Good News for Landlords Bad News for Tenants
In what’s good news for landlords the National Eviction Moratorium Invalidated by Federal Judge.
The CDC, citing public health grounds, had implemented the temporary halt on evictions, extending protections for millions of tenants who have fallen behind on their rent during the pandemic. But a series of conflicting lower court rulings has called into question the legality of the moratorium, creating uncertainty for landlords and tenants alike.
Wednesday’s ruling from Judge Dabney Friedrich, from the U.S. District Court for the District of Columbia, is the first to set aside the moratorium on a nationwide basis.
Judge Friedrich, a Trump appointee, said that while it was the role of the political branches of government to address the pandemic, current federal law on public health didn’t give the CDC broad authority to impose the moratorium.
“Because the plain language of the Public Health Service Act unambiguously forecloses the nationwide eviction moratorium, the court must set aside the CDC order,” Judge Friedrich wrote.
Moratorium History
The eviction moratorium started with Trump via an executive order. He conveniently set expiration for December 31, after the election.
Congress extended the order until January, then the CD extended the order twice setting up this court showdown.
Correct Ruling
Small landlords are suffering because they have mortgages to pay and themselves risk foreclosure.
How the heck are back rents ever to be paid by those still out of a job?
If Congress wanted to halt evictions, the proper way would have been to pay tenants rent, not impose burdens making other people helpless.
Trump, Congress, and the CDC all erred, effective robbing Peter to keep Paul in his home.
Mish
I believe about 95% of all residential mortgages are owned by the two agencies, Fannie and Freddie. Commercial mortgage loans are not nearly as much in governments hands. There is a large amount of CMBS that goes to securitization, although that market has been in the toilet
There is no real estate investor that would anticipate risk for this type of event. One major factor for survival is what class of MF real estate did you own. Class A renters may not refrain from paying vs Class C MF renters. Another factor is size. If you have enough $$$$ you will survive. In my opinion this is an example of the govt inadvertently picking winners and losers again. Happened in 2008. This is a self fulfilling prophecy and is a problem of their own creation
“In my opinion this is an example of the govt inadvertently picking winners and losers again”
Bingo!
Which is why no one should feel sorry for anyone who owns any real estate.
It’s not about feeling sorry. It’s about the rule of law and legal/economic stability. Far more important. This is a very big deal.
Reminds me of when Obama wanted to reorder the bankruptcy liquidation preferences of bondholders in an automaker (if memory serves).
The small landlords will be preyed upon by corporate vultures that buy up tens or even hundreds of thousands of properties using Fed-printed money.
U.S. District Court for the District of Columbia is a federal appellate court. Next step for this case would be the US Supreme Court if there is an appeal. I don’t know how much sway this case would have on the other appellate courts, but I suspect this is far from over. Don’t underestimate the insanity that could come out of the 9th or the 4th district or state court systems such as California.
Nope, there’s still the court of appeals for the DC Circuit. After that the SCOTUS.
I never understood the no evictions. I mean your getting unemployment plus 600 bucks and stimulus cks. Most should be able to pay bills.
“How the heck are back rents ever to be paid by those still out of a job?”
Isn’t that what all the free money payments were for? I think it’s $3,200 per person to date, plus an extra $25,000 or so if you’re unemployed.
Exactly.
What was it spent on?
As a person who counsels hundreds of low income people a year on finances I can tell you exactly what nearly all of them spent it on.
New cars
New furniture
Nails
Clothes
Amazon
Apple.
I get to see where every penny of my clients money goes.
I kid you not…I had one client tell me she didnt’ have her rent money. I asked her what she did with her 1200 stimulus (the first one) and she told me word for word “I needed new furniture”.
Seriously. These people have plenty of money, with rare exceptions. They have no discipline. If I hadn’t seen their finances myself I’d think someone who said what I just said was being unkind. I have, however, seen their finances, and yes, the biggest issue they face isn’t a lack of money. It’s an abundance of foolish choices and a total lack of discipline.
Yes. Look at a homeless person in America and one in a third world country. You can notice the difference there as well.
That’s nonsense.
Unless you actually regularly examine low income\homeless people’s finances you are clueless as to how they actually spend their money.
Most low income people\homeless people have discipline issues.
They have no lack of food (food stamps are very generous), no lack of jobs (everyone is hiring right now, like everywhere) and no lack of stimulus money today.
In the last year a single person has received 3200 in direct cash assistance and over 25k in unemployment benefits (if they remained unemployed the entire time, which seems ludicrous to assume).
You can have a pretty nice life on that income in 95% of the geographic USA.
The issue is personal financial discipline.
Besides, the bottom 20% USA poor, were they a country, would be the 9th richest country in the world, were they a country. 9th richest is not nearly third world.
And unfortunately “the poor” are not the only ones who have no financial knowledge or discipline. It includes those house asset rich, who are over-mortgaged, i.e. bought the house of their dream or gambled on QE forever. The only difference is they have a FED printing presses on their side.
They just live from monthly payment to monthly payment.
I have managed subsidized housing for 12 years, and agree with you wholeheartedly. If I didn’t see all of the finances with my own eyes I wouldn’t believe it. The pattern of horrendous choices and lack of any notion of responsibility is breathtaking. The only thing more appalling is the high percentage of childhood abuse that becomes apparent when you listen and let them talk.
That’s a theme in the subsidized housing industry.
I know a lot of folks who were die hard democrats who became conservatives when they started working in the low income field, whether at DSS, HUD or other agencies.
Your eyes become open when you finally understand the the problem low income people face is themselves, not a lack of resources or opportunity.
Giving money to non-productive people should a crime. When society rewards non-productivity more than productivity, it’s doomed.
I’m afraid we’ve been there for the last year. I hope we get out, ASAP.
That all went for Xboxes and down payments on 9 year car loans.
“If Congress wanted to halt evictions, the proper way would have been to pay tenants rent, not impose burdens making other people helpless”…NOT TRUE – the burdens are not true, landlords can get forbearance. that was passed by the US legislature under the Cares Act.
Forbearance – Then what after the person moves out without paying?
BTW forbearance only applies to certain kinds of loans
Please think
If memory serves, I believe the help offered landlords required them to accept 80% of the back rent as paid in full, among other restrictions.
” I don’t feel bad for small landlords of any kind because they knew the risks of being landlords and taking on mortgages.”
CO is losing his mind
There are plenty of people renting out 2 or 3 flats or with small amount of properties. Entirely different from someone speculating in 20 air B&Bs
The rules were changed at whim of the emporer … no way to plan for that.
But part of the risk of running a glorified government-supported asset class is that things could go south quickly right ? Given that real estate is a federal government supported asset class, the landlords complaining is rather rich. Even the ones that own 2 or 3.
Do you HAVE any investments at all?
If so, do you screen them to deliberately avoid taking advantage of government policy, and/or Fed policies that might benefit you……just so you can be sure you aren’t contributing to the perpetuation of an inequitable system?….So as to maintain your high ethical standards and personal moral purity?
Because (a) ALL investments carry risk, and risk increases with the degree of leverage involved…..in anything.
And…..b) successful investing is much easier if you tailor your investments to take advantage of any and all of those things….favorable government policies, favorable Fed policies, low manipulated interest rates, various legal tax breaks.
What I’m saying is that you don’t think much like an investor. Only really dumb people don’t take advantage of every possible break they can get, out here in the real world of making money.
I still have no defaults, but it’s been a very expensive year for make-readies….and I got an email yesterday telling me I need to ante up $10K for a roof that got hailed on a couple of weeks ago. Today it was $1750 for a new water heater…..highway robbery, but I will pay it to get the tenant’s hot water back on right away.
My lowest end unit, which is out at the lake, is empty and needing a bunch of work right now. I hope it will be ready by June.
And I am having to completely reassess my entire retirement plan because Old Joe wants to change tax code that has been in place since 1921.
But I’m not complaining. My small portfolio is up more than a million bucks in the last 12 months, so I can afford to hang in there for the moment, given that windfall, which I never expected.
I just live my life. I’m not sitting there trying to exploit every opportunity for money making. I like most people own a single family home. I own stocks and bonds. I am a very passive investor and that has passively invested my way into over $2M of non real estate assets. I’m not complaining about the system. All my money was earned through toiling at various engineering jobs for 20 years. I am part of class of productivity that has built technology from the ground up. I’m sorry I can’t respect any industry or investors that simply stand on the shoulders of productive economy. The FIRE class is not productive. It is exactly why we are stuck at 1-2% GDP.
I think your mortgage payments and real estate taxes on your home should be doubled to support the banks that are no longer able to collect on income property mortgages. You knew the risks of investing in a government sponsored asset class.
Not an investor. It is my only home.
The point of all this is people in real estate who think government shouldn’t pick winners and losers and yet government has been picking them for decades as winners.
To be fair no asset class should be favored over another.
Stocks and bonds. Don’t people often sell those and pay capital gains in their retirement years?
Since you’ve done well, you’re probably considering early retirement.
Ahhhh. I feel better. Excuse me while I enjoy thinking about a little future schadenfreude.
When he’s clearing a million a year in gains, that’ll kick in… and you know, I think he’ll still be ok.
Why are you so panicky over legislation that will never pass ?
So you are an IT guy and because you know how to code you believe you are a part a part of the productive class in opposition to the parasite class. Do the companies you work for do worthwhile business or do they just facilitate the posting of cat videos or some other bullshit things? If you want to set yourself up as somehow being productive you should tell us what exactly do you do and which type of projects you have done and let’s us decide if your job is productive or not. In my job we financed so many bullshit companies with absolutely no social utility whatsoever but there is a big market for tech bullshit service companies. Maybe you work for some of them. That you don’t like capital gains period says that you don’t have any assets at all. It also says you are so far down the chain in your company that you don’t have stock options otherwise you would be very concerned by capital gains. The same goes for property taxes. After twenty years of working and nothing to show for it no wonder you sprout maxist bullshit.
You said “All my money was earned through toiling at various engineering jobs for 20 years. I am part of class of productivity that has built technology from the ground up. I’m sorry I can’t respect any industry or investors that simply stand on the shoulders of productive economy.”
Seriously? You seriously believe that your contributions are more important to productivity than a guy who builds a home and rents it out? Or a guy like myself who buys an old junker house, renovates it and rents it out?
You may have contributed a different kind of productivity to society but home building and renovation\providing housing for society is every bit as important.
You received a paycheck for your efforts-I receive rent. I have to maintain and keep habitable these houses for my clients. That’s work, every bit as important as your own. For that I am paid.
The only difference in how we are paid for our contribution is how we are paid.
But to state that you are productive and I am not and therefore do not deserve to be paid?
You sound a lot like the pigs in Animal Farm…”All animals are equal, but some are more equal than others.”
You are right I dont think like an investor. It is too stressful imo. The stress isnt worth the sleep I would lose.
Look. I don’t mean to be an asshole……but you need to understand. You are a member of a very small subset of people for whom the corporatist controlled system we live in still works.
You are comfortably anesthetized with your decent middle class pay and your corporate funded retirement plan. You have never held your own money in your own bank account and seen that balance drop by half (or more) at tax time.
You’re a blue pill guy who is comfortably attached to the matrix, but there is a lot going on that you never see,
You’ve never made enough money to really get in much trouble with money, although you are to be commended for your stability, which is why you have managed to hang on to your nest egg and have some measure of prosperity.
But…..very, very few people anymore are in your shoes. Once, most working people in this country were in your shoes, more or less…but that hasn’t been the case for a long time.
My productivity does not come primarily from my real estate. (although@dbannist is correct that providing rental housing is productive and honorable work). My productivity mostly comes from providing good and necessary healthcare treatment for people like you and for many who are less fortunate.
I never had a 401K, because I’m an employer, and I don’t have the 20% profit margin of an internet company…if I had a 401K, I’d have to pay matching funds for almost all my employees, just like your employer does for you. The money is just not there anymore for that to happen, here on Main Street.
So I look for places to put the surplus money that I try to create, with a view to getting the maximum return I can. This is not because of greed. It’s because the only person who is looking out for my retirement is me. In particular I am concerned about my partner, who is likely to outlive me by a number of years, if you believe the statistics.
It’s very easy for someone like you to be a social critic. You have very little skin in the game. I hope your passive approach to work, investing, and life works out for you, but you are not in a position to criticize people scrambling to figure out how to provide for themselves, or passing judgment on them because they’re upset at suddenly having their taxes raised precipitously, late in the game, after they’ve managed to find a workable path to a little wealth.
The narrative that is being sold to the public right now, “tax the rich”….. is a false narrative, The middle class will always get screwed, because the real rich have the ability to move their capital anywhere in the world now, and can thumb their nose at
the Joe Bidens of the world…..a scurvy political operative who never worked for a living himself, who long ago feathered his own nest.
Small landlords are suffering because they have mortgages to pay and themselves risk foreclosure.
Are these the same landlords who collected rent during the last crisis but didn’t pay and eventually defaulted and were foreclosed on and whose credit was cleared 3 years after ? I don’t feel bad for small landlords of any kind because they knew the risks of being landlords and taking on mortgages.
Most people who own rentals are mom and pop’s who rely on the home for income.
The large speculators are few and far between, though they do set markets at times.
It’s bad enough that “grandpa” can’t earn any interest from bonds, now you want to take away his income from his rental property too?
Seems unkind at best.
Unconstitutional is the correct word
But where does the income really come from ? Mom and pop knew the risks after the last economic crisis. Mom and pop complaining about their rental income for an asset class is federally supported by a federalized banking system is rather rich.
The government has no business interfering in private contracts.
Here’s why the eviction moratorium is nonsense. It helps no one and hurts everyone.
One of my companies properties that I manage, which is an average property, has a wait list of 150 families waiting for housing. That same property has 7 tenants who have not paid rent in months.
I’ve personally examined those 7 tenants finances. Not one of them is hurting because of COVID. These are regular issues that happened pre-covid.
So, I have to deny housing to 7 of those 150 families on the wait list who are living in cramped conditions (perfect for a COVID outbreak), are employed and able to pay rent and would love to have a home.
The government has forced me to deny them housing, collect no rent, and the tenants who live here will accrue a 5-6k rent deficit that will never be paid, go on their record and they will all be evicted anyway.
Everyone loses under the governments eviction ban. Get rid of the ban and everyone does better.
The eviction ban does nothing to help. No, it makes things far far worse for all, even the ones who get evicted.
Who owns or backs most of the mortgages in America ?
That’s irrelevant completely to whether or not small landlords should be allowed to evict. It doesn’t change a thing as to whether or not the eviction moratorium actually helped anyone.
It didn’t help anyone. It hurt all parties, even the ones who should have been evicted. No, people who are evicted don’t go live on the streets. That’s extremely rare. People go live with family and friends. The people who replace them and get to live in the housing are doing that now. Wouldn’t it be better for all to swap a non-payer with a payer? The landlord gets his money, the lender gets their money, the tenant is a break even….one family loses their housing and another one gains. The family that loses even gains a little in that they don’t build up a massive debt that will keep them from getting housing again immediately.
There is a net gain, no net loss.
You can harp on that all you want.
Gov’t eliminating rent payments is not really a normal business risk. If the gov’t decided to block your sources of income, you would have a different opinion.
Casual definitely has a problem with the concept of ownership.
“The risks of being landlords” should not involve a government entity deciding that contract law no longer applies, willy nilly, when it doesn’t want it to. Can you imagine the political risk premia investors will demand on US assets if our gov can decide to exercise the takings clause without compensation whenever it’s convenient. (Yes, a temporary taking is still a taking.)
In the process of these landlords learning, you’ll see that extra risk priced into the next rent increase.
Real estate is a Fed supported asset class. If the renters don’t have to pay, the mortgage owners should not have to pay either. The bondholders are protected by the Fed. Let us not pretend anymore that real estate is not effectively a federalized asset class.
Mortgages were a federalized asset class from the beginning of government sponsored mortgage insurance. The scam that just keeps giving.
Actually even before that. When they introduced loans to pay for stuff by banks that are effectively supported by the Federal government.
Hopefully this decision will trickle down to the local governments. Yesterday San Diego County supervisors voted 3-2 to extend the Eviction Moratorium.