SOUTHEASTERN, N.C. — After months of reprieve, local, statewide, and federal protections that would stop evictions from proceeding are nearly completely gone as the coronavirus pandemic continues.
The economic support networks put in place but state and federal governments all seem to be disappearing at once: the statewide utility disconnection moratorium expired Wednesday at midnight; the statewide eviction moratorium expired June 20; the federal eviction moratorium expired last Friday; federal Pandemic Unemployment Assistance (PUA) ended Saturday.
The economy is rebounding but still bruised. Back down from the all-time high 14.7% unemployment rate in April, unemployment is steadying, at 7.6% in North Carolina in June. That’s still higher than the pre-Covid-19 unemployment average, between 3.5 and 4.4% —
That rate could still climb again, as businesses, in particular, continue to struggle with making ends meet. Add to that fears of a second wave of Covid-19 — or the continuation of the current wave — and uncertainty over whether a second round of federal Paycheck Protection Program loans, which have helped to keep many employees on the payroll, will be included in upcoming federal relief packages.
Last week, the N.C. Department of Employment Security received 61,794 new unemployment claims, averaging about 8,800 new claims a day.
While the economy works to rebound from the coronavirus, courtrooms are flooding with eviction proceedings as government protections are lifted.
In New Hanover County, two magistrates and courtrooms have been dedicated to eviction proceedings since mid-July; under normal circumstances, there’d just be one.
Housing advocates describe the wave of eviction paperwork as a crisis already in progress. For landlords, the ability to collect rent and replace nonpaying renters with tenants able to pay could help stabilize a shaky marketplace.
Wilmington attorney Addison Palanza, who specializes in landlord-tenant law and represents both sides, said the recently-lifted eviction protections were at first a helpful Band-Aid. “For many of your average folks, that was a boom. That helped them get through this time,” he said. “But what we have in this reality is there’s a burden on everyone in the chain.”
The chain includes renters at the bottom, then landlords, then creditors. When one segment of the chain stops paying, it impacts the entire system.
“It’s harder to be sympathetic to a bank than to a human being. The reality, however, is when we’re zoomed out at this 30,000-foot level, the burden has to be borne by someone,” he said.
“This is a pretty serious backlog.”
Steve Lee, a steering committee member with New Hanover For All and housing advocate, said the odds are not in a nonpaying tenant’s favor. “North Caroling has good protection for tenants — except when you don’t pay the rent,” he said. “Eviction for nonpayment is almost a slam dunk, you lose, landlord wins situation in small claims court.”
The doubled-up courtroom activity means less time for defendants, Lee said. “You’ve got six minutes to make your case,” he said.
Statewide, the eviction backlog topped 10,500 cases in July, according to N.C. Supreme Court Chief Justice Cheri Beasley. Palanza believes the actual figure is likely twice the Chief Justice’s estimate.
It includes eviction proceedings that were already underway before courtrooms shut down to non-emergencies that were unrelated to Covid-19 financial difficulties. So on top of a new wave of summary ejectment filings to account for recent months of unpaid rent, the court system has also been working its way through pre-existing evictions that were previously put on pause.
On July 24, the last remaining government intervention under the CARES Act stopping many evictions expired, allowing landlords with federally-backed mortgages to issue a 30-day notice to vacate. The CARES Act’s expired evictions protections have not since been extended or renewed, though Congress is attempting to pass a new Covid-19 related stimulus package.
Many renters have already begun receiving 30-day vacate notices this week; most major apartment rental groups sent out notices to all tenants warning them that evictions for non-payment would be proceeding.
By Aug. 24, the notice to vacate will have expired and a new batch of summary ejectment hearings will hit the small claims court’s busy calendar. Normally, hearings must be scheduled within a week of filing; under Chief Beasley’s July 20 emergency order, defendants have up to 30 days until a court date must be scheduled.
Outside of the CARES Act, one protection for mortgages through Fannie Mae or Freddie Mac remains in place through Aug. 31. This moratorium set by the Federal Housing Finance Agency blocks evictions of homeowners and renters of single-family homes. Nearly 70% of single-family home mortgages are federally backed, but the other 30% — with loans backed by private investment groups or banks — have no protection at all. (The federal Consumer Financial Protection Bureau has tools to find out who owns your mortgage here).
Govt. intervention too much?
Governor Roy Cooper allowed a months-long statewide ban on all residential evictions for the reason of nonpayment to expire June 20 — this included privately properties owned outright. Though serious and necessary at the time, Palanza said this intervention is a representation of extreme government intervention.
“Our Constitution prohibits interference of private contracts,” Palanza said, referencing Article I, Section 10, Clause 1 of the U.S. Constitution. “At this state, our government, every state government across the country have overlaid restrictions on private contracts. That’s pretty wild stuff.”
At this point, Palanza hopes the housing economy can catch up on its own — without government intervention. This requires extensive coordination and humility on behalf of both tenants and owners, Palanza said, requiring compromise.
When payment is not possible, landlords must find a way to retain ownership of their homes without triggering the need for them to sell at a lower price en masse, thus negatively impacting home values, Palanza explained. Suing a tenant for back rent owed requires all new paperwork and filing fees outside of the eviction process. And once the tenant is finally out, there’s no telling how much damage has incurred.
Judgments are rarely paid and owners going through the eviction process almost always lose money owed to them. “I just want my money,” Palanza said clients tell him. “It is your money — but you’re never going to get it,” he said he tells them. Like any business, renting includes financial loss. It’s best to work something out verbally with renters before going down the more aggressive path, he said.
“Next thing you know you’re trying to get blood out of a turnip and there’s just no point,” he said. Though he’s worked on hundreds of cases, most are settled out of court. Only two have made it all the way through the eviction process, sheriff’s office escort and all.
“No one wants this bubble to pop — but how people chose to work with one another — or not — is ultimately what’s going to define the next six months from the eviction foxhole, our society is going to be impacted in an incredible way if we don’t find a way to equitably share the burden that’s effectively shared by everybody,” Palanza said.
Govt. intervention not enough?
Housing advocates believe government intervention should instead be extended and enhanced.
Lee with New Hanover For All said though it’s radical, he’d like to see rent cancellation or reduction for the time being. “Our position is, although we don’t know how to make it a reality, is that the suffering should be shared all the way up the chain,” he said.
Specifically focusing absentee corporate landlords over small individual landlords, Lee and his colleague Ashley Daniels, an organizer with New Hanover For All, would like to see more urgency out of elected officials to confront the growing housing crisis.
“Clearly the folks who are going to be the most impacted are going to be the folks who don’t have a lot in their bank account,” Daniels said. “Folks are expected to have enough money to carry them through losing a job in a pandemic and still being able to pay rent. It makes no sense that there is no expectation that these landlords should pay back the community in the time of a pandemic.”
“A global pandemic is unprecedented. But nonetheless, the responsibility and the urgency remains for people who are facing eviction and housing insecurity through no fault of their own,” she said.
New Hanover For All has been handing out flyers and trying to track courtroom schedules to assist renters undergoing the eviction process. The non-profit team flagged multiple federally-backed apartment complexes that attempted to evict tenants last month before the CARES Act moratorium actually expired.
Other services like Legal Aid of North Carolina are working to educate tenants of their rights and catch filing inaccuracies that may help buy them more time. For example, many ejectment filings did not include an affidavit stating whether or not the property was federally-backed and therefore covered by the CARES Act — a new requirement put in place by the Chief Justice.
Sonja McFarland, Director of the Help Hub at the Harrelson Center, has been fielding calls from people who’ve fallen behind on bills. “Slowly you can just feel the tensions rising,” she said.
The Help Hub provides one-time payments to low-income individuals by answering the question: “Can we close a gap and you be O.K going forward?” she said.
Because the Help Hub is supported by some private funding, they can help pay unconventional bills, like a car payment, directly to the entity owed money. “We try to put all the pieces together and not just throw money at something and not be sustainable,” she said.
The Help Hub was one of a handful of area non-profits that applied to be the City of Wilmington’s administrator of $350,000 in rent assistance funded through the CARES Act. The City plans to announce the recommended distributor early next week.
“Whoever does get it it will be a blessing for a lot of people in the Wilmington community,” McFarland said.
New Hanover For All initially advocated that the City’s dedicate its full $612,032 allotment of CARES Act funding toward rent assistance. Now, Lee worries the $350,000 will be difficult for the low-income individuals the program targets to access.
“The problem is is it’s going to be paperwork intensive with a lot of red tape and documentation that many poor people won’t be able to come up with in a timely fashion, he said. “It’s a bureaucratic undertaking and I think it’s going to be a challenge for everyone.
Mostly offering payments of about $200, the Help Hub has occasionally helped pay the bulk of or a full rent payment to help people catch up.
With many government protections now gone, McFarland is ready to meet an even higher demand. “I’m just expecting August to just be kind of crazy. The rubber’s hitting the road. You’ve got to pay something,” she said of the various lifted moratoriums. “I feel like we will get a flood [of requests],” she said.
McFarland said she’s heartbroken for renters who have fallen behind and also feels for landlords that haven’t had the ability to collect rent in months. The best way through these circumstances is through honesty and negotiations, she said.
“Talk to your landlord. Tell them what’s going on. So we can keep the lines of communication open because that’s kind of key to solving the problem. And many times, it works. I see the good in most people. They seem very gracious and don’t want to just throw somebody on the street,” she said.
Author’s note: Stay tuned for part two in this series which will focus on utility disconnections.
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