Millions of tenants fall further behind on rent while waiting for federal Covid-19 assistance


WASHINGTON – Renters who are behind on their rent are still waiting for the $ 25 billion in assistance that Congress allocated in December, as millions of homes and landlords go deeper into debt.

Many states are still determining how to distribute the money they have received from the Treasury Department to help some 13 million renters. Meanwhile, Congress is ready to grab another $ 20 billion in rental assistance.

California has a March 15 deadline to set up an application system. In New York, the funds are trapped in the state’s budget process, which could run through April. The Michigan legislature plans to approve its share of the money in installments only.


“We have some tenants who have not paid their rent since March of last year.”


– PJ Calello, Newark, NJ Area Owner

The delays partly reflect the complexities of starting a new system from scratch and the difficulty of getting the money out quickly while preventing fraud.

“Right now it’s there in most states,” said David Dworkin, president and CEO of the National Housing Conference, a nonprofit group that advocates for affordable housing. “The reality is that these things take time and you want to do them well and not make mistakes because you were too fast.”

Texas opened its application portal for $ 1.3 billion in rental assistance on February 15 and hopes to begin releasing funds sometime this month, said Kristina Tirloni, a spokeswoman for the Texas Department of Housing and Community Affairs.

The state will distribute aid to lower-income tenants first. It will take landlords and tenants about two weeks to receive the money once they apply, he said, and applications will be accepted for the duration of the money.

Congress is ready to pass an additional $ 20 billion in rental assistance as part of the $ 1.9 trillion aid package backed by the Biden administration. On Saturday, President Biden urged the Senate to take swift action on the package after it passed the House in a majority party vote.

A survey conducted last month showed that about 17% of renters are behind on their payments, three times the typical rate.


Photo:

tom brenner / Reuters

Taken together, the roughly $ 45 billion in aid is expected to greatly help delinquent tenants, many of whom lost their jobs as a result of the pandemic, as well as landlords who are owed money.

An analysis by the Urban Institute, a Washington think tank, found that the amount of unpaid rent could exceed $ 52 billion. He estimated that the average delinquent household owed $ 5,586.

According to a Census Bureau survey conducted last month, about 17% of renters are now behind on their payments, three times the typical rate.

Many state and local governments have cut staff during the pandemic and are ill-equipped to build and manage rental assistance programs, said Brad Gair, senior managing director at emergency services consultancy Witt O’Brien’s.

“You need staff to design the programs and implement them. Case management, call centers – that’s a little more than many [local governments] I can drive, ”Mr. Gair said. His firm has been hired to help administer rental assistance and other forms of pandemic relief in Kansas and other states and by local governments, including King County, Washington, where Seattle is located.

States and localities generally have until September 30 to use the rental assistance money.

The delays are partly due to Treasury efforts to develop fraud protection guidelines. That was a problem last year with the more than $ 520 billion of forgivable loans from the Small Business Paycheck Protection Program, which were quickly distributed but required little documentation.

State and local officials said they ran into problems with the guidelines initially issued by the Treasury on January 19, the Trump administration’s last full day in office, which they deemed excessively complicated. The Biden administration clarified the guidelines last week, allowing self-certification for tenants who are unable to document a loss of income.

The delay is making it difficult for Laura Carrion, a working single mother in Houston, to regain her financial balance.

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A home care nurse, Ms. Carrion was out of a full-time job for six months and ultimately owed the landlord over $ 8,000. A federal moratorium on evictions, in effect through at least March, has kept her at home.

In February she got a nursing job. Now she works up to 72 hours a week trying to earn enough to cover her monthly bills and pay off her past debts, all while raising her teenage son.

“I feel like I’m going to drown because I’m 49 years old,” he said. “I’m not 30 anymore.”

The owners are also being pressured.

PJ Calello said that about 120 tenants were behind on their rent or were making partial payments.


Photo:

Diane calello

PJ Calello, whose family business manages about 1,000 rental units in and around Newark, NJ, said about 120 tenants were behind on rent or partial payments, triple the number before the pandemic. .

Meanwhile, costs increase. Water use on their properties increased by a third as renters stay home during the pandemic. The amount of garbage to be collected has doubled, and wear and tear affects maintenance and cleaning personnel, who cannot work remotely.

“We have some tenants who haven’t paid their rent since March of last year,” Calello said.

The coronavirus pandemic has forced many Americans to accept new financial realities. WSJ’s Shelby Holliday traveled to a diverse neighborhood in Philadelphia to learn how neighbors face different struggles caused by the same virus. Photo: Adam Falk / The Wall Street Journal

Write to Andrew Ackerman at [email protected] and Will Parker at [email protected]

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