After all, the foreclosure and eviction processes serve important functions, giving those who are putting up capital for housing — lenders and landlords — confidence that they will be paid for their investment, either by the current occupant or another. Without that confidence, they either won’t provide funding or will do so only at a premium high enough to cover their risk, leading to a dramatic increase in the cost of housing for everyone who rents a home or takes out a mortgage.
Given the cost, it is important that these moratoria go only as far as necessary to get struggling families to the other side of the economic chasm. That means keeping the moratoria in place long enough to give the economy time to stabilize and get the needed relief infrastructure into place, so that as many families as possible can afford their housing costs by the time they are forced to cover them again.
Fortunately, the economy appears poised to regain momentum later this summer, as the widespread distribution of the vaccine gradually allows commerce to open back up in earnest. The question, then, is when the relief for those struggling to cover their housing costs will be in position to help.
This relief infrastructure is largely in place today, with the only remaining piece the $10 billion of additional support from Congress, which should begin to fall into place in the coming months. This suggests that the foreclosure moratorium can be lifted by the end of the summer.
Given this uncertainty, in order to ensure that the eviction moratorium neither ends before renters have gotten the relief Congress has provided, nor drags on longer than necessary, policymakers should take an incremental approach. By extending the moratorium several months at a time, they can assess the pace at which renters are getting relief and set its expiration once they are comfortable that soon enough renters will have received relief to minimize the number of families who will be displaced unnecessarily.
If a significant number of states appear unable to get the relief to renters and landlords in a timely way, policymakers should consider lifting the moratorium only for a failure to pay prospective rent, not the back rent that Congress has committed to cover. This would allow policymakers to keep those in their current housing who will be able afford it once the relief arrives, and ease those who will not into housing they can afford.
There is an understandable inclination to extend the eviction and foreclosure moratoria indefinitely. After all, it is terrible to see families forced out of their homes, whatever the reason. But these moratoria are not free. The longer they drag on, the heavier their toll, driving up the already high cost of housing. It’s important to be thoughtful about when we end them, so that the moratoria function as a bridge to recovery instead of an impediment.