Gryphon USA: Extension of eviction, foreclosure moratorium no long-term solution
COLUMBUS, Ohio, Dec. 23, 2020 /PRNewswire/ -- Recent actions at the federal level to extend foreclosure and eviction moratoriums on certain sections of the housing market through January will allow the incoming administration of President-elect Biden to revisit the issue after Inauguration Day, according to Columbus distressed assets manager and auctioneer Rich Kruse.
But the Gryphon USA Ltd. principal said adopting that strategy for too long could create risks for the housing market as many landlords and mortgage holders begin to assess the impact on their businesses.
Congress supported the extension of mortgage foreclosures and eviction protections to certain properties through Jan. 31 as part of a second round of support for those facing job loss and other economic stress as a result of the COVID-19 pandemic. A number of federal agencies had already extended the moratorium that were due to expire on Dec. 31.
Kruse said the National Low-Income Housing Coalition has estimated the amounts of back rent owed to be between $30 billion and $70 billion, although a report from the Philadelphia Federal Reserve Bank in early December had put the number at $7.2 billion from the start of the moratoria in March through Dec.1, 2020.
The $600 payments Congress just approved for adults earning less than $75,000 per year, however, will have little impact for the 12 million renters the Low-Income Housing Coalition estimates have accumulated deferred rent since January.
"It's a finger in the dike that continues to crumble in front of our eyes," Kruse said.
"Tenants are not likely to use the funds to make rental payments because the government essentially just said the free ride is open for another 2 months," Kruse said. "There's nothing here for the housing providers and barely anything for the tenants."
Mortgage lenders also face an uncertainty on when payments on FHA, VA and other loans backed by the federal agencies will come due. The Visual Capitalist website estimates 17 million adults are behind on the house payments nationally. More than a third of Ohioans are behind on their mortgages or their rent, with 192,000 people poised to face foreclosure or eviction.
"This congressional action, while necessary at the moment, just kicks the can down the road," Kruse said.
"The Biden administration should look to refocus any future support of the housing industry toward landlords and mortgage holders and quickly allow the marketplace to sort out the economic damage the moratoria have caused," Kruse said. "Too long of a delay will cause untold harm to the rental properties without a stream of income to pay for general maintenance and create a backlog of distressed owner-occupied homes that could result in damaging the broader home market."
Kruse serves as managing partner of Gryphon USA Ltd., and oversees the affiliated Gryphon Realty real estate brokerage and the Gryphon Asset Management receivership and asset management practice. His engagements primarily focus on complex state and federal legal matters, Private Selling Officer transactions and business insolvency.
More reading here from recent articles on the eviction and foreclosure situation:
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- https://dsnews.com/daily-dose/12-21-2020/fha-extends-foreclosure-moratorium-expands-forbearance-options
- https://www.housingwire.com/articles/the-next-coronavirus-front-evictions-and-foreclosures/
- https://www.visualcapitalist.com/mapped-the-risk-of-eviction-and-foreclosure-in-u-s-states/
- https://nlihc.org/news/new-research-released-costs-covid-19-evictions
Gryphon provides these links for background only and does not claim ownership of the articles or extend permission to reproduce for publication.
SOURCE Gryphon USA
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