to the labor force was 21.2

million with regular state unemploy-

boost to income that has helped many

percent in May 2020 compared with 7.2

ment and 14.5 million covered by the

households stave off more dire econom-

percent one year prior; this figure had

Coronavirus Aid, Relief, and Economic ic fallout from the pandemic. After the

rebounded to 14.2 percent by August

Security (CARES) Act Pandemic Unem-

supplemental unemployment insurance

2020.1 The surge in pandemic-related

ployment Assistance.3

payments authorized by the CARES

unemployment, coupled with ongoing

Act expired, the Federal Emergency

marginal attachment to the labor force

Many renters and homeowners are

Management Agency began using its

for some workers, leaves millions in

ill-prepared to weather any kind of

Disaster Relief Fund in conjunction

danger of being unable to pay for basic

financial shock, particularly a prolonged

with state allocations from the Corona-

needs such as housing. These missed

one. In a 2019 survey, 63 percent of

virus Relief Fund to assist unemployed

payments are often the first domino to

respondents reported that they could

workers.6

fall, triggering a cascade of financial

cover a hypothetical $400 emergency

stressors on other components of the

expense using exclusively cash, savings,

The CARES Act also included provi-

system. For example, a missed rent

or a credit card they could pay off at

sions aimed specifically at relief for

payment puts pressure on a landlord,

the next statement; nearly 3 in 10 re-

housing expenses. Drawing on previous

who might be making payments to

spondents, however, were either unable

federal experience with housing relief

a mortgage servicer; the mortgage

to pay their household’s monthly bills

in response to natural disasters, the

servicer, in turn, then owes payments

or reported that a modest financial set-

act requires that mortgage servicers

(or advances) to investors in mortgage-

back would leave them unable to fully

of federally backed loans — those

backed securities. Missed payments

cover their bills. In addition, whereas

made, insured, or guaranteed by FHA,

at any of these points may also pres-

53 percent of respondents reported

the U.S. Department of Veterans Affairs

sure insurance funds and guarantors.

having set aside savings for emergency

(VA), or the U.S. Department of Agricul-

Unemployment insurance can mitigate

or “rainy day” use, only 18 percent

ture (USDA), as well as those purchased

the financial blow of losing a job, allow-

reported having enough money saved

or securitized by Fannie Mae or Freddie

ing renters and borrowers to continue

to cover three months of household

Mac — offer forbearance for up to six

making payments and keeping the sys-

expenses. HUD-assisted renters are

months, plus an additional six months

tem stable, and unemployment claims

especially unlikely to have sufficient

if requested by borrowers with a finan-

escalated precipitously in the spring.

savings; in 2017, median annual house-

cial hardship caused by the COVID-19

On February 22, 2020, there had been

hold incomes were $10,800 for tenants

National Emergency that makes them

4

unable to pay their mortgage.7 Servicers

senior industry fellow at Harvard’s Joint

waterfall that reduces barriers to keep-

cannot charge additional interest,

Center for Housing Studies, notes that

ing borrowers in their homes.15

fees, or penalties beyond what would

there is a kind of overlap in the forbear-

have been charged if the borrower

ance and income assistance components

As a group, renters earn lower incomes

had made all payments on time and in

of the CARES Act. In essence, the extra

than homeowners and are more likely

full. Borrowers may attest to their own

income authorized by the Act should

to be affected by pandemic-related un-

hardship.8

be helping borrowers to pay their mort-

employment. To help renters, the relief

gages and avoid forbearance, which likely targeted to homeowners is also avail-

As of September 15, 2020, 1,365,000

contributes to the latter’s lower-than-

able to landlords renting out one- to

FHA- and VA-insured mortgage loans

expected takeup rate.13

four-unit properties that are financed

(11.3% of the total) and 1,361,000

by Freddie and Fannie, which accounts

loans backed by Fannie Mae and Freddie

FHA also implemented the COVID-19

for approximately one-third of the

Mac (4.9% of the total) were in forbear-

National Emergency Partial Claim,

nation’s rental units. The CARES Act

ance. Overall, 3,692,000 loans were

an option servicers can use after the

also provides relief for holders of FHA

in forbearance as of September 15,

COVID-19 forbearance period ends.

multifamily mortgages.16 For borrowers

2020.9 Many borrowers have requested

This partial claim will help eligible

holding FHA-insured multifamily mort-

forbearance but have continued to pay;

homeowners who have been granted

gages or participating in other HUD

46 percent of borrowers in forbear-

special COVID-19 National Emergency

multifamily housing programs who

ance made April payments. As of May

forbearance to reinstate their loans by

are experiencing financial hardships

19, 2020, however, only 21 percent

authorizing servicers to advance funds

because of COVID-19, servicers must

had made May payments.10 By July, 26

on the homeowners’ behalf. The partial

grant up to 90 days of forbearance

percent of borrowers who had entered

claim defers the repayment of those

when borrowers request assistance.17

COVID-19 related forbearance were

advances through an interest-free

In addition, the CARES Act requires

current on their mortgage payments.11

subordinate mortgage that borrowers

owners or agents of these properties to

Black Knight’s report on September 8,

do not have to repay until their first

cease evicting tenants for nonpayment

2020, estimated a combined monthly

mortgage is paid in full.14 For borrowers

of rent for 120 days, and landlords

advance on principal, interest, taxes,

who are affected by COVID-19 but are

cannot charge late fees or penalties for

and insurance of $6.3 billion on ac-

ineligible for the partial claim, FHA

late payments. Tenants remain respon-

tive forbearance plans.12 Don Layton,

developed a streamlined loss mitigation

sible for paying rent for this period in

In July, HUD announced the “Eviction Protection and Stability Toolkit” to curate resources aimed at keeping families stably housed and mitigating economic hardships caused by the COVID-19 pandemic.

5

governments to “prevent, prepare for,

and respond to coronavirus, among

individuals and families who are homeless

or receiving homeless assistance and to

support additional homeless assistance

and homelessness prevention activities to

mitigate the impacts created by corona-

virus,” with the flexibility to extend

assistance to individuals earning up to 50

percent of the area median income.26

Localities can use these grants for

activities such as operating emergency

shelters, issuing vouchers for hotel or

motel stays, providing essential services

to people experiencing homelessness,

and rehousing individuals experiencing

homelessness.27

U.S. Department of Housing and Urban Development

The CARES Act provided forbearance to owners of FHA-insured multifamily properties.

The U.S. Department of the Treasury

and Federal Reserve have also acted to

full.18 FHA has extended its foreclosure

which provides documents and resources

bolster liquidity in markets, including

and eviction moratorium for single-

from HUD, FHFA, and the Consumer

mortgage markets, by expanding lend-

family homes through December 31,

Financial Protection Bureau that en-

ing programs to support businesses and

2020, and FHA and the Federal Housing

courage engagement between tenants

banks’ business lending, increasing the

Finance Agency (FHFA) have extended

holding housing choice vouchers and

purchase of corporate debt, and lend-

their moratoria on foreclosures on

their landlords before the moratorium

ing to boost the circulation of dollars,

federally backed single-family mort-

expires, assist with establishing repay-

among various other efforts to support

gages through the same period.19 The

ment agreements, and help landlords

the economy.28 The CARES Act also

Federal Reserve Bank of Atlanta esti-

receive mortgage relief with the aim of

allocated $150 billion to fund the Trea-

mates that the CARES Act moratorium

keeping families stably housed and miti-

sury’s Coronavirus Relief Fund (CRF).

covers between 28.1 percent and 45.6

gating the economic hardships that the

Local governments can use these funds

percent of rental units.20 With broader

COVID-19 pandemic has caused.23

for various purposes, including hous-

coverage effective September 4, 2020,

ing assistance.29 For example, Collin

the Centers for Disease Control and

Local governments can use Community

County, Texas, has designated $30 mil-

Prevention (CDC) and the U.S. Depart-

Development Block Grant (CDBG)

lion in CRF funds to the Collin Cares

ment of Health and Human Services

program funds to “prevent, prepare

Assistance Program, which provides

issued an order under the Public

for, and respond to coronavirus.”24 The

households financially impacted by

Health Service Act that temporarily

CARES Act made a total of $5 billion

COVID-19 with 3 months of financial

halts residential evictions to prevent

available, with $2 billion allocated

assistance, of up to $2,500 per month,

the spread of COVID-19. Tenants,

under the regular CDBG formula and

for housing, utility, and nutrition

lessees, and residents covered by the

an additional allocation of $1 billion to

costs.30 In March 2020, the Federal Re-

order must declare under penalty of

states based on factors such as public

serve pledged to purchase at least $500

perjury that, despite their best efforts,

health needs, the risk of coronavirus

billion in Treasury securities and $200

they are unable to pay their rent in full

transmission, the number of coronavirus

billion in mortgage-backed securities.31

because of a loss of employment or

cases compared with the national aver-

Ginnie Mae created a special COVID-19

income or extraordinary out-of-pocket

age, and economic and housing market

Pass-Through Assistance Program as a

medical expenses.21 Renters receiving

disruptions, among others. The remain-

last-resort resource to help issuers meet

HUD-funded assistance who have lost

ing $2 billion, less $10 million designated

their pass-through principal and inter-

income can arrange an income recer-

for technical assistance, has been al-

est obligations to end investors through

tification as soon as possible to receive

located to state and local governments

advances.32 As participants in the Ginnie

a possible rent reduction or hardship

according to similar factors.25

Mae program, issuers are required to

exemption.22

pass through principal and interest on

The CARES Act also provided an

time and in full to investors regard-

In July 2020, HUD announced the Evic-

additional $4 billion in funding for

less of whether homeowners pay their

tion Protection and Stability Toolkit,

Emergency Solutions Grants to local

monthly mortgage installments.

6

Through the summer of 2020, with the

to their current rent bills. As certain sec-

GSE, FHA, USDA, and VA-backed loans

help of these interventions, no surge in

tors of the economy recover, decreasing

who resume monthly payments will be

evictions or foreclosures has occurred,

unemployment may lessen this burden.

able to repay missed payments when the

and the mortgage market possessed suf-

As eviction proceedings resume, rent-

home is sold or refinanced or when the

ficient liquidity to protect institutions

ers risk being forced from their homes

loan reaches maturity, but borrowers

and keep the housing finance system

and assuming numerous associated

with mortgages that are not federally

viable. In fact, as of August 2020, HUD

costs, including increased health risks,

backed might not have that option.35

reported that “housing market activity

difficulty securing new housing, and

Because interest rates currently are

began to rebound as buyers took advan-

moving costs. If tenants are unable to

low, which can offer borrowers some

tage of record-low mortgage rates and

pay rent for an extended period or if

relief, FHFA and FHA have also tailored

the economy reopened more broadly,”

units remain vacant, landlords with-

eligibility for purchases and no-cash

with purchases of new and existing

out sufficient reserves and who have

out refinances, allowing some borrow-

single-family homes at their strongest

no forbearance coverage of their own

ers coming out of forbearance to apply

pace since December 2006 and con-

may be unable to pay their mortgages,

for lower interest rates after only three

struction of new single-family homes

taxes, insurance, and maintenance ex-

months of resumed payments.36 In addi-

increasing 7.4 percent over the previ-

penses. Under these conditions, some

tion to potentially ongoing employment

ous year.33 Most of these interventions,

landlords may be forced to sell their

and income challenges, however, lender

however, are temporary, and although

properties.

overlays are shrinking the credit box,

the economy shows signs of improve-

and some borrowers may find refinanc-

ment — for example, unemployment

Similarly, homeowners may also have

ing difficult.

rates have decreased — the pandemic

difficulty resuming mortgage payments

persists, and a number of housing-

and making up for payments deferred

Because most of the federal initiatives

related challenges remain or are likely

during forbearance. Borrowers with

described above prohibit requiring

to emerge in the future.

Emerging and Future

Challenges

Many of the temporary measures initi-

ated at the beginning of the pandemic

have expired, although some have

been extended. For example, FHA and

FHFA have extended their moratoria

on foreclosures and evictions that,

along with the CDC order, are in effect

through the end of 2020; in addition,

federal agencies have been directed to

use their powers and available funds

to minimize evictions.34 The extension

or expiration of temporary measures

along with other variables, such as

the pace of recovery and associated

changes in employment rates, new or

extended income supports, and the

impacts of the novel coronavirus and

efforts to contain it, will shape the

scope and scale of future housing-related

challenges at each stage of the housing

provision and financing system.

Many renters have been helped through

these income supports, eviction mora-

toria, and supports for their landlords.

As these supports expire or are exhaust-

ed, however, many may have difficulty

Photo courtesy of Premier Senior Living

The safe, stable, and affordable housing supported by federal programs such as FHA’s multifamily housing paying off deferred rent in addition

programs helps individuals shelter at home, maintain social distancing, and quarantine when needed.

7

The CARES Act provided an additional $4 billion in funding for Emergency Solutions Grants to local governments to mitigate the impact of the novel coronavirus for individuals experiencing homelessness.

renters and borrowers to document

if borrowers cannot pay. Even if their

obligations thanks to a combination

their hardship (the CDC order requires

borrowers are getting forbearance,

of lower-than-expected forbearance

a signed affidavit), it is possible that

servicers are still obligated to pay end

takeup, cash flow from refinancing

people have received assistance that

investors, potentially creating a liquidity

prepayments and revenue as borrowers

they did not need. That many borrowers

crunch for the servicers that could bank-

took advantage of low interest rates,

receiving forbearance have continued

rupt them and ultimately hurt borrowers

and reduced borrowing costs for the

to make payments indicates that they

and tenants.38 The aftermath of the Great

servicers themselves.42 If the situation

may have requested forbearance out

Recession saw an increase in nonbank

worsens considerably as emergency

of an expectation or possibility of need

servicers, which may be more suscep-

measures expire and the economic ef-

but have been able to continue mak-

tible to liquidity pressures because

fects of the pandemic continue, however,

ing payments for now. Layton believes,

they tend to have fewer reserves, less

claims on mortgage insurance funds and

based upon observing how borrowers

borrowing ability (from the Federal Re-

guarantors may increase, eroding and

behaved after 2008 and in various disas-

serve), and higher borrowing costs than

perhaps surpassing revenue and re-

ters, that the vast majority of borrowers

do banks.39 FHFA is alleviating some

serves. John Weicher, Hudson Institute

want to pay their mortgage obligations

of this pressure by capping servicers’

senior fellow and director of the Center

on time, and that very few are “games

responsibility to four months and giving

for Housing and Financial Markets, sug-

players” who are trying to take advan-

GSEs expanded authority to purchase

gests that if this scenario occurs, there

tage of a situation. Overall, he believes,

loans in forbearance.40 As of early June

needs to be “forgiveness all around”

the populace is acting responsibly thus

2020, FHFA Director Mark Calabria

— that the FHA Mutual Mortgage

far.37 However, borrowers who have

reports that even if forbearance rates

Insurance (MMI) Fund, for example,

started forbearance but do not yet need

increased dramatically to 15 percent

should be allowed to use its reserves,

it face a potential self-inflicted problem:

(which FHFA does not project), thereby

and beyond those reserves, which were

they could exhaust their eligibility,

increasing advance obligations to $1.2

designed to address a smaller-scale

leaving themselves with no recourse for

billion, nonbank mortgage servicers

shock, should exercise its permanent

forbearance if they experience a future

of GSE loans would have sufficient

and indefinite line of credit from the

financial hardship.

capital.41 American Enterprise Institute

U.S. Department of the Treasury to

resident fellow Ed Pinto notes that as of

weather the pandemic.43 Pinto offers a

Mortgage lenders and mortgage servicers

early August 2020, mortgage servicers

different suggestion, saying that the

also may face financial consequences

had thus far been able to meet their

shock exposes the excessive risk carried

8

in FHA loans and the need to reduce

fire departments, parks, and local police

The current economic disruption also

that risk by lowering debt-to-income

departments; landlords increasing rents

differs significantly from the Great

ratios, shortening mortgage terms (from

or security deposits to recoup lost revenue

Recession in that it did not emerge

30 years to 20 years to pay off a greater

and out of fear of future moratoria; and

from the housing or housing finance

share of the principal at the beginning

a reduction in the number of affordable

markets; however, relevant lessons from

of the loan), and making only purchase housing units constructed. Joel Griffith, the response to the recession as well loans.44 Fortunately, the MMI Fund is in

a research fellow at the Heritage Foun-

as other disruptions, such as natural

its best position in more than a decade

dation, writes, “Those efforts represent

disasters, could still be applied today.

to withstand a shock, with a capital ratio

an abdication of core government

The experiences, institutional ar-

of 4.84 percent, well above the congres-

responsibilities; namely, enforcement

rangements, and relationships forged

sionally mandated 2 percent.45

of private contracts and protection of

during and after the Great Recession

private property. Forcing property own-

are already informing institutional

Continuing eviction moratoria, for-

ers to provide free housing is a subtle

responses to the pandemic-induced

bearance, and other uncertainties and

form of expropriation of private property

disruption. Frank Vetrano, senior advi-

instabilities in housing markets may dis-

without just compensation.”49 Efforts to

sor at HUD, notes that experience with

suade investors from housing finance,

supplement income or provide rental

loss mitigation during the recession,

but federal government actions such as

assistance to help residents affected by

even if not directly applicable to cur-

committing to backstop the MMI Fund

the pandemic pay their rent may there-

rent circumstances, allows policymakers

or to tying the expiration of eviction

fore be the preferred way to keep people

and industry stakeholders to craft

moratoria to the federal pandemic

in their homes, reducing evictions while

responses using a toolbox rather than

emergency declaration, for instance,

compensating landlords.

starting from a blank slate.52 Karen

can provide investors with greater

Hoskins, vice president of national

certainty.46 Layton says that, for rent-

Among the additional ongoing chal-

homeownership programs and lending

ers, “if eviction moratoria are handled

lenges for policymakers, researchers,

at NeighborWorks America, says that

reasonably well in terms of being there

and industry stakeholders are the data

there are now established relationships

during the pandemic crisis but ending

limitations associated with a fast-moving

between housing counselors and lend-

in a reasonable manner, then I don’t

financial disruption. The difficulty of

ers formed during and after the 2008

believe it would have some permanent

acquiring reliable data exacerbates a

financial crisis to help homeowners.53

negative impact on the rental housing

situation that is already considerably un-

market. But if it is not ended reason-

certain. For example, uncertainty about

The current disruption, rooted in often-

ably — perhaps too early on one hand

the servicing costs of new loans and

abrupt, pandemic-related employment

or lasting well past the official end of

liquidity pressures may cause credit stan-

and income loss in what was otherwise

the pandemic national emergency on

dards to tighten. Evidence exists that

a strong economy, resembles in many

the other, then it could become very

the economic impacts to date have led

ways the aftermath of a natural disaster.

problematic.”47 The long-term impact

lenders to add overlays beyond previ-

Accordingly, FHA, VA, USDA, and

of FHFA’s pandemic-related policies

ous lending standards, making it harder

FHFA have modeled their implementa-

on the GSEs, including their capital re-

for borrowers with lower credit scores,

tion of forbearance policies on their

serves, is still unclear. Both Fannie Mae

for example, to qualify for purchases or

responses to the hurricanes of 2017.

and Freddie Mac have hired financial

refinance loans.50 (For more about this

However, although the pandemic and

advisors as they examine the possibility

emerging challenge and responses, see

the hurricanes are similar in that their

of exiting conservatorship.48

“The Federal Housing Administration:

onset was sudden, the hurricane model

Bringing the Housing Finance System

assumes that the period of increased

Some claim that the state and local evic-

out of a Chaotic Situation,” p.12.)

unemployment is relatively brief and

tion moratoria are unnecessary, do not

that prestorm employment and income

consider the existence of temporary

Lessons From Past

levels are soon restored, says Vetrano.

federal relief programs, and introduce

Disruptions

The period of high unemployment lev-

long-term unintended consequences.

Weicher stresses that the current health

els triggered by the pandemic is already

Some of these unintended consequences

and economic circumstances are truly

longer than that following a typical

may include landlords delaying mainte-

unprecedented. Certain aspects of the

natural disaster. Moreover, in the case

nance and upgrades to their properties

pandemic are similar to those of the

of the pandemic, workers in certain

because of a lack of cash flow; delayed

1918 influenza epidemic, and some

industry sectors may be less likely to be

mortgage payments that negatively

aspects resemble those of the Great

able to return to their previous jobs,

impact the owners of those mortgages;

Depression, but today’s institutional

and they may remain unemployed or be

landlords postponing the property tax

and financial frameworks are dramati-

underemployed when their forbearance

payments needed to fund local schools,

cally different from what existed then.51 ends.54 If renters and borrowers are

9

unable to pay their bills beyond forbear-

terms of credit quality, market shares,

points in the probability of default at 48

ance, the risks of widespread foreclosure

and other factors, differ from those

months after the start of assistance. The

and eviction will persist, and problems

during and immediately after the Great

effect was not driven by reduced mort-

similar to those of the Great Recession

Recession in significant ways that would

gage balance, and the effect is larger

could develop. In that case, renters and

affect the applicability and impact of

for those who were underwater when

borrowers as well as mortgage lenders

such interventions today.

assistance began.59 Studies by Agarwal

and servicers may need protections

et al., Ganong and Noel, Hembre, and

and assistance. Consumer protection

Lessons can also be drawn from Great

Scharlemann and Shore support the

regulations established following the

Recession programs aimed at help-

conclusion that increased liquidity

Great Recession should prevent the

ing borrowers who have defaulted

from a loan modification in the pres-

problematic practices that emerged

or are at risk of defaulting on their

ent is more helpful to borrowers than

during the foreclosure crisis in the late

mortgages. After examining various

decreased debt burden in the long

2000s. The liquidity issues that nonbank

interventions during the Great Reces-

run.60 The Hardest Hit Fund did not

mortgage companies (both origination

sion, McCoy concludes that, whenever

reach borrowers as quickly as expected,

and servicing) experienced during the

possible, lenders should modify loan

particularly in Florida. There, the Office

Great Recession, which led to failures

terms to lower monthly payments.

of the Special Inspector General for

and requests for aid, suggest that these

Earlier interventions showed greater

the Troubled Asset Relief Program finds

companies may need continued sup-

success in preventing redefault, sug-

that insufficient comprehensive plan-

port if defaults increase or the credit

gesting that lenders should not delay

ning and oversight and a lack of targets

that they rely on to originate mortgages

in implementing modifications. McCoy

slowed implementation — conclusions

tightens precipitously. Nonbank mort-

also notes that keeping homeowners

that could be relevant for policymakers.61

gage companies originate and service a

in their homes whenever possible,

large share of the loans guaranteed by

or at least keeping homes occupied,

Conclusion

FHA and VA and securitized in pools

can help avoid foreclosures and the

The U.S. economy and housing mar-

guaranteed by Ginnie Mae.55

problems associated with vacancy and

kets were in strong positions entering

excess inventory. Research shows that

the pandemic. This strong foundation,

Evidence indicates that federal guar-

participation in the Home Affordable

along with federal interventions such as

antees played an important role in

Modification Program (HAMP) lowered

income supplementation, protections

helping stakeholders weather the Great

redefault rates, but the program made

for renters and borrowers, purchases to

Recession. Passmore and Sherlund

fewer modifications than expected.

promote liquidity, and grants to local

find that counties with higher partici-

Through paid subsidies to incentivize

governments, have been essential for

pation rates in government mortgage

modifications, HAMP lowered borrow-

keeping people in their homes and

programs — in particular, higher levels

ers’ monthly payments to 31 percent of

keeping the housing finance system

of FHA participation — experience

gross monthly income for five years by

functioning well. Many of these inter-

better economic outcomes than do

lowering interest rates and, if necessary,

ventions have been temporary and

counties more reliant on bank port-

extending the loan term or forbearing

are currently or nearly exhausted or

folio and private-label security loans,

or forgiving loan principal.57 Agarwal

expired. Additional interventions and

including smaller increases in unem-

et al. find that the shortfall in modifica-

policies may be needed to continue to

ployment, smaller declines in purchase

tions resulted largely from low rates

meet these goals. Although the pan-

originations, and smaller increases in

of modifications from a few large

demic and its related economic distress

mortgage delinquency. Not only were

intermediaries for reasons specific to

are in many ways unprecedented, poli-

the government-backed loans issued in

those entities.58 There are, however,

cymakers can draw from past experiences

the runup to the crisis of higher credit

consequences associated with modifica-

— in particular, federal responses to

quality than those backed by private-

tions for borrowers, including negative

natural disasters and the Great Reces-

label securities (although these would

impacts on credit. If modifications

sion — to inform future policies.

have the strictest credit standards after

reach a high volume, they can affect the

the crisis), they also remained avail-

cost of credit for borrowers broadly.

1 U.S. Bureau of Labor Statistics. “Table A-15.

able throughout the recession, whereas

Alternative measures of labor underutilization,” Updated

5 June 2020. Accessed 29 June 2020; U.S. Bureau of

private-label securitized loans largely

Hardest Hit Fund programs were also

Labor Statistics. “Table A-15. Alternative measures of

disappeared. Passmore and Sherlund

used during the Great Recession to

labor underutilization,” Updated 4 September 2020.

Accessed 9 September 2020.

therefore conclude that government-

aid distressed borrowers. A study by

2 U.S. Department of Labor. “Unemployment Insurance

backed securitization provides vital

Moulton et al. finds that temporary

Weekly Claims Data,” 12 March 2020. Accessed 23

liquidity for “maintaining credit flows

mortgage payment assistance through

September 2020.

3

and economic growth during financial

the Hardest Hit Fund was associated

U.S. Department of Labor. “Unemployment Insurance

Weekly Claims Data,” 17 September 2020. Accessed 23

turmoil.”56 Present circumstances, in

with a reduction of 28 percentage

September 2020.

10

4 Sara Canilang, Cassandra Duchan, Kimberly Kreiss,

Coverage and the Need for Better Data,” Federal

Servicers were on the hook for as long as a year’s

Jeff Larrimore, Ellen Merry, Erin Troland, and Mike

Reserve Bank of Atlanta website (www.frbatlanta.org/

worth of payments on mortgages on forbearance. That

Zabek. 2020. “Report on the Economic Well-Being

community-development/publications/partners-up-

has been capped at four months.” Wall Street Journal,

of U.S. Households in 2019, Featuring Supplemental

date/2020/covid-19-publications/200616-housing-poli-

21 April; Federal Housing Finance Agency. 2020. “FHFA

Data from April 2020,” Board of Governors of the

cy-impact-federal-eviction-protection-coverage-and-the-

Announces Refinance and Home Purchase Eligibility for

Federal Reserve System, 20–1; Frederick J. Eggers,

need-for-better-data.aspx). Accessed 9 September 2020.

Borrowers in Forbearance,” 19 May press release.

Econometrica, Inc., and SP Group LLC. 2020. “Charac-

21 U.S. Department of Health and Human Services and

41 Mark Calabria. 2020. “Statement of Dr. Mark A. Cal-

teristics of HUD-Assisted Renters and Their Units in

Centers for Disease Control and Prevention. 2020.

abria, FHFA Director, Before the U.S. Senate Commit-

2017,” Prepared for U.S. Department of Housing and

“Temporary Halt in Residential Evictions to Prevent

tee on Banking, Housing, and Urban Affairs, ” 9 June.

Urban Development, Office of Policy Development

the Further Spread of COVID-19,” Federal Register: and Research, 24.

42 Interview with Ed Pinto, 3 August 2020.

85:173, 55292, 55297.

5 “Unemployment Insurance Provisions in the Coronavirus

43 Interview with John Weicher, 7 July 2020.

22 U.S. Department of Housing and Urban Develop-

Aid, Relief, and Economic Security (CARES) Act,”

44

ment. 2020. “Addressing Tenant Concerns During the

Interview with Ed Pinto.

National Employment Law Project website (www.nelp.

COVID-19 National Emergency,” 1–2.

45 U.S. Department of Housing and Urban Develop-

org/publication/unemployment-insurance-provisions-

23

ment. 2019. “FHA Releases 2019 Annual Report to

coronavirus-aid-relief-economic-security-cares-act/).

U.S. Department of Housing and Urban Development.

Congress,” 14 November press release.

Accessed 30 June 2020; “The CARES Act Provides

2020. “HUD Provides Eviction Prevention and Stability

46

Assistance to Workers and their Families,” U.S. Depart-

Toolkit in Latest COVID-19 Response Effort,” 8 July Interview with John Weicher.

ment of the Treasury website (home.treasury.gov/

press release.

47 Interview with Don Layton.

policy-issues/cares/assistance-for-american-workers-

24 U.S. Department of Housing and Urban Develop-

48 Fannie Mae. 2020. “Fannie Mae Hires Financial Advi-

and-families). Accessed 30 June 2020; “The CARES Act

ment. 2020. “Notice of Program Rules, Waivers, and

sor, ” 15 June press release; Freddie Mac. 2020. “Freddie

Provides Assistance to Small Businesses,” U.S. Depart-

Alternative Requirements Under the CARES Act for

Mac Announces J.P. Morgan as Financial Advisor, ” 15

ment of the Treasury website (home.treasury.gov/

Community Development Block Grant Program Coro-

June press release.

policy-issues/cares/assistance-for-small-businesses).

navirus Response Grants, Fiscal Year 2019 and 2020

49 Joel Griffith. 2020. “Why COVID-19 Eviction Mora-

Accessed 30 June 2020.

Community Development Block Grants, and for Other

toriums are Unnecessary, Unfair, and Economically

6 Executive Office of the White House. 2020. “Memo-

Formula Programs, ” 5–7.

Harmful,” The Heritage Foundation.

randum on Authorizing the Other Needs Assistance

25 U.S. Department of Housing and Urban Development.

50

Program for Major Disaster Declarations Related to

Michael Neal and Laurie Goodman. 2020. “The

2020. “CPD Program Formula Allocations and CARES

Coronavirus Disease 2019,” 8 August.

Pandemic Is Shrinking the Mortgage Credit Box,”

Act Supplemental Funding for FY 2020.”

UrbanWire.

7 Interview with Don Layton, 6 July 2020; U.S. Department

26 U.S. Department of Housing and Urban Development.

51

of Housing and Urban Development. 2020. “HUD

Interview with John Weicher.

2020. “CARES Act Emergency Solutions Grant (ESG)

Issues New CARES Act Mortgage Payment Relief for

Round 2 Funding under COVID-19 Supplemental Ap-

52 Interview with Frank Vetrano, 17 July 2020.

FHA Single Family Homeowners,” 1 April press release;

propriations”; U.S. Department of Housing and Urban 53 Karen Hoskins. 2020. “Lessons from the 2008 Crisis:

Consumer Financial Protection Bureau. 2020.

Development. 2020. “Flexibilities/Waivers Granted by

COVID-19 Response and Recovery,” NCRC webinar,

“CARES Act Forbearance & Foreclosure.”

the CARES Act + Mega Waiver and Guidance,” 11.

30 June.

8 Consumer Financial Protection Bureau.

27 U.S. Department of Housing and Urban Development.

54 Interview with Frank Vetrano.

9 “Fourth Consecutive Week of Forbearance Improve-

2020. “HUD Provides Remaining $2.96 Billion in

55 Kim et al.

ment,” Black Knight website (www.blackknightinc.

CARES Act Funding for Homeless Populations Amid

56

com/blog-posts/fourth-consecutive-week-of-forbear-

Coronavirus Recovery,” 9 June press release.

Wayne Passmore and Shane M. Sherlund. 2016. “FHA,

ance-improvement/). Accessed 18 September 2020.

Fannie Mae, Freddie Mac, and the Great Recession,”

28 Interview with Don Layton.

Finance and Economics Discussion Series 2016-031,

10 “Nearly Half of Homeowners in Forbearance Made

29 U.S. Department of the Treasury. 2020. “The CARES

Washington DC: Board of Governors of the Federal

April Mortgage Payments,” Black Knight website

Act Provides Assistance for State, Local, and Tribal

Reserve System, 1, 5, 21–2.

(blackknightinc.com/blog-posts/nearly-half-of-

Governments.”

57

homeowners-in-forbearance-made-april-mortgage-

Patricia A. McCoy. 2013. “The Home Mortgage

30

payments/). Accessed 2 July 2020; “Fourth Consecutive

“County Responses to the COVID-19 Pandemic,” Na-

Foreclosure Crisis: Lessons Learned, ” Joint Center for Week of Forbearance Improvement,” Black Knight

tional Association of Counties website (www.naco.org/

Housing Studies of Harvard University.

website.

covid19/crf). Accessed 9 September 2020.

58 Sumit Agarwal, Gene Amromin, Itzhak Ben-David,

31

11 Black Knight. 2020. “Mortgage Monitor: July 2020

Julia-Ambra Verlaine and Tristan Wyatt. 2020. “Sizing

Souphala Chomsisengphet, Tomasz Piskorski, and

Report, ” 10.

Up the Fed’s Historic Coronavirus Crisis Intervention;

Amit Seru. 2017. “Policy intervention in debt renego-

While market strain triggered by pandemic has eased,

12 “1.7M Forbearance Plans Set to Expire in September,”

tiation: Evidence from the Home Affordable Modi-

stresses remain,” Wall Street Journal, 9 April.

Black Knight website (www.blackknightinc.com/blog-

fication Program,” Journal of Political Economy 125:3,

32

posts/1-7m-forbearance-plans-set-to-expire-in-septem-

Ginnie Mae. 2020. “Pass-Through Assistance Program

654–712; Stephanie Moulton, Yung Chun, Stephanie

ber/). Accessed 18 September 2020.

Related to COVID-19 (PTAP/C19): Frequently Asked

Pierce, Holly Holtzen, Roberto Quercia, and Sarah

Questions.”

Riley. 2020. “Does Temporary Mortgage Assistance

13 Interview with Don Layton.

33 U.S. Department of Housing and Urban Development.

for Unemployed Homeowners Reduce Longer Term

14 U.S. Department of Housing and Urban Development.

2020. “Housing Market Indicators Monthly Update, ” 1.

Mortgage Default? An Analysis of the Hardest Hit

2020. “HUD Issues New CARES Act Mortgage Pay-

Fund Program.”

ment Relief for FHA Single Family Homeowners.”

34 Executive Office of the White House. 2020. “Executive

Order on Fighting the Spread of COVID-19 by Provid-

59 Moulton et al.

15 U.S. Department of Housing and Urban Development.

ing Assistance to Renters and Homeowners,” 8 August.

60 Sumit Agarwal, Gene Amromin, Itzhak Ben-David,

2020. “FHA Expands Home Retention Measures for

Homeowners Financially Impacted By COVID-19, ” 8

35 Federal Housing Finance Agency. 2020. “FHFA

Souphala Chomsisengphet, Tomasz Piskorski, and Amit

July press release.

Announces Payment Deferral as New Repayment

Seru. 2012. “Policy Intervention in Debt Renegotiation:

Option for Homeowners in COVID-19 Forbearance

Evidence from the Home Affordable Modification Pro-

16 Joint Center for Housing Studies of Harvard Univer-

gram, ” National Bureau of Economic Research Working sity. 2020. “America’s Rental Housing, ” 13; Interview

Plans,” 13 May press release.

Paper Series; Peter Ganong and Pascal Noel. 2018.

with Don Layton.

36 Federal Housing Finance Agency. 2020. “FHFA

“Liquidity vs. Wealth in Household Debt Obligations:

17 U.S. Department of Housing and Urban Development.

Announces Refinance and Home Purchase Eligibility

Evidence from Housing Policy in the Great Recession,”

2020. “Mortgagee Letter 2020-09: Implementation of

for Borrowers in Forbearance, ” 19 May press release.

National Bureau of Economic Research Working Paper

the Coronavirus Aid, Relief, and Economic Security

37 Interview with Don Layton.

Series; Therese C. Scharlemann and Stephen H. Shore.

(CARES) Act Forbearance.”

38 Karan Kaul. 2020. “A Liquidity Vehicle for Mortgage

2015. “The Effect of Negative Equity on Mortgage De-

18 “Resources for Renters,” U.S. Department of Housing

Servicing Is in Consumers’ Best Interest,” Urban

fault: Evidence from HAMP PRA,” Office of Financial

and Urban Development website (hud.gov/coronavi-

Institute.

Research Working Paper.

rus/renters). Accessed 2 July 2020.

39 You Suk Kim, Steven M. Laufer, Karen Pence, Richard

61 Special Inspector General for the Troubled Asset

19 U.S. Department of Housing and Urban Develop-

Stanton, and Nancy Wallace. 2018. “Liquidity Crises

Relief Program. 2015. “Factors Impacting the Ef-

ment. 2020. “FHA Extends Foreclosure and Eviction

in the Mortgage Market,” Brookings Papers on Economic

fectiveness of Hardest Hit Fund Florida, ” 1, 20; U.S.

Moratorium for Homeowners through Year End,” 27

Activity (Spring).

Government Accountability Office. 2018. “Troubled

August press release.

40 Andrew Ackerman. 2020. “Fannie, Freddie Regulator

Asset Relief Program: Monitoring of the Hardest Hit

20 “Housing Policy Impact: Federal Eviction Protection

Moves to Ease Cash Crunch at Mortgage Servicers;

Fund Program Could Be Strengthened.”

11

The Federal Housing Administration: HIGHLIGHTS

Bringing the Housing Finance

n Created in 1934 under the National

Housing Act, the Federal Housing

System Out of a Chaotic Situation

spotlight

Administration expands homeownership

by providing millions of homeowners

ch

underserved by the conventional market

A More Economical,

with access to a stable source of home

fixed payments over the life of the loan.

Dependable, and Sounder

mortgage credit.

Long loan terms and low interest rates

resear

Source of Home Mortgage

reduced borrowers’ monthly payment

n FHA helped stimulate mortgage lending

Credit

burden. Private industry would not

during the Great Recession by boost-

ing the refinancing of conventional

participate in such a radical experi-

T

mortgages, resulting in more affordable

he United States’ current housing

ment in mortgage underwriting without

housing costs for more than 1.6 million

finance system was forged during

government support, and direct lend-

conventional borrowers between 2006

the depths of the Great Depression; it

ing would explode the federal debt.

and 2012.

was designed to stimulate private invest-

Instead, an insurance program would

n FHA’s capacity to withstand the

ment to bolster the economic recovery

“use the power of government to estab-

COVID-19 pandemic’s economic fall-

and increase employment. Before the

lish the conditions under which private

out remains strong and it has taken

1930s, mortgage borrowers typically

initiative could feed itself and multiply

several steps to ensure mortgage

made interest-only payments for three

its own benefits.”5

credit availability during the current

to five years before requiring a balloon

situation.

repayment of the principal. Borrowing

FHA’s first annual report summarized

more than half the value of the house

its mission:

often required a second loan with a

$1 for every $144 in total value of real

high interest rate.1

The mutual mortgage insurance

estate held by households, although

system as established by the National

that ratio varies over the business cycle.

These short term, interest-only loans

Housing Act aims to provide the

Since World War II, FHA’s share of

had to be refinanced frequently, which

millions of home owners in the

the mortgage market has increased by

was difficult if home prices declined

country with a more economical,

more than 5 percentage points in a

or financial institutions became dis-

dependable, and sounder source of

single year four times (in 1948, 1958,

tressed. Nominal home prices peaked

home-mortgage credit.

1970, and 2008), each time in response

in 1925 and fell 30 percent by 1933.2 By

to a recession.7 Residential investment

then, more than one in five American

It was designed to bring the home-

is a primary driver of broader economic

workers was unemployed.3 In 1933,

financing system of the country out

cycles.8 FHA’s unique position to simu-

1,000 homes entered foreclosure every

of a chaotic situation, and to restore

late mortgage lending helps ameliorate

day. The foreclosure rate exceeded

it on an improved basis, able to

recessions and jump-start economic

1 percent of all mortgages each year

meet the legitimate demands of the

recoveries.

from 1931 to 1935. At the start of 1934,

borrowing public, and to provide for

nearly 44 percent of urban, owner-

the revival of home-building activity

The National Housing Act also estab-

occupied homes with a mortgage were

which is so essential to the recovery

lished the Mutual Mortgage Insurance

in default.4

program.6

(MMI) Fund to finance FHA’s mortgage

insurance. The MMI Fund is intended

In response to the economic crisis,

FHA gradually reduced downpayment

to be self-supporting, with borrowers

Congress created the Home Owners’

requirements further and extended loan

paying premiums sufficient to cover

Loan Corporation in 1933 to purchase

terms to create the 30-year, fixed-rate,

investors’ claims if a borrower defaults.

and refinance delinquent mortgages.

self-amortizing loan that dominates

“Mutual insurance” generally refers to

The following year, the National Hous-

modern American housing finance.

an insurance company that is owned by

ing Act of 1934 created the Federal

The liberalization of mortgage prod-

its policyholders and in which profits

Housing Administration (FHA) to en-

ucts and underwriting democratized

are returned as dividends. Between

courage new home lending. These new

homeownership, which increased from

1943 and 1991, FHA returned similar

agencies allowed borrowers to finance

46 percent in 1920 to 62 percent by

“distributive shares” after a loan was

a larger share of the property value in a

1960. In addition, FHA has reprised its

repaid. FHA suspended dividends

single loan. Loans required full amor-

countercyclical role several times. Fig-

after actuarial reviews found that the

tization, meaning that the principal

ure 1 shows that FHA annually insures

MMI Fund had a negative economic

and interest would be repaid in regular

new loans worth, on average, roughly

net worth, meaning that the present

12

value of projected losses on existing

Fund’s capital reserves to cover unex-

historically has played a role in

loans exceeded the existing capital

pected losses.11 The first independent

stabilizing housing markets during

resources of the fund and the present

actuarial review of the fund posited

economic downturns. Setting a

value of projected revenue. Each book

a Great Depression-type scenario of

minimum capital requirement that

of business must have a negative credit

declining home prices and interest rates

is too high may limit FHA’s ability to

subsidy (that is, a positive economic

and an unemployment rate reaching 20

serve the borrowers for which it was

value) or require appropriations under

percent, but it notes that “we assume

intended or play its market-stabiliz-

the Federal Credit Reform Act of 1990.

that the social purpose of the Fund

ing role, because it might require

In addition, the Cranston-Gonzalez

is such that it should not be expected

FHA to charge insurance premiums

National Affordable Housing Act of 1990

to withstand such a calamity.”12 More

that many borrowers cannot afford

requires the MMI Fund to maintain a

recently, the U.S. Government Account-

or impose underwriting standards

capital ratio (defined as the economic

ability Office discussed the balance

they cannot meet.13

net worth as a share of the insurance

between risk to the fund and the mis-

in force) of at least 2 percent.9 The

sion of FHA:

Neither Congress nor FHA has explic-

net worth, and therefore the level of

itly specified the economic conditions

required capital reserves, is based on

A minimum capital requirement

the MMI Fund should be able to

the expected risk to the fund, which is a

that is too low may result in FHA

withstand.14

function of both the credit quality of in-

taking on too much risk and having

sured borrowers as well as assumptions

an insufficient capital buffer to

If losses overwhelm the MMI Fund,

about the future of the economy.10

withstand an economic downturn

FHA has “permanent indefinite

without requiring supplemental

authority” to draw funds from the

Current FHA premiums are designed

funding. On the other hand, FHA

U.S. Department of the Treasury under

to cover expected losses of 5 percent,

also has a statutory operational goal

the Federal Credit Reform Act. This

which would be incurred “during

to provide mortgage insurance to

explicit government guarantee is

normal business cycles, which would

traditionally underserved borrow-

integral to the ability of FHA to support

include mild recessions,” and an ad-

ers—such as low-income, minority,

the mortgage market; even if the MMI

ditional 1 percent that builds the MMI

and first-time home buyers—and

Fund is in the red, investors will remain

confident that the federal government

is backing FHA and that mortgage

Figure 1. Historical FHA Lending Volume

insurance claims will continue to be

paid. Lenders therefore will continue to

underwrite FHA-insured loans. Similarly,

the U.S. Department of the Treasury

explicitly backs the guarantees of the

Government National Mortgage As-

sociation (Ginnie Mae), which supports

the secondary market for mortgages

insured by FHA or other federal agen-

cies. Together, these agencies provide

liquidity to the mortgage market, boost-

ing demand for homes and forestalling

a repeat of the debt-deflation spiral of

the Great Depression.

FHA also distinguishes itself from other

entities in that it does not need to earn

a return on its capital reserves. The

Federal Housing Finance Agency notes

that the cost of holding capital, includ-

ing both the level of capital and a target

return, is “by far the most significant”

component of the guarantee fees

Sources: Federal Housing Administration, Single Family Data Warehouse; U.S. Department of Housing and Urban charged by the government-sponsored

Development. 1979. “1979 Statistical Yearbook”; U.S. Census Bureau. “Statistical Abstract of the United States: enterprises (GSEs) the Federal National

1987” (www.census.gov/library/publications/1986/compendia/statab/107ed.html). Accessed 10 September 2020; Federal Reserve, Flow of Funds, Table B.101 Balance Sheet of Households and Nonprofit Organizations.

Mortgage Association (Fannie Mae)

13

Figure 2. FHA and Conventional Price/Risk Comparison, premium and an upfront premium that

may be financed in the loan amount,

June 2020

regardless of his or her downpayment,

credit score, or debt burden. By con-

trast, the combination of risk-based

private mortgage insurance premiums

and loan-level price adjustments that

the GSEs levy varies from $60 to $600

per month. As a result, higher-risk bor-

rowers will find FHA-insured loans less

expensive than conventional mortgages.

Many higher-risk borrowers include

first-time homebuyers and minority

households that otherwise might have

difficulty accessing affordable mortgage

credit. Between 2015 and 2018, two-

thirds of loans endorsed by FHA (82%

of endorsed purchase loans) went to

first-time homebuyers, and more than

35 percent went to minority borrow-

ers. By comparison, only 20 percent of

loans acquired by GSEs (40% of pur-

chase loans) in the same period went

Note: Assumes $250,000 purchase price with a downpayment of 10 percent or less and a credit score greater than to first-time homebuyers, and roughly

or equal to 620. GSE loan-level price adjustments annualized by a factor of 5. Upfront FHA mortgage insurance premium financed in the loan amount with a 3.4 percent interest rate. Delinquency rates based on FHA books of 22 percent went to minority borrow-business from 2011 through 2015.

ers. Enabling new homebuyers to enter

the market allows existing homebuy-

Sources: Federal Housing Administration; Genworth Mortgage Insurance. 2019. “Monthly Premium MI (BPMI)-

Fixed (Effective Date: June 4, 2018)”; Fannie Mae. 2020. “Loan-Level Price Adjustment (LLPA) Matrix,” 11 June.

ers to sell and fosters greater liquidity,

and the Federal Home Loan Mortgage

Figure 3. FHA’s Countercyclical Market Share

Corporation (Freddie Mac).15 The cost

of capital can be up to 29 times greater

than the costs directly related to their

expected credit losses.16 As Bunce et

al. said, “The freedom from having to

earn a private risk-adjusted profit is

FHA’s principal cost advantage over the

[private mortgage insurers] in serving

riskier borrowers.”17

Despite its cost advantage, FHA gener-

ally complements rather than competes

with the conventional market and

private mortgage insurance companies

because FHA pools risk across borrow-

ers with minimal variation in pricing.

The conventional market, on the other

hand, typically charges higher-risk bor-

rowers more than lower-risk borrowers.

Figure 2 shows that an FHA borrower

purchasing a $250,000 house would pay

less than $200 a month in insurance

premiums, including both an annual

Sources: Federal Housing Administration, Single Family Data Warehouse; CoreLogic®, Real Estate Analytics Suite.

14

particularly in a depressed market.18 As

Figure 4. Credit Risk of FHA vs. Overall Market

HUD stated in its 2019 housing finance

reform plan, “Generally, FHA facilitates

earlier entry points into homeowner-

ship for [first-time homebuyers] than

conventional mortgage loans. This is

FHA’s most important contribution to

the American housing market.”19

The Great Recession

Many considered FHA a vestigial part of

the American housing finance system

at the start of the millennium; a New

Deal relic at a time when Wall Street

was managing risk through derivatives

and other sophisticated financial instru-

ments. In 2006, FHA helped finance

less than 4 percent of home purchases

(figure 3) and was almost entirely

absent from the nation’s hottest hous-

ing markets. For example, fewer than

2,300 FHA-insured home purchase

loans were originated in the entire state

of California in 2006, accounting for

approximately 1 in 260 home sales. But

as the housing market collapsed and

the country entered the Great Reces-

Sources: William Larson, Morris Davis, Stephen Oliner, and Benjamin Smith. 2019. “A Quarter Century of Mortgage sion, FHA’s market share spiked to a

Risk,” Working Paper 19-02, Federal Housing Finance Agency; American Enterprise Institute. “Mortgage Risk Index”

(www.aei.org/housing/mortgage-risk-index/). Accessed 10 September 2020; Urban Institute. 2020. “Housing

quarter of all home purchases. In addi-

Credit Availability Index.”

tion, FHA refinances of conventional

mortgages, including many unsustain-

able subprime loans, increased from

growth in FHA lending did not signifi-

In fact, FHA-insured loans that closed

33,000 in all of 2005 to 36,000 per month

cantly displace conventional lending,

between 2002 and 2010 were less likely

in 2009. Between 2006 and 2012, FHA

leading to an increase in overall credit

to default than privately insured loans

helped more than 1.6 million conven-

availability. The conventional market

with similar borrower and loan charac-

tional borrowers take advantage of falling

had sufficiently recovered to replace

teristics.23

interest rates to lower their housing

FHA lending when the limits expired in

costs. Moody’s Analytics estimates that

2014 and were replaced by a new statu-

Figure 4 shows that FHA did not

were it not for FHA, 2.4 million fewer

tory formula under the Housing and

experience a dramatic deterioration

homes would have been sold in 2011,

Economic Recovery Act.21

of underwriting standards during the

and sales prices would have fallen an

housing boom. By contrast, private

additional 19 percent.20

FHA’s market share is countercycli-

mortgage-backed securities and mortgage

cal primarily because its underwriting

insurance companies underestimated

FHA’s market share ballooned in part

standards are the industry’s least

and underpriced risk.24 Passmore and

because of a dramatic statutory increase

procyclical.22 Figure 4 shows three

Sherlund found that areas more reli-

in loan limits. The Economic Stimulus

measures of the average credit risk

ant on government or GSE mortgage

Act of 2008 effectively increased the

of FHA loans and the overall market

channels before the Great Recession

nationwide “floor” from $200,160 to

over time, independent of the risk

experienced smaller declines in em-

$271,050 and the high-cost area “ceiling” related to the economic environment.

ployment, automobile sales, home sales,

from $362,790 to $729,750. However,

In keeping with its public mission to

and mortgage originations as well as

base loan amounts greater than the earli-

serve marginal homebuyers, FHA loans

lower rates of mortgage delinquency.25

er limits accounted for only 15 percent

are generally higher-risk products.

As they observed, “The persistence of

of the increase in FHA lending between

This fact, however, does not mean that

better outcomes with higher pre-crisis

2006 and 2009 and only 12 percent of

FHA-insured mortgages have histori-

use of FHA/VA lending is consistent

overall FHA lending through 2013. The

cally been the riskiest loan products.

with a view that less procyclical government

15

Figure 5. Economic Value of the Mutual Mortgage Insurance Fund (Forward Loans)

Note: Adjusted using the Personal Consumption Expenditures price index.

Source: Federal Housing Administration, Annual Actuarial Reviews.

underwriting standards and credit risk

Lenders restricted FHA’s “credit box”

If FHA had been a private mortgage

pricing — backed by a securitization

by imposing overlays, such as minimum

insurance company, it would have

outlet with the full faith and credit of

credit score requirements, that further

been declared insolvent and forced

the government — can stimulate ad-

reduced losses but also limited credit

into bankruptcy. In fact, three private

ditional economic activity during and

availability beyond FHA’s stated under-

mortgage insurance companies failed

after a financial crisis.”26

writing standards.

during the Great Recession. Distressed

mortgage insurers became less likely

Figure 4 also shows that FHA did not

Despite these steps to reduce losses,

to approve insurance applications,

tighten underwriting standards as

the Great Recession took a severe toll

restricting the availability of conventional

much as the conventional market did

on the MMI Fund (figure 5). In 2019

mortgage credit.30 Private mortgage

during the Great Recession, although

dollars, the economic net worth of FHA-

insurance underwriting standards were

it did take several important steps

insured forward loans fell from $25.4

tightened, particularly in the most

to reduce losses. Annual insurance

billion, or 6.4 percent of the insurance

distressed housing markets.31 By law,

premiums increased from 0.50 percent

in force, in FY 2007 to –$14.8 billion

the GSEs require credit enhancement —

to 1.55 percent between 2008 and

(–1.2%) just 5 years later. Although the

typically private mortgage insurance — to

2013 and were levied for the life of the

MMI Fund still held roughly $30 billion

purchase loans with low downpayments.

loan.27 The minimum downpayment re-

in capital reserves, the projected losses

The GSEs themselves are also private

quirement for a borrower with a credit

on existing books of business required a

companies with shareholders. If these

score of less than 580 increased to 10

$1.7 billion draw from the U.S. Depart-

financial institutions become distressed,

percent. Most important, the Housing

ment of the Treasury in 2013 under

conventional credit becomes more

and Economic Recovery Act of 2008

federal accounting rules. As Weicher

expensive and less available. Szymanoski

prohibited seller-funded down-payment

observed, “The goal of 2.0% was not

et al. noted that “profit-maximizing

assistance. FHA’s fiscal year (FY) 2016

expected to be sufficient to withstand

lenders do not only raise prices when

actuarial review estimated that these

a major economic downturn, and that

lending becomes riskier in areas

loans cost the MMI Fund $16.5 billion.28

expectation has now been fulfilled.”29

experiencing economic downturns,

16

instead, they tighten underwriting to ra-

While FHA was created to counter

at this point may exacerbate home

tion the number of mortgages made in

the collapse of the housing finance

price appreciation.36

such an area. FHA, on the other hand,

market during the Great Depres-

maintains its presence in all markets,

sion, its mission now includes the

At the same time, lenders have lifted

providing stability and liquidity in markets

promotion of affordable housing

credit overlays that restricted higher-

experiencing recession.”32 The explicit

opportunities and homeownership,

risk borrowers from obtaining FHA

government guarantee given to federal

specifically for buyers not served by

insurance. Together, these trends

agencies such as Ginnie Mae and FHA,

traditional underwriting. Then, as

have increased the average credit risk

along with sister mortgage insurance

now, FHA facilitated access to credit

of more recent FHA endorsements.

programs administered by the U.S.

for borrowers from lenders and also

However, FHA risk remains substan-

Department of Veterans Affairs and the

increased investor confidence to

tially lower than it was before the Great

U.S. Department of Agriculture, grant

purchase mortgages.34

Recession. Each forward loan book of

them a special role in stabilizing the

business for the past 10 years has had a

economy.

FHA’s market share has declined in

positive economic value, with an aver-

the years since the Great Recession.

age credit subsidy rate of –3.89 percent.

The housing finance reform plan

Lower-risk borrowers have found

released by the Trump administration

lower mortgage pricing in a recovering

Pandemic Recovery

in 2019 acknowledged the important

conventional market. As the adminis-

After the longest economic expansion

roles of FHA and Ginnie Mae: “When

tration’s housing finance reform plan

in American history, FHA’s MMI Fund

the mortgage market contracts and

stated, “When the economy is strong

is in a strong position to weather the

private capital recedes, HUD must

and markets are well-functioning,

economic turmoil stemming from the

maintain stability in the nation’s hous-

HUD must avoid competing with other

COVID-19 pandemic. According to the

FY 2019 actuarial review, the economic

ing finance system by continuing to

government-supported programs

net worth of the MMI Fund reached

serve as a countercyclical buffer.”33

and private capital, and take steps to

an all-time high of $62 billion, and the

FHA also helps expand homeowner-

provide housing finance support to

capital ratio was 4.8 percent, the high-

ship by increasing access to mortgage

low- and moderate-income families that

est level since 2007. Excluding reverse

credit among those underserved by the

cannot be fulfilled through traditional

mortgages, the MMI Fund’s economic

conventional market:

underwriting.”35 Additional FHA lending

value would be $66.6 billion, with a

capital ratio of 5.4 percent. The report

estimates that a “protracted slump” or

Figure 6. Purchase Mortgage Applications in the Pandemic “severely adverse” economic scenarios would create losses of 5.2 percent and

6.9 percent, respectively, of forward

loan insurance in force. Yet the fund’s

claims-paying capacity (its capital

resources and the present value of pro-

jected revenue) stood at 8.2 percent,

sufficient to weather even another

Great Recession-level event.37 The most

recent budget estimates indicate that

the fund holds $72.4 billion in capital

resources, of which $17.5 billion is held

in the financing account for expected

losses and $54.9 billion is held in the

capital reserve account.38 Before the

outbreak of the pandemic, the FY 2020

forward loan book of business was

projected to have a credit subsidy rate

of –2.27 percent.

Projected losses and net worth, however,

are highly dependent on forecasted

house price appreciation, which is a

lagging indicator of the strength of

the economy and health of the MMI

Fund. “Because the MMI Fund Capi-

NSA=Non-Seasonally Adjusted

tal Ratio is so closely tied to [house

Source: Mortgage Bankers Association®, Weekly Mortgage Applications Survey.

17

these borrowers or the return of credit

Figure 7. Housing Payment Burden

overlays by lenders is not clear. As of

July 2020, lending to first-time home-

buyers and minority borrowers has not

suffered. FHA is also supporting the

mortgage market by allowing existing

borrowers access to historically low in-

terest rates through refinancing. More

than 81,000 FHA borrowers utilized

a streamline refinance in the second

quarter to reduce their interest rate by

2.5 percentage points on average, low-

ering principal and interest payments

by $152 per month.

The pandemic will likely cause sig-

nificant economic disruption over the

next few years. It took a full decade

after the Great Recession for the U.S.

gross domestic product to return to its

potential as estimated by the Congres-

sional Budget Office (CBO). CBO now

forecasts that the economy will recover

to its prepandemic level by mid-2022,

but it will again remain below potential

with elevated unemployment.42 Fannie

Sources: S&P/Case-Shiller National Home Price Index; Freddie Mac, Primary Mortgage Market Survey; Bureau of Mae forecasts that home sales will be

Labor Statistics, Average Weekly Earnings of Private Employees.

down 7 percent from the previous year,

rebounding in 2021 but remaining 4

price appreciation], it shares the same

FHA has taken several steps to ensure

percent lower.43

tendency to overstate, then understate

that mortgage credit remains available

swings in the economy.”39 The Federal

during the crisis. FHA modified its

The pandemic may also exacerbate

Housing Finance Agency’s purchase-

property valuation policies to allow

existing trends in housing affordability.

only house price index rose more than

exterior and desktop appraisals for most

Figure 7 compares two measures of

5.7 percent in the four quarters ending

single-family forward loans through

housing costs. The first shows the ratio

in March. But the future of the hous-

August 2020 to facilitate social distanc-

of home values to the average weekly

ing market through the COVID-19

pandemic and its aftermath is extremely

ing.40 FHA will also insure qualified

earnings of production and nonsuper-

uncertain.

loans that were underwritten following

visory workers, indexed to the average

FHA standards but placed into for-

ratio between 1987 and 2019. The second

At the start of 2020, homebuying rates

bearance before endorsement due to

shows a similar index, but it captures

were slightly above average. The total

financial hardship related to the pan-

the effect of mortgage interest rates on

number of homes sold in January

demic.41 Excluding streamline refinances,

monthly housing payments. In early

and February was nearly 10 percent

FHA endorsed nearly 231,000 loans

2020, home prices relative to incomes

above the average in the same months

in the second quarter of 2020, nearly

were more than 10 percent higher

between 2000 and 2019. By May, how-

identical to the number endorsed

than their long-run average, but the

ever, home sales had plummeted to 30

during the same period a year earlier.

financing cost was roughly 20 percent

percent below normal. The Pending

However, higher-risk borrowers have

below average. This divergence reflects

Homes Sales Index from the National

been negatively affected; endorsements

a constrained housing supply that is

Association of REALTORS® and the

to borrowers who spend more than

driving up values but is offset by low

Weekly Mortgage Applications Survey

half of their income on debt payments

interest rates. These trends are likely to

by the Mortgage Bankers Association

were down 14 percent, and borrowers

continue. New home construction rates

indicate a substantial rebound, suggest-

with credit scores of less than 620 were

never fully recovered from the Great

ing that the pandemic delayed rather

down 34 percent. The extent to which

Recession. At the same time, Fannie

than depressed the 2020 homebuying

these patterns are caused by reduced

Mae predicts that the average interest

season (figure 6).

demand for mortgage credit among

rate on a conventional 30-year fixed-rate

18

mortgage will continue to fall to less

mortgage insurance capital ratio requirement less

cancelled when the amortized loan balance is sched-

than 3 percent through 2021. Low

applicable to FHA. Price Waterhouse. 1990. “An Actuarial

uled to reach 78 percent of the original property value

Review of the Federal Housing Administration’s

under the Homeowners Protection Act of 1998. Even

interest rates greatly benefit borrowers

Mutual Mortgage Insurance Fund.”

though FHA insurance insures the full amount of the

who can qualify for mortgage credit,

10 Government Accountability Office. 2017. “Federal

loan for the life of the loan, it implemented a similar

Housing Administration: Capital Requirements and

premium cancellation policy in 2001 (Mortgagee

but higher home values require a larger

Stress Testing Practices Need Strengthening,” GAO-Letter 2000-38). The policy was rescinded in 2013

downpayment, which creates a wealth

18-92.

(Mortgagee Letter 2013-04).

28

barrier to homeownership. By insuring

11 U.S. Department of Housing and Urban Development.

Integrated Financial Engineering, Inc. 2016. “Actu-

2019b. “Annual Report to Congress Regarding the

arial Review of the Federal Housing Administration

against the risk of default associated

Financial Status of the FHA Mutual Mortgage Insurance

Mutual Mortgage Insurance Fund Forward Loans for

with low downpayment lending, FHA

Fund Fiscal Year 2019.”

Fiscal Year 2016,” U.S. Department of Housing and Urban Development.

allows more households to take advan-

12 Price Waterhouse, 30.

29 John Weicher. 2014. “FHA in the Great Recession:

13

tage of historically low financing costs.

Government Accountability Office, 19–20.

Rebalancing its Role,” Housing Policy Debate 24:3, 638.

14 Government Accountability Office.

30 Kevin Park. 2020. “Choice, Capital, and Competition:

15 Federal Housing Finance Agency. 2019. “Fannie Mae

Private Mortgage Insurance Application and Availability,”

Future house prices will be determined

and Freddie Mac Single-Family Guarantee Fees in 2018.”

Housing Policy Debate 30:2, 137–63.

by whether the economic disruption

16 The example from FHFA includes capital require-

31 Roberto B. Avery, Neil Bhutta, Kenneth P. Brevoort

has a greater effect on housing supply

ments between 2 and 5 percent, with after-tax returns

and Glenn B. Canner. 2010. “The 2009 HMDA Data:

between 9 and 15 percent. The resulting cost of capital

The Mortgage Market in a Time of Low Interest Rates

or housing demand. Fannie Mae fore-

ranges from 28 to 115 basis points compared to only

and Economic Distress,” Federal Reserve Bulletin 96, casts that home prices will continue to

4 basis points to cover expected credit-related losses.

39–77.

Federal Housing Finance Agency. 2014. “Fannie Mae

rise, albeit more modestly than before.

32 Edward Szymanoski, William Reeder, Padmasini Raman

and Freddie Mac Guarantee Fees: Request for Input.”

and John Comeau. 2012. “The FHA Single-Family

CoreLogic, however, predicts that prices

17 Harold Bunce, Charles Capone, Sue Neal, William

Insurance Program: Performing a Needed Role in

will fall nearly 7 percent over the next

Reeder, Randall Scheessele, and Edward Szymanoski.

the Housing Finance Market,” U.S. Department of

1995. “An Analysis of FHA’s Single-Family Insurance

Housing and Urban Development, Housing Finance

year.44 CoreLogic also anticipates wide-

Program,” U.S. Department of Housing and Urban Working Paper No. HF-019, 1.

spread home price declines affecting

Development.

33 U.S. Department of Housing and Urban Development

18 Elliot Anenberg and Daniel Ringo. 2019. “The Propa-

every state. If a significant downturn

2019a, 4.

gation of Demand Shocks Through Housing Markets,”

34

in housing occurs, then FHA will likely

Ibid., 6.

Federal Reserve Board, Finance and Economics

35 Ibid., 4.

be called on once again to stabilize the

Discussion Series, Working Paper 2019-084.

19 U.S. Department of Housing and Urban Development.

36 Morris Davis, Stephen Oliner, Tobias Peter, and

economy, as it has done repeatedly over

2019a. “Housing Finance Reform Plan,” 8.

Edward Pinto. 2019. “The Impact of Federal Housing

the past 86 years.

Policy on Housing Demand and Homeownership:

20 Mark Zandi and Cristian deRitis. 2010. “What if there

Evidence from a Quasi-Experiment,” American

were no FHA,” Moody's Analytics.

— Kevin A. Park, HUD Staff

Enterprise Institute, Working Paper 2018-01.

21 Kevin Park. 2017. “Temporary Loan Limits as a Natural

37 U.S. Department of Housing and Urban Development

Experiment in Federal Housing Administration Insur-

2019b.

ance,” Housing Policy Debate 27:3, 449–66.

38 U.S. Department of Housing and Urban Development.

1 Price Fishback, Jonathan Rose, and Kenneth Snowden.

22 Andrew Holmes and Paul Horvitz. 1994. “Mortgage

2020. “FHA Single Family Mutual Mortgage Insurance

2013. Well Worth Saving: How the New Deal Safeguarded

Redlining: Race, Risk, and Demand,” The Journal

Fund Programs, FY 2020 Q2 Quarterly Report to

Home Ownership, Chicago, IL: University of Chicago Press.

of Finance 49:1, 81–99; Brent Ambrose, Anthony

Pennington-Cross, and Anthony Yezer. 2002. “Credit

Congress.”

2 Robert Shiller. 2020. “U.S. Home Price and Related

39 U.S. Department of Housing and Urban Development

data, for Figure 3.1,” in Robert J. Shiller, Irrational Rationing in the U.S. Mortgage Market: Evidence from

2019b, 73.

Exuberance, 3rd. Edition, Princeton University Press,

Variation in FHA Market Shares,” Journal of Urban

Economics

40

2015, as updated by author.

51:2, 272–94; Wei Li and Laurie Goodman.

U.S. Department of Housing and Urban Development.

2014. “Measuring Mortgage Credit Availability Using

2020. “Mortgagee Letter 2020-05: Re-verification

3 Michael Darby. 1976. “Three-and-a-Half Million U.S.

Ex-Ante Probability of Default,” Urban Institute.

of Employment and Exterior-Only and Desktop-Only

Employees Have Been Mislaid: Or, an Explanation of

23

Appraisal Scope of Work Options for FHA Single

Unemployment, 1934-1941,” Journal of Political Economy

Kevin Park. 2016. “FHA Loan Performance and

Family Programs Impacted By COVID-19,” 27 March;

54:1, 1–16.

Adverse Selection in Mortgage Insurance,” Journal of

Housing Economics 34, 82–97.

U.S. Department of Housing and Urban Develop-

4 David Wheelock. 2008. “The Federal Response to

ment. 2020. “Mortgagee Letter 2020-20: Re-Extension

24

Home Mortgage Distress: Lessons from the Great

Atif Mian and Amir Sufi. 2009. “The Consequences

of Mortgage Credit Expansion: Evidence from the

of the Effective Date of Mortgagee Letter 2020-05,

Depression,” Federal Reserve Bank of St. Louis Review U.S. Mortgage Default Crisis,” The Quarterly Journal

Reverification of Employment and Exterior-Only and

90:3, 133–48.

of Economics 124:4, 1449–96; Adam Levitin and Susan

Desktop-Only Appraisal Scope of Work Options for

5 Marriner Eccles. 1951. Beckoning Frontiers: Public and

Wachter. 2010. “Explaining the Housing Bubble,”

FHA Single Family Programs Impacted By COVID-19,”

Personal Recollections, Alfred A. Knopf, 151.

Georgetown University Law Center, Business, Eco-

29 June.

6 Federal Housing Administration. 1935. “First Annual

nomics and Regulatory Policy Working Paper Series,

41 U.S. Department of Housing and Urban Development.

Report of the Federal Housing Administration,”

Research Paper 1669401; James Kahn and Benjamin

2020. “Mortgagee Letter 2020-16: Endorsement of

Washington DC: United States Government Printing

Kay. 2019. “The Impact of Credit Risk Mispricing

Mortgages under Forbearance for Borrowers Affected

Office, 14.

on Mortgage Lending During the Subprime Boom,”

by the Presidentially-Declared COVID-19 National

7 Edward Golding, Edward Szymanoski, and Pamela

Federal Reserve Board, Finance and Economics Dis-

Emergency consistent with the Coronavirus Aid, Relief,

Lee. 2014. “FHA at 80: Preparing for the Future,” U.S.

cussion Series, Working Paper 2019-046; Neil Bhutta

and Economic Security (CARES) Act,” 4 June.

Department of Housing and Urban Development.

and Benjamin Keys. 2018. “Eyes Wide Shut? The Moral

42 Congressional Budget Office. 2020. “An Update to the

Hazard of Mortgage Insurers During the Housing

8 Edward E. Leamer. 2007. “Housing IS the Business

Economic Outlook: 2020 to 2030.”

Boom,” National Bureau of Economic Research,

Cycle,” National Bureau of Economic Research, Work-

43 Fannie Mae. 2020. “Economic and Housing Outlook,

Working Paper 24844.

ing Paper No. 13428.

July 2020.”

25 Wayne Passmore and Shane Sherlund. 2018. “The

9 For comparison, private mortgage insurance compa-

44 CoreLogic®. 2020. “Prepare for a Cooldown: CoreLogic

FHA and the GSEs as Countercyclical Tools in the

nies are typically required by state regulators to have

Reports Home Prices Were Up in May, but Could

Mortgage Market,” Federal Reserve Bank of New York

risk-to-capital ratios of 25:1 (i.e., capital ratio of 4%)

Slump Over the Summer,” 7 July press release.

Economic Policy Review 24:3, 28–40.

and the GSEs require 18:1 (5.6%); however, private

mortgage insurance typically covers 35 percent or less

26 Ibid., 37.

of the original loan amount while FHA insures the full

27 Private mortgage insurance, which typically covers 35

amount. The difference in coverage makes the private

percent or less of the loan amount, is automatically

19

State Moratoria Support Households HIGHLIGHTS

ctice Experiencing Financial Hardship

n Minnesota enacted an eviction mora-

pra

torium and an avenue for tenants to

file complaints.

in

The economic uncertainty created A statewide moratorium can be more n Delaware halted all eviction process-by the COVID-19 pandemic has

effective than multiple actions by local

es, including filings and hearings,

caused housing insecurity among a

government officials and agencies,

and prevented utility companies

growing number of families who are

which may stop some phases of evic-

from terminating service or issuing

facing a loss of income and the in-

tion but not all. Eviction moratoria

late fees due to nonpayment.

ability to make their rent or mortgage

designed to halt all phases of eviction,

n Minnesota and Delaware offer rent

payments. Implementing short-term

including notices to vacate, filings, court

and mortgage relief to prevent

eviction and foreclosure moratoria

hearings, and the physical execution of

homelessness and maintain stability

can alleviate some of the immediate

eviction by a law enforcement officer,

for those impacted by the COVID-19

impacts of economic upheaval and

also can be more effective at protect-

pandemic.

help homeowners and renters remain

ing public health during the pandemic

in their homes. On August 8, 2020,

and supporting vulnerable households.

the Coronavirus Relief Fund (CRF)

President Trump signed an execu-

A moratorium that only halts court

under the Coronavirus Aid, Relief,

tive order to minimize evictions and

hearings, for example, would not

and Economic Security (CARES) Act

foreclosures resulting from pandemic-

prevent landlords from issuing notices,

to finance housing assistance to help

induced financial hardship. The order

which could cause tenants to leave and

families remain in their homes even

directs federal agencies to examine

potentially become homeless. Banning

after the moratoria are lifted.

the public health impacts of halting

physical evictions while allowing court

evictions; identify federal funds for

hearings to proceed can damage

Minnesota Suspends

temporary financial assistance to

tenants’ credit and hinder their ability

Evictions During Its

renters and homeowners; and offer

to secure new housing.2 Strong mora-

Peacetime Emergency

assistance to public housing agencies,

toria also prohibit late fees to protect

The COVID-19 pandemic hit at a time

affordable housing owners, landlords,

residents from additional financial

when Minnesota’s housing market

and federal grant recipients to prevent

hardship. Minnesota and Delaware are

was already strained.3 According to a

evictions and foreclosures.1

among the states that have implemented

2019 report from Minnesota Housing

successful moratorium policies to prevent

Partnership, 1 in 4 Minnesotans are

Many states and localities have also en-

spikes in homelessness at a time when

cost burdened (meaning that they are

acted eviction and foreclosure moratoria

sheltering in place is critical. The two

paying more than 30 percent of their

in response to the COVID-19 pandemic.

states have also used allocations from

income on housing costs), including

44 percent of the state’s 611,160 renter

households and nearly 20 percent of

its 1.54 million owner households.4

The COVID-19 pandemic has left

more Minnesotans suffering from lost

income and unable to afford housing

costs. The state’s unemployment rate

grew from 2.9 percent in March 2020

to 9.9 percent in May 2020.5 More

than 941,000 Minnesotans applied for

unemployment insurance benefits

between March 16, 2020, and September

7, 2020.6

As COVID-19 cases began emerging

in Minnesota, the state worked quickly

to institute protections to mitigate the

virus’ spread and help people shelter in

their homes without being evicted.7 Ten

Josh Nguyen, Minnesota Housing days after declaring a state peacetime

The Minnesota Attorney General’s Office contacts landlords who may have violated the state's moratorium and works to resolve the situation. (Greenway Terrace in Ramsey, Minnesota.)

emergency on March 13, 2020, Governor

20

decrease in income or increase in out-

of-pocket medical expenses caused by

the pandemic. It also “strongly urged”

financial institutions to avoid impos-

ing late fees or other penalties for late

mortgage payments.13 Many financial

institutions “want to do the right thing

by their customers,” and Minnesota has

been successful in getting banks to con-

sider strategies to keep homeowners in

their homes, said Ho.14 On July 2, 2020,

the offices of Attorney General Keith

Ellison and the governor announced

an agreement with 31 Minnesota finan-

cial institutions to offer mortgage relief

for property owners who were finan-

cially impacted by COVID-19 but were

not covered by the CARES Act. Offer-

ing protections similar to those of the

CARES Act, the agreement includes a

90-day forbearance period for single- or

Minnesota Housing

Minnesota’s eviction moratorium includes enforcement mechanisms such as fines for those who violate the multifamily mortgage holders effective

regulations.

July 1, 2020.15 According to Sadaf Rah-

mani, policy research associate at the

Tim Walz issued Executive Order (EO)

“was based on a public health need,

Minnesota Attorney General’s Office

20-14, which placed a moratorium on

and not just the health of those who

(AG’s Office), lenders cannot initiate

nonemergency evictions and writs of

are financially impacted by COVID-19.

foreclosure proceedings on residential

recovery.8 The moratorium prohibited

It really was designed to have a broader

property owners who have applied for

property owners, mortgage holders,

reach.” Tenants were not required to

payment forbearance under this agree-

or others from filing an eviction order

submit documentation to landlords

ment. “Foreclosures are expensive for

if, after March 1, 2020, a household

proving financial hardship because of

banks and credit unions as well, and

continued living in the property after

COVID-19. Because the order did not

avoiding them makes the most finan-

receiving a lease termination notice,

suspend rent payments, Governor Walz

cial sense,” Rahmani added.16 Rather

after the redemption period for a resi-

and Ho have encouraged those who

than requiring a lump-sum payment at

dential foreclosure ended, after a tenant

are able to pay their rent to continue

the end of the forbearance, participat-

violated a provision in the lease, or

doing so and those who are not to com-

ing financial institutions are allowing

after nonpayment of rent. All landlords

municate with their landlords. Rather

single-family homeowners to either tack

had to suspend lease terminations and

than assisting only some renters while

on the missed or reduced payments

notices to vacate except in emergency

displacing others, said Ho, EO 20-14

over the lifetime of the loan or extend

cases in which the tenant endangered

was designed to be broad in coverage

the maturity of the loan to compensate

the safety of residents or others on the

to prevent evictions and additional

for the missed payments. In addition,

premises, based on clarifying language

homelessness. As EO 20-14 was being

participating financial institutions will

in EO 20-73.9 Sheriffs were prohibited

developed, homeless shelters were also

suspend all late fees for missed mort-

from physically evicting tenants except

trying to deconcentrate quickly to slow

gage payments and will not report late

under very limited circumstances

the spread of COVID-19, which made

or missed payments to credit bureaus.17

involving criminal activities or the

protecting residents from eviction even

Such measures offer the flexibility and

endangerment of others.10 Assistant

more vital.12

relief that many residential property

Attorney General Katherine Kelly noted

owners need to make ends meet during

that EO 20-14 halted the issuance of

Although EO 20-14 did not offer a

the pandemic.

writs of recovery, and even if a landlord

foreclosure moratorium for homeown-

had a writ of recovery, sheriffs were

ers and landlords with mortgages, it

EO 20-14 did not relieve tenants of

ordered not to execute it.11

“requested” that financial institutions

their obligation to pay rent, a provision

suspend all pending and future fore-

that supported landlords who rely on

Jennifer Ho, commissioner of Min-

closures and related evictions resulting

rent to make mortgage payments.18

nesota Housing, noted that EO 20-14

from a residential property owner’s

HousingLink — a nonprofit organization

21

that collects data, information, and

unemployment benefits expired,

cases, “gaining compliance through

resources on affordable housing in

President Trump took unilateral action

a mutual agreement was much more

Minnesota — conducted a nonstatistical

on August 8, 2020, signing an execu-

productive in the long term than just

survey in June 2020 among renters with

tive memorandum to extend federal

threatening legal action.” The AG’s

active user profiles on the HousingLink

unemployment insurance benefits

Office resorted to legal action in only a

website to gauge their ability to pay

totaling $400 per week, with a federal

few cases in which landlords attempted

rent in the midst of the pandemic. The

contribution of 75 percent and a state

self-help evictions through actions such

survey determined that 72 percent of

contribution of 25 percent.21

as shutting off utilities or changing

renters (out of 907 respondents) had

locks. In these cases, the AG’s Office

remained current on their rent pay-

Overcoming Challenges

successfully filed temporary restraining

ments since the start of the pandemic.

Having mechanisms in place to encour-

orders to require landlords to restore

However, 26 percent of renters (out of

age compliance with moratoria can

utilities and unlock doors.24

639 respondents) indicated that they

help states achieve positive outcomes.

would not be able to continue paying

Minnesota’s EO 20-14 granted the

Under EO 20-14, tenants who believed

rent without the weekly $600 in federal

AG’s Office the authority to enforce its

their landlords were wrongly evicting

unemployment insurance benefits,

provisions.22 A person who “willfully”

them could complete an online com-

which expired on July 31, 2020.19 Libby

violated the order was guilty of a misde-

plaint form on the AG Office’s website.

Murphy, deputy policy director for

meanor — a criminal offense — with a

After receiving the form, the AG’s

the Minnesota Housing Partnership,

fine of up to $1,000 or imprisonment

Office contacted the tenant and the

attributes some of the strong rent collec-

for up to 90 days. The AG’s Office

landlord by phone. The team gathered

tions in spring 2020 to the addition of

enforces civil laws and could enforce

facts from tenants and advised them of

these federal unemployment insurance

EO 20-14 through its section 8.31

their rights and protections under the

benefits to the state’s unemployment in-

authority, whereby violators of the

order. Next, the team collected infor-

surance, which offers up to a maximum

order would face a civil penalty of up

mation from landlords and determined

of $740 in benefits per week.20 With

to $25,000 per violation.23 According to

whether EO 20-14 was being violated.

questions mounting about what would

Kelly, instances of legal action against

The calls to landlords were often

happen after the federal CARES

landlords were rare, and in most

lengthy, said Kelly, because the AG’s

Minnesota Housing

To keep residents stably housed, the original eviction moratorium halted lease terminations, notices to vacate, filings, and physical evictions carried out by law enforcement.

22

Authority

Delaware State Housing

Delaware’s Sixth and Twenty-Third Modifications to the emergency declaration prohibit landlords from charging late fees and interest on residential rental units.

Office sought to explain the rationale

at the end of their lease despite their

doubling up as a result of the finan-

behind EO 20-14 and the individual

being unemployed or unable to find

cial challenges caused by COVID-19.

situations of the tenants.25 The AG’s

another housing arrangement. Reports

Although EO 20-14 prohibited land-

Office does not ask tenants if they have

also came from tenants whose landlords

lords from filing evictions, some still

been affected by COVID-19 medi-

falsely told them that the moratorium

occurred, Murphy said. Once someone

cally, financially, or otherwise because

only protected them if they could prove

has an eviction on their record, their

the orders do not require tenants to

that they were directly affected by

likelihood of experiencing housing

be impacted by COVID-19 or prove

COVID-19.28 According to Kelly, most

instability, housing cost burdens, or

financial hardship to be protected

of these complaints were resolved after

homelessness increases.32 Unlike many

from eviction. Kelly indicated, however,

the AG’s Office called the landlords

states, Minnesota courts can order that

that “almost all tenants [who] report

to inform them about the rules of the

eviction case records be expunged at

violations…tell us that they have been

order, because many landlords were

the request of a tenant if the court

impacted by COVID in some way

unaware of the suspension.29 Nonprofit

determines that the case is “sufficiently

(financially, health-wise, disruptions in

organizations such as HousingLink

without basis in fact or law.”33 Many

the rental marketplace, etc.).”26

and the Minnesota Multi Housing As-

tenants, however, are unaware that they

sociation were also vital resources for

can ask for expungement during their

From March 2020 through the first

educating landlords and tenants about

court hearing. Once the eviction hearing

week of July 2020, the AG’s Office

the moratorium; they hosted webinars,

is complete, requesting expungement

received 900 tenant complaints that

issued guidance on mediation, shared

is difficult, Murphy explained.34

landlords were violating the morato-

COVID-19 preparedness resources, and

rium.27 Nearly half of the complaints

created tenant/landlord hotlines.30

In May 2020, Minnesota Management

came from tenants who were unable to

and Budget predicted a bleak economic

pay their rent because they lost their

Some housing organizations have

outlook for the state, depending on

jobs and were told by their landlords

predicted that demand for homeless

the trajectory of several factors such

to either pay their rent or move out.

services and assistance will increase.31

as the pandemic and state revenue.35

Some complaints came from tenants

Murphy anticipates that more families

Stakeholders are concerned about

whose landlords wanted them to move

will experience housing instability and

how to meet the state’s future need for

23

affordable housing. Minnesota lacks

notify tenants of the past due amount

March 24, 2020, when EO 20-14 was

approximately 114,000 units that are

owed, due dates, and the consequences

enacted. This order remains in effect

affordable to households earning 30

of nonpayment. In addition, making

until the state peacetime emergency is

percent of the area median income.36

tenants aware of resources available to

rescinded.41 On September 11, 2020,

Small-building landlords supply 6.2 mil-

them for financial or legal assistance is

Governor Walz extended the peacetime

lion rental units in the United States,

critical to preventing future evictions.

emergency through October 12, 2020,

many of which are a natural source

EO 20-14 also did not preclude land-

which may be extended again on or

of affordable housing for low-income

lords from reporting delinquent rent

before its expiration.42

renters. Landlords of such units are as

payments to credit bureaus, which can

vulnerable to economic shocks as their

negatively affect tenants’ credit scores

Because Minnesota has a projected

tenants. Without a reliable stream of

and their ability to access housing in

budget shortfall, the state has shifted its

rent payments, some small landlords

the future.40

attention toward the federal CARES

may default on their properties, sell

Act rather than a new state appropria-

them to new owners who may convert

Keeping Residents

tion as a source of emergency housing

the rentals into personal housing, or

Stably Housed

assistance, said Ho.43 On July 14, 2020,

sell them to investment groups that may

Effective August 4, 2020, Governor

Governor Walz and Lieutenant Gov-

renovate the units and increase the rent,

Walz rescinded EO 20-14 and EO 20-73

ernor Peggy Flanagan announced

thereby making them unaffordable

and issued EO 20-79, which allows evic-

the COVID-19 Housing Assistance

to those in need.37 If the state is not

tions in limited circumstances, such as

Program to prevent homelessness and

increasing housing opportunities, “we

if a tenant damages the property or if a

maintain stability for those affected by

will certainly see people experiencing

landlord or landlord’s family member

the pandemic. Funded through CRF

homelessness more frequently and for

will be moving into the rental property.

under the CARES Act, the $100 mil-

longer durations,” Murphy noted.38

Landlords must give tenants seven days’

lion program will be administered by

notice of their intent to file for eviction

local organizations that will conduct

EO 20-14 lacked a grace period for late

to allow tenants and landlords a chance

eligibility screening and outreach and

rent payments and allowed late fees

to resolve the matter without court

process applications and payments. To

to accrue.39 Murphy pointed to the

action. In addition, officers can begin

be eligible for the program, applicants

need for a more formal procedure to

executing writs that were issued before

must be Minnesota residents; have an

income at or below 300 percent of the

federal poverty level; have a past due

housing expense incurred between

March 1, 2020, and December 30, 2020;

and be unable to make the payment

because of unemployment, illness, or

another issue related to COVID-19. The

funds, dispersed directly to landlords,

mortgage servicers, utility companies,

or manufactured home park owners,

can be used toward rent and mortgage

payments, manufactured lot rents or

home payments, utilities, homeowner

association dues, homeowner’s insur-

ance, and other costs as approved by

Minnesota Housing.44

Emergency Solutions Grants (ESG)

have been another vital source of

Authority

support to prevent homelessness and

help those experiencing homelessness

because of COVID-19. In addition to

$22.8 million received at the state level,

several counties and cities in Minne-

sota also received ESG funding and

Delaware State Housing

allocated some of their dollars toward

To ensure residents would have no disruption in utility service, Delaware requires utility companies to offer four-month payment plans for customers with past due accounts due to the COVID-19 pandemic.

housing assistance.45

24

Authority

Delaware State Housing

Tenants can participate in an alternative dispute resolution process, which helps to prevent evictions and resolve cases without formal trials.

Delaware Enacts an

“at high risk for COVID-19-related

writ of possession or physical eviction.53

Eviction and Foreclosure

job loss.”50 Delaware residents were

John Whitelaw, advocacy director at

Moratorium

already experiencing housing cost

the Community Legal Aid Society, Inc.,

As the COVID-19 pandemic took hold

burdens before the pandemic began.

noted that the Sixth Modification shut

in Delaware, residents began to feel the

The National Low Income Housing

down the Justice of the Peace Court (JP

economic effects. From March 2020

Coalition reported that 78 percent of

Court), which hears eviction cases in

to May 2020, Delaware’s unemploy-

very low-income renters in Delaware

Delaware. From March 17, 2020, to July

ment rate increased from 5 percent to

were cost burdened, paying more than

1, 2020, all eviction processes were fro-

15.9 percent.46 Unemployment claims

30 percent of their income on hous-

zen, including new filings and cases in

set a state record, and the unemploy-

ing costs. In addition, 23 percent were

which a final judgment had been issued

ment office fielded an “overwhelming”

extremely low-income renters, and

but no writ had been executed.54 The

number of calls and questions about

76.1 percent had severe cost burdens,

Sixth Modification allowed landlords

the unemployment claims process.47

paying more than 50 percent of their

to file for evictions only on tenants they

Between March 14 and March 28,

income on housing costs.51 Recogniz-

deemed to have caused irreparable

2020, the number of filed unemploy-

ing the potentially serious consequences

harm or threat to others or the prop-

ment claims in the state rose from 472

if Delawareans lost their housing as

erty.55 Court actions and eviction orders

to 19,137.48 Effective March 13, 2020,

a result of COVID-19, on March 24,

that commenced before the state of

Governor John Carney declared a state

2020, Governor Carney issued the Sixth

emergency began were granted a 31-day

of emergency due to the public health

Modification of the Declaration of a

extension from the date the governor

threat of COVID-19, and on September

State of Emergency enacting an evic-

lifts the emergency declaration. In addi-

3, 2020, he extended the emergency

tion and foreclosure moratorium.52

tion, constables had to wait seven days

declaration for a sixth time.49 Shortly

from the termination of the emergency

after Governor Carney issued the initial

The Sixth Modification protected

declaration before executing writs of

declaration, public policy scholars at

tenants from any “action for sum-

possession for tenants who had received

the University of Delaware determined

mary possession,” which is Delaware’s

final judgments on eviction before the

that more than 136,000 Delawareans

eviction process covering the notice of

state of emergency. Landlords were

hold low-wage occupations that are

termination, filing, court hearing, and

CONTINUED ON PAGE 27

25

Legal Aid Organization Assists North Carolinians Facing Eviction

Many low-income tenants facing eviction lack legal representation, which can lead to unfavorable outcomes for tenants and limit their knowledge about available programs and resources that could help them pay their rent and avoid eviction.1

Several legal aid organizations across the nation offer free legal aid and advocacy for low-income households and partner with other community organizations to prevent homelessness and increase access to affordable housing. Pisgah Legal Services (PLS), which currently serves 11 counties in Western North Carolina, is one such organization.2 According to Robin Merrill, managing attorney at PLS, the organization’s homelessness prevention program is one of its largest initiatives, with both a rental component and a homeownership component to prevent evictions and foreclosures.3 Staff attorneys at PLS represent people who are facing eviction or foreclosure or who are living in substandard housing conditions as well as those who need help with obtaining or maintaining their eligibility for housing subsidies.4

North Carolina began experiencing the economic impacts of the COVID-19 pandemic in April 2020; the state received 494,728 initial claims for unemployment benefits that month, with 395,794 of these claims indicating the COVID-19 pandemic as the reason for job loss.5 On May 30, 2020, Governor Roy Cooper enacted a moratorium on evictions for nonpayment or late payment of rent that expired on June 20, 2020. During the effective period, the moratorium prohibited landlords from imposing late fees, interest, or other penalties on tenants. The moratorium also granted tenants a six-month grace period beginning on June 20, 2020, to pay overdue rent as well as the opportunity to arrange payment plans with utility companies to pay past due accounts over the course of at least six months.6 Merrill indicated, however, that many landlords are unaware of the grace period, and landlords may find the moratorium’s language confusing, especially when determining past due amounts and whether to prorate past due rent for the effective period.7

North Carolina courts resumed hearing summary ejectment actions on June 22, 2020, and PLS expects a flood of eviction cases because landlords were still able to file for eviction while the moratorium was in effect.8 On June 30, 2020, sheriffs again became responsible for executing writs of possession.9 As of mid-July 2020, North Carolina’s state court system had a backlog of approximately 10,000 eviction cases. Summary ejectment cases typically must be scheduled within 7 days of filing, but because of the backlog, the courts now have 30 days to schedule cases. As of July 2020, most of the cases involve the simple nonpayment of rent, Merrill said. Anticipating a growing need for legal services, PLS has been training more pro bono attorneys. PLS maintains a strong relationship with the clerk’s office in Buncombe County, the largest county that it serves. This relationship has been helpful in gathering copies of complaints with summary judgments and the contact information of defendants so that PLS can inform them of the services that it offers.10

In her role as chair of the board of the North Carolina Housing Coalition, Merrill strongly advocates offering rental assistance at local, state, and federal levels. She is concerned that landlords may not be able to make their own mortgage payments.

Although the moratorium delayed rent payments, it also caused the rent debt to grow, which increased uncertainty and instability for landlords and tenants alike. Before the pandemic, PLS maintained an information table in the Buncombe County Courthouse for those needing legal services. Keeping those resources accessible during the pandemic is critical, so PLS has begun using virtual platforms such as Facebook Live and other social media outlets to publicize its services.

Several landlords have expressed appreciation to PLS for connecting clients to monetary resources through public rental assistance programs, the United Way, local churches, or other privately funded programs. As the massive backlog in eviction cases increases the need for legal representation, the legal services and public outreach that PLS offers will be critical to helping families maintain housing stability during periods of uncertainty.11

1 Susan Fleurant and Colleen Healy Boufides. 2020. “Eviction Expungement: A Civil Legal Tool to Improve Housing Stability and Health,” The Network for Public Health Law.

2 “Homelessness Prevention,” Pisgah Legal Services website (www.pisgahlegal.org/free-legal-assistance/homelessness/). Accessed 5 June 2020; “About Us,” Pisgah

Legal Services website (www.pisgahlegal.org/free-legal-services/). Accessed 16 July 2020.

3 Interview with Robin Merrill, 8 July 2020.

4 “Homelessness Prevention,” Pisgah Legal Services website.

5 North Carolina Department of Commerce. 2020. “April 2020 Monthly Unemployment Insurance Claims Now Available.”

6 State of North Carolina. 2020. “Executive Order No. 142 Assisting North Carolinians by Placing Temporary Prohibitions on Evictions and Extending the Prohibition on Utility Shut-Offs.”

7 Interview with Robin Merrill.

8 Ibid; “North Carolina,” Eviction Lab website (evictionlab.org/covid-policy-scorecard/nc/). Accessed 28 May 2020; Elizabeth Anne Brown. 2020. “Evictions to resume in

Buncombe County as thousands in NC remain unemployed,” Asheville Citizen Times, 27 May.

9 Port City Daily Staff. 2020. “With no extension filed, eviction proceedings to continue in N.C,” Port City Daily, 28 June.

10 Interview with Robin Merrill.

11 Ibid.

26

CONTINUED FROM PAGE 25

prohibited from assessing late fees or

unaware of how many eviction cases

and interest for residential rental units

interest on unpaid rent.56 On March

were in its backlog. Effective July 1,

may not be charged or accrue while

30, 2020, and April 30, 2020, Governor

2020, language pertaining to evictions,

the emergency declaration is in effect.

Carney signed the Eighth Modification

foreclosures, and utilities in the Sixth

Holdover tenants as well as residents

and Fourteenth Modification of the

and Fourteenth modifications was de-

who own manufactured homes on

emergency declaration, respectively,

leted and replaced by the Twenty-Third

leased land are still protected from

which extended the same protections

Modification. Unlike the Sixth Modifi-

physical eviction.63

to owners of manufactured homes

cation, the Twenty-Third Modification

on leased land and holdover tenants.

allows eviction filings and mortgage

As the JP Court begins addressing its

Landlords could not require holdover

foreclosure actions to proceed.59 Ac-

backlog of cases, stakeholders must

tenants to pay more than the monthly

cording to Whitelaw, the Twenty-Third

adapt the resolution process to the

rental amount under their previous

Modification and the JP Court order

pandemic by developing new ways to

rental agreement. The Fourteenth

“were really designed not so much to

mediate cases and direct tenants to

Modification required landlords to

move cases quickly but to get a sense of

available resources. Although several

prorate tenants’ rent for each day of

how many cases they’re going to have to eviction cases have been filed as of

the holdover.57

deal with. So it’s more about being able

July 1, 2020, this backlog of cases will

to get a handle on what’s going on than

take time to resolve. Few trials have

The Sixth Modification also protected

been scheduled, and, because of the

owner-occupied properties of one to

heavy caseload, eviction cases will not

four units from foreclosure and pro-

be heard for at least 12 weeks after the

hibited late fees and interest. Financial

Delaware also insti-

governor lifts the emergency declara-

institutions that initiated residential

tion. Even so, the extreme backlog

tuted protections

mortgage foreclosure actions before

could create further delays in issuing

the state of emergency began had to

judgments. The Twenty-Third Modifica-

for residents to

extend deadlines to at least the 31st day

tion permits the JP Court to determine

following the termination of the emer-

ensure no disruption whether cases can be resolved using

gency declaration. The modification

other methods. Through an online

in their utility services.

also halted the sheriff sales of properties

dispute resolution and an alternative

that received final judgment on foreclo-

dispute resolution and mediation, the

Residential utility

sure before the state of emergency until

JP Court aims to prevent unnecessary

a date no earlier than 31 days after the

companies could

evictions and resolve as many cases as

governor lifts the emergency declara-

possible without holding formal trials.

not terminate service

tion. If a residential property had been

Whitelaw predicted that the bulk of

the subject of foreclosure action and

these cases will stem from nonpayment

or charge late fees.

sold at a sheriff sale before the state of

of rent rather than rules violations. The

emergency, law enforcement officers

alternative dispute resolution process in

could not execute writs of recovery

the Twenty-Third Modification will be

until at least the 31st day after the gov-

it is about scheduling new cases quick-

vital to connecting tenants who are past

ernor lifts the emergency declaration.

ly.”60 The Twenty-Third Modification

due on their rent to the Delaware State

Delaware also instituted protections

reopened the JP Court, which issued an

Housing Authority (DSHA) to obtain fi-

for residents to ensure no disruption

order to resume accepting filings and

nancial assistance to resolve the cases.64

in their utility services. Residential

supporting documents indicating that

utility companies such as electric, water,

the property under consideration is not

Landlords generally support rental

natural gas, telephone, and cable and

covered by the federal CARES Act mora-

assistance measures because such

internet providers could not terminate

torium on evictions.61 Law enforcement

funding would help them make their

service or charge late fees. The Sixth

officers still may not physically evict ten-

mortgage payments and keep them

Modification granted the Delaware

ants and homeowners because of sheriff

afloat financially. Without rental pay-

Public Service Commission the au-

sales, writs of possession, or actions for

ments, “there will be some landlords

thority to enforce these mandates and

ejectment while the emergency declara-

who can’t pay [their mortgage] obliga-

penalize any violations.58

tion remains in effect unless the JP

tion,” Whitelaw stated.65 Although some

Court determines that “enforcement

lenders have been willing to grant

Mitigating a Backlog

is necessary in the interest of justice.”62

landlords interest-only payments and

of Cases

As of September 1, 2020, the court had

mortgage deferrals, they take these

A major challenge under the Sixth

not formalized a process for making this

actions only on a case-by-case basis.

Modification was that the JP Court was

determination. In addition, late fees

The Delaware Apartment Association

27

(DAA), a nonprofit organization repre-

weekly $600 federal unemployment

financial assistance, to help residents

senting multifamily housing owners,

benefit to meet their basic needs. “The

affected by COVID-19 retain their

managers, and developers, supports

reduced amount of federal unemploy-

homes.70 The state received approxi-

state allocation of funding for rental

ment benefits will not be sufficient for

mately $15 million in federal funding

assistance. Through information and

many tenants to be able to pay rent and

for direct housing assistance, $2.33

resource sharing, DAA is currently

obtain other necessities, but it is certainly

million of which was ESG funds under

focused on ensuring that members give

better than a complete elimination of

the CARES Act to mitigate the spread

residents appropriate information on

the benefit,” he said.67

and impact of COVID-19 on those

applying for rental assistance programs

experiencing homelessness, receiving

and navigating unemployment benefits

Programs to mitigate future evictions

homeless assistance, or at risk of

to help them manage financial hardship.66

will be critical for keeping residents

becoming homeless.71 In addition to

stably housed when the emergency

the federal support, DSHA and the

Preventing a Wave

declaration is lifted.68 The Twenty-

Delaware Department of Justice plan

of Evictions

Third Modification stipulates that the

to allocate $250,000 and $100,000,

Whitelaw emphasized that the state’s

resolution process can include hous-

respectively, to support public aware-

actions kept people in their homes. As

ing support services, as determined by

ness and advocacy organizations.72

of early September 2020, “we have not

DSHA, “if requested by either party

had an eviction crisis in Delaware, in

or the Court.”69 On July 1, 2020, DSHA

In late March 2020, DSHA announced

large part because of the intervention

and the Delaware Department of Justice

the Delaware Housing Assistance

of the governor and the court system,”

announced a partnership to develop

Program (DE HAP) for renters fac-

he stated. Without grace periods to

a comprehensive plan focused on

ing financial hardship because of

pay past due balances, however, the

educating homeowners and renters

COVID-19. Initially, DSHA allocated $2

state could witness a surge in evictions.

on the eviction and foreclosure

million for DE HAP, and New Castle

Whitelaw predicted a new wave of evic-

process. The two agencies will partner

County contributed $500,000 of its

tions among those who relied on the

to offer integrated services, including

CARES Act CRF to the program.73

The Delaware Emergency Mortgage Assistance Program offers eligible low-income homeowners at risk of foreclosure up to $5,000 paid directly to the mortgage servicer.

28

Unable to meet the high demand for

by the pandemic. The Delaware

insurance benefits can help families pay

financial assistance, DSHA temporar-

COVID-19 Emergency Response Initia-

for housing needs, and, in turn, help

ily stopped taking applications, but on

tive has raised funds for several

landlords recoup financial losses. As

August 10, 2020, DSHA reopened the

nonprofit organizations that provide

states lift moratoria, resource sharing

program with $40 million combined

social services, emergency assistance,

across state agencies and nonprofit and

from the state and New Castle County’s

food, and virtual educational resources

legal aid organizations will be critical in

CRF. Under the revised guidelines,

to families and individuals across the

raising awareness among tenants and

eligible renters can receive up to

state. A vital component of this initiative

landlords about programs available to

$5,000 to pay past due rent or current

is an assessment to determine how

assist them.

rent, with payments made directly to

nonprofit organizations can sustain

the property owner. Applicants must be

assistance given the long-term impacts

1 The White House. 2020a. “Executive Order on Fight-

Delaware residents and have a postpan-

of the pandemic and allocate funding to

ing the Spread of COVID-19 by Providing Assistance to

demic household income at or below

have the most impact across the state.76

Renters and Homeowners.”

2

60 percent of the area median income

Emily Benfer, Eric Dunn, Norrinda Brown Hayat,

and Rachel Blake. 2020. “What an Effective Eviction

for the county in which they live. With

Conclusion

Moratorium Must Include”; “COVID-19 Housing a new application portal on DSHA’s

Ensuring that families have safe places

Policy Scorecard Methodology,” Eviction Lab website

(evictionlab.org/covid-housing-scorecard-methods/).

website, landlords and property owners

to call home during the COVID-19

Accessed 9 September 2020.

must submit applications on tenants’

pandemic will remain a priority of HUD

3 Interview with Jennifer Ho, 1 July 2020.

behalf. In addition, through DSHA’s

Secretary Ben Carson and President

4 Minnesota Housing Partnership. 2019. “State of the

State’s Housing 2019 Biennial report of the Minnesota

existing Delaware Emergency Mortgage

Trump. As stated in President Trump’s

Housing Partnership.”

Assistance Program (DEMAP), low-

EO, families who are dislocated from

5 U.S. Bureau of Labor Statistics. “Midwest Information

income homeowners in the state at risk

their homes may have to live in home-

Office: Minnesota” (www.bls.gov/regions/midwest/

minnesota.htm). Accessed 30 June 2020.

of losing their homes to foreclosure

less shelters where maintaining social

6 Minnesota Department of Employment and Economic

because of a pandemic-related job loss,

distance is difficult, double up with fam-

Development. “Unemployment Insurance Statistics”

reduced work hours, or unpaid leave

ily members, or travel to other states,

(mn.gov/deed/data/data-tools/unemployment-insur-

ance-statistics/). Accessed 9 September 2020.

can receive up to $5,000 per household

putting their health at risk.77 Minnesota

7 Interview with Jennifer Ho.

paid directly to the mortgage servicer.

and Delaware’s moratoria offered some

8 State of Minnesota Executive Department. 2020a.

By collaborating with HUD-approved

of the nation’s more stringent policies

“Emergency Executive Order 20-14 Suspending Evic-

tions and Writs of Recovery During the COVID-19

housing counseling agencies in Dela-

to help families avoid housing instabil-

Peacetime Emergency.”

ware who will process DEMAP applications, ity and financial hardship. Under their

9 Ibid; State of Minnesota Executive Department. 2020.

DSHA is working to ensure the efficient

original moratoria, both states halted

“Emergency Executive Order 20-73 Clarifying Executive

Order 20-14 Suspending Evictions and Writs of Re-

distribution of assistance.74

the filing and court processes for hear-

covery During the COVID-19 Peacetime Emergency”;

ing eviction cases and prohibited law

Interview with Jennifer Ho.

Payment plans for past due utilities can

enforcement from physically evicting

10 Interview with Jennifer Ho; State of Minnesota Executive

Department 2020a.

also offer relief for residents struggling

tenants. Minnesota’s eviction morato-

11 Interview with Katherine Kelly, 7 July 2020.

with financial hardship. The Twenty-

rium includes enforcement mechanisms

12 Interview with Jennifer Ho.

Third Modification requires every

such as fines, whereas Delaware’s mora-

13 State of Minnesota Executive Department 2020a.

public, nonprofit, and municipal utility

torium prohibited utility companies

14 Interview with Jennifer Ho.

that operates water, wastewater, gas, or

from terminating service. The protections

15 The Office of Minnesota Attorney General Keith Ellison.

2020. “AG Ellison, Gov. Walz, Lt. Gov. Flanagan

electric service in Delaware to offer a

offered by moratoria are temporary,

announce financial institutions will provide additional

four-month payment plan to customers

and some of them have expired, so the

mortgage-relief options to homeowners facing hard-

ship due to COVID-19, ” 2 July press release.

with past due accounts who indicate

states expect to see a flood of evictions

16 Email correspondence with Sadaf Rahmani, 9 July

that they have been affected by illness,

when the moratoria are fully revoked.

2020.

healthcare costs, reduced income, or

If Minnesota and Delaware rescind

17 The Office of Minnesota Attorney General Keith

job loss because of COVID-19. Although

the moratoria, the recent order from

Ellison 2020.

18 Interview with Jennifer Ho.

some utility companies may request

the Centers for Disease Control and

19 Housing Link. 2020. “Paying Rent During the COVID-19

proof of COVID-19 impact, they cannot

Prevention and the U.S. Department of

Pandemic”; “Simplifying Affordable Housing,” Housing apply eligibility criteria such as install-Health and Human Services will protect

Link website (www.housinglink.org/AboutUs). Accessed 3 August 2020.

ment plan history, and customers are

residents from eviction due to nonpay-

20 Interview with Libby Murphy, 2 July 2020; Minnesota

not required to make a deposit or

ment of rent through December 31,

Unemployment Insurance. “Information Handbook”

downpayment to enroll in the plan.75

2020.78 Both states have reopened courts

(www.uimn.org/applicants/help-support/info-

handbook/after-you-apply.jsp). Accessed 3 September and have begun to assess the backlog of

2020.

Nonprofit and philanthropic organiza-

cases. Emergency rental and mortgage

21 The White House. 2020. “Memorandum on Authorizing

tions have also emerged as an additional

assistance financed through CRF in both

the Other Needs Assistance Program for Major Disas-

ter Declarations Related to Coronavirus Disease 2019.”

avenue of support for families affected

states as well as extended unemployment

22 The Office of Minnesota Attorney General Keith Ellison

29

2020a. “Attorney General Ellison ready to enforce

COVID-19 Peacetime Emergency Declared in Executive

Due to a Public Health Threat.”

order suspending evictions during emergency,” 24

Order 20-01.”

58 State of Delaware 2020a.

March press release.

43 Interview with Jennifer Ho.

59 Interview with John Whitelaw; State of Delaware 2020b.

23 State of Minnesota Executive Department 2020a;

44 State of Minnesota. 2020. “Governor Walz, Lt. Gov-

60 Interview with John Whitelaw.

Interview with Katherine Kelly, 7 July 2020; The Office

ernor Flanagan Announce $100 Million in Housing

of Minnesota Attorney General Keith Ellison 2020b.

61 Justice of the Peace Court of the State of Delaware.

Assistance, Homelessness Prevention”; Minnesota

“Attorney General Ellison files another lawsuit to

Housing. “COVID-19 Housing Assistance Program”

2020. “In the Justice of the Peace Court for the

protect tenants from forced removal during COVID-19

(www.mnhousing.gov/sites/np/covid19housingassis-

State of Delaware Standing Order No. 5 Concerning

pandemic, ” 17 April press release.

tanceprogramFAQ). Accessed 3 August 2020.

COVID-19 Precautionary Measures and Scheduling of

24 Interview with Katherine Kelly; The Office of Min-

Cases,” Document provided by John Whitelaw.

45 U.S. Department of Housing and Urban Develop-

nesota Attorney General Keith Ellison 2020b; The

62

ment. 2020. “CARES Act Emergency Solutions Grant

State of Delaware 2020b.

Office of Minnesota Attorney General Keith Ellison.

(ESG) Round 2 Funding under COVID-19 Supple-

63 State of Delaware 2020b; Interview with John

2020. “Attorney General Ellison’s office wins halt to

mental Appropriations”; U.S. Department of Housing Whitelaw; Email correspondence with John Whitelaw,

illegal removal of tenants during emergency,” 7 April

and Urban Development. 2020a. “HUD Provides

3 September 2020.

press release.

Remaining $2.96 billion in CARES Act Funding for

64 Interview with John Whitelaw; State of Delaware

25 The Office of Minnesota Attorney General Keith Ellison

Homeless Populations Amid Coronavirus Recovery, ” 9

2020b; State of Delaware. 2020c. “Gov. Carney, AG

2020a; Interview with Katherine Kelly.

June press release; Interview with Jennifer Ho.

Jennings, DSHA, Delaware Judiciary Announce Joint

26 Email correspondence with Katherine Kelly, 4 September

46 U.S. Bureau of Labor Statistics. “Mid-Atlantic Information

Effort on Foreclosure & Eviction Prevention.” 1 July 2020.

Office — Delaware” (www.bls.gov/regions/mid-atlan-

press release.

27 Ibid.

tic/delaware.htm#tab-1). Accessed 8 June 2020.

65 Interview with John Whitelaw.

28 Marissa Evans. 2020. “Minnesota attorney general’s

47 Brandon Holveck. 2020. “Unemployment claims triple

66 Jeanne Kuang. 2020. “Rent Was Due This Week amid

office fielded 400 complaints since eviction proceed-

Delaware’s previous monthly record due to coronavirus

The Coronavirus Crisis. What If You Couldn’t Pay?”

ings stopped,” Star Tribune, 6 May.

shutdown,” Delaware News Journal, 2 April.

Delaware News Journal, 4 April; “What Does DAA Do?”

29 Interview with Katherine Kelly.

48 U.S. Department of Labor. Employment & Training

Delaware Apartment Association website (www.daahq.

org/). Accessed 13 July 2020.

30 “COVID-19,” Housing Link website (housinglink.org/

Administration. “Unemployment Insurance Weekly

List/covid-19). Accessed 21 July 2020; “We are here to Claims Data - Report r539cy” (oui.doleta.gov/un-

67 Interview with John Whitelaw; Email correspondence

help,” Minnesota Multi Housing Association website

employ/claims.asp). Accessed 8 June 2020.

with John Whitelaw; “Delaware,” Eviction Lab website

(www.mmha.com/Resources). Accessed 21 July 2020;

49 State of Delaware. 2020. “Declaration of a State of

(evictionlab.org/covid-policy-scorecard/de/). Ac-

“COVID-19 Updates and Resources,” Minnesota

Emergency for the State of Delaware due to a Public

cessed 28 May 2020.

Multi Housing Association website (www.mmha.com/

Health Threat” ; State of Delaware. 2020. “Sixth Extension

68 Stephen Metraux et al., 7–8.

COVID19). Accessed 21 July 2020; “Minnesota Multi

of the Declaration of a State Emergency for the State

69 State of Delaware 2020b.

Housing Association,” Minnesota Multi Housing

of Delaware due to a Public Health Threat.”

70

Association website (www.mmha.com/Membership/

State of Delaware 2020c.

50 Stephen Metraux, Mimi Rayl, Julia O’Hanlon, and

Membership-Information). Accessed 21 July 2020.

Sean O’Neill. 2020. “Addressing the Threat of COVID-

71 Ibid; HUD Exchange. “Delaware” (www.hudexchange.

31 Brian Arola. 2020. “Evictions could increase demand

19-Related Housing Instability and Displacement in

info/grantees/delaware/). Accessed 6 July 2020; U.S.

for homeless services,” Mankato Free Press, 12 May.

Delaware,”  Center for Community Research and Ser-Department of Housing and Urban Development

2020a.

32 Interview with Libby Murphy.

vice & Institute for Public Administration, Joseph R.

Biden, Jr. School of Policy and Public Administration,

72 State of Delaware 2020c.

33 Minnesota Legislature. Office of the Revisor of

University of Delaware, 2, 5.

73

Statutes. 2019. 484.014 Housing Records; Expungement of

Delaware State Housing Authority. 2020. “Governor

51

Eviction Information; Susan Fleurant and Colleen Healy

National Low Income Housing Coalition. 2020. “2020

Carney and DSHA Announce Housing Assistance

Boufides. 2020. “Eviction Expungement: A Civil Legal

Delaware Housing Profile.”

Program”; National Conference on State Legislatures.

Tool to Improve Housing Stability and Health,” The 52 State of Delaware. 2020a. “Sixth Modification of the

2020. “State Actions on Coronavirus Relief Funds” ; Network for Public Health Law.

Declaration of a State of Emergency for the State of

Interview with John Whitelaw.

34 Interview with Libby Murphy.

Delaware Due to a Public Health Threat”; State of 74 State of Delaware. 2020. “Governor Carney, DSHA,

Delaware. 2020b. “Twenty-Third Modification of the

New Castle County Announce $40 Million in Hous-

35 Minnesota Management and Budget. 2020. “Interim

Declaration of a State of Emergency for the State of

ing Assistance”; Delaware State Housing Authority.

Budget Projection.”

Delaware Due to a Public Health Threat.”

“Delaware Housing Assistance Program” (www.

36 Interview with Libby Murphy.

53 State of Delaware 2020a; “Delaware Eviction,” Land-

destatehousing.com/OtherPrograms/ot_dehap.php).

37 Jung Hyun Choi and Caitlin Young. 2020. “Owners

lord Guidance website (www.landlordguidance.com/

Accessed 20 August 2020; National Conference on

and Renters of 6.2 Million Units in Small Buildings

eviction-notice-forms/delaware-eviction/). Accessed State Legislatures.

Are Particularly Vulnerable during the Pandemic,”

10 July 2020.

75 State of Delaware 2020b.

Urban Institute.

54 Interview with John Whitelaw, 10 July 2020; Isabel

76 “Delaware COVID-19 Emergency Response Initiative,”

38 Interview with Libby Murphy.

Hughes. 2020. “Delaware courts and coronavirus:

Delaware Community Foundation website (www.delcf.

39 “Minnesota,” Eviction Lab website (evictionlab.org/

What’s postponed, what’s still scheduled,” Delaware

org/coronavirus/). Accessed 13 July 2020; “COVID-19

covid-policy-scorecard/mn/). Accessed 28 May 2020.

News Journal, 16 March.

Strategic Response Fund Grantees,” Delaware Community

40 Interview with Libby Murphy.

55 Interview with John Whitelaw; State of Delaware

Foundation website (www.delcf.org/covid-grantees/).

41 State of Minnesota Executive Department. 2020b.

2020a.

Accessed 14 July 2020.

“Emergency Executive Order 20-79; Rescinding

56 State of Delaware 2020a.

77 The White House 2020a.

Emergency Executive Orders 20-14 and 20-73, Modify-

57 State of Delaware. 2020. “Fourteenth Modification of

78 U.S. Department of Health and Human Services and

ing the Suspension of Evictions and Writs of Recovery

the Declaration of a State of Emergency for the State

Centers for Disease Control and Prevention. 2020.

During the COVID-19 Peacetime Emergency.”

of Delaware Due to a Public Health Threat”; State of

“Temporary Halt in Residential Evictions to Prevent

42 State of Minnesota Executive Department. 2020.

Delaware. 2020. “Eighth Modification of the Declaration

the Further Spread of COVID-19,” Federal Register:

“Emergency Executive Order 20-89 Extending the

of a State of Emergency for the State of Delaware

85:173, 55292, 55297.

30

Additional Resources

n The Joint Center for Housing Studies (JCHS) of Harvard University hosts a repository of COVID-19 resources categorized by government resources, eviction and mortgage relief, JCHS COVID-19 research, and additional resources.

www.jchs.harvard.edu/covid-19-resources.

n “Household Pulse Survey Phase 2: Measuring Social and Economic Impacts during the Coronavirus Pandemic” by the U.S. Census Bureau, surveys households on how the pandemic has affected their education, employment, food security, health, and housing, among other topics. www.census.gov/programs-surveys/household-pulse-survey.html.

n “Assessing Options for Federal Rental Assistance to Stabilize Renters During the Pandemic” (2020), by Martha Galvez, Kathryn Reynolds, Jorge Morales-Burnett, and Yipeng Su with Solomon Greene, examines several federal rental assistance programs and finds that the Housing Choice Voucher and Emergency Solutions Grants programs offer the most promise for delivering efficient and equitable rental relief. www.urban.org/sites/default/files/publication/102676/

assessing_options_for_federal_rental_assistance_during_pandemic_2.pdf.

n “Designing a Rental Assistance Program for COVID-19” (2020), by Local Housing Solutions, highlights several factors for cities and states to consider when developing rental assistance programs in response to COVID-19 and offers early lessons from local rental assistance programs in Chicago, Minneapolis, and San Antonio.

www.localhousingsolutions.org/wp-content/uploads/2020/07/Rental-assistance-updated-brief.pdf.

n “Getting Landlords and Tenants to Talk: The Use of Mediation in Eviction” (2020), by Brian Bieretz, Kimberly Burrowes, and Emily Bramhall, examines how housing courts use mediation as an alternative to traditional court proceedings and highlights best practices for using landlord-tenant mediation more widely.

www.urban.org/sites/default/files/publication/101991/getting-landlords-and-tenants-to-talk_3.pdf.

n “National Low Income Housing Coalition Research Note: State and Local Rental Assistance Programs: Finding Solutions for a Growing Crisis” (2020), by Andrew Aurand, Rebecca Yae, Daniel Threet, and Emma Foley, examines prepandemic rental assistance programs from NLIHC’s Rental Housing Programs Database and another dataset compiled from information about 195 rental assistance programs created or expanded in the wake of COVID-19.

nlihc.org/sites/default/files/State-and-Rental-Assistance-Programs.pdf.

n “State and Local Rental Assistance,” by the National Low Income Housing Coalition, tracks city, state, and philanthropic

rental assistance programs created during the COVID-19 pandemic. nlihc.org/rental-assistance.

n “The COVID-19 Eviction Crisis: An Estimated 30-40 Million People in America are at Risk” (2020), by Emily Benfer, David Bloom Robinson, Stacy Butler, Lavar Edmonds, Sam Gilman, Katherine Lucas McKay, Zach Neumann, Lisa Owens, Neil Steinkamp, and Diane Yentel, compiles existing housing research and data related to the COVID-19 pandemic to estimate future eviction filings and housing insecurity and presents policy solutions to mitigate displacement. www.aspeninstitute.

org/blog-posts/the-covid-19-eviction-crisis-an-estimated-30-40-million-people-in-america-are-at-risk/.

For additional resources archive, go to www.huduser.gov/portal/periodicals/em/additional_resources_2020.html.

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Document Outline

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Table of Contents

The Federal Government Steps Up in

The Federal Housing Administration:

State Moratoria Support Households

— Seth D. Appleton, Assistant Secretary for Policy Development and Research

CONTINUED ON PAGE 27

CONTINUED FROM PAGE 25