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Biden Tries to Revive His Eviction Moratorium Through the Back Door

National Review

July 17, 2023

The federal overreach that was part of the Covid pandemic response included a ban on residential evictions, ordained by, of all agencies, the Centers for Disease Control. Ultimately, the Supreme Court slapped down a Biden-administration effort to extend the ban — which had no serious public-health basis. But that has not stopped the White House from taking steps based on the dubious view that tenants nationally are at the mercy of oppressor landlords — and from taking backdoor steps through the federally chartered mortgage-finance companies to enforce this view.

The regulation of landlord–tenant relations — like housing and building-code enforcement — has historically been a matter for localities, the units of government by far the closest to housing markets. Cities and towns have long had a variety of policies, ranging from the non-zoning of Houston to the price regulation of rents in New York City.

But of late, the Left has taken up the idea that an eviction crisis is at hand — and that extensions of tenants’ rights and, indeed, housing subsidies are the remedy. The truth is that evictions have not spiked. They have, to be sure, increased since the period of the federal ban. But even Princeton University’s Eviction Lab, whose founder, sociologist Matthew Desmond, has campaigned to limit the practice, paints a nuanced picture:

We recorded almost 66,000 eviction filings in January 2022, approximately 35.1% less than normal for a typical, pre-pandemic January. Over the next eight months, those numbers steadily increased, peaking at over 96,000 cases filed in August 2022 (8.2% less than historical average). Case volumes declined slightly in the last quarter of the year, but that follows a predictable seasonal pattern. The 85,593 cases filed in December were 1.6% less than historical average.

The truth is that, in competitive housing markets, owners are at pains to retain tenants rather than capriciously kick them out. A steady revenue stream is the most important part of rental-property ownership.

None of this deterred the Biden administration, this past January, from issuing “The White House Blueprint for a Renters Bill of Rights,” whose provisions are clearly based on the view that renters are at risk of being harmed by rapacious owners. It included such provisions as the need for “clear and fair leases,” eviction prevention, and the rights of tenants to organize. Indeed, the core idea here — that tenants need a “bill of rights” — reflects a worldview that, absent such a document, they will be at the mercy of greedy owners. The document, what’s more, takes no note of tenant responsibilities, such as paying the rent and maintaining the premises.

Notably, this blueprint was at pains to note that it does not “constitute US government policy.” The powers of Washington do not, apparently, extend to such matters.

Enter the Federal Housing Finance Agency (FHFA), established by Congress in 2008 as an independent agency under the Housing and Economic Recovery Act. FHFA oversees “government-sponsored enterprises” (GSEs) such as the secondary-mortgage giants Fannie Mae and Freddie Mac. Chartered during the New Deal to provide liquidity to the infant long-term U.S. mortgage market, “Fannie and Freddie” have, more recently, become vehicles for questionable progressive social ideas, most notably the “affordable-housing goals,” which prioritize credit for lower-income households over their ability to repay their loans. That policy helped contribute to the 2008 financial-crisis mortgage meltdown; indeed, it may well have been the key catalyst.

Now the GSEs are back for an encore. The FHFA has asked them to develop “tenant protection policies” in keeping with that “White House Bill of Rights.” Many of the questions that Fannie and Freddie staff raised during a comment period are nothing if not leading: Should tenants get adequate notice before an eviction action? Should Fannie and Freddie make sure housing codes are enforced? Is rent stabilization (price control) worth considering?

The context here is important. Fannie and Freddie hold extensive portfolios of multifamily apartment buildings. Fannie Mae alone purchased $69 billion in multifamily-building mortgages in both 2021 and 2022. So Fannie and Freddy have a clear financial interest in ensuring that owners are able to continue to make their mortgage payments for these buildings. That further suggests they actually have an interest in fair but swift eviction policies, since deadbeat tenants mean landlords who can’t pay their bills — as became a significant problem during the lengthy eviction ban in the Covid era.

What’s more, thoughtful social policy should reflect an understanding that the threat of eviction — rather than being the sword of Simon Legree, the cruel plantation owner in Uncle Tom’s Cabin — in fact protects other tenants. Those who behave badly — whether by being disruptive or engaging in criminal activity — threaten the quality of life of those who work hard and play by the rules. Indeed, that is made clear, ironically, by Mathew Desmond’s best-selling 2016 book Evicted, which sparked a wave of concern about tenant protection. Although Desmond ultimately proposes an entitlement to housing subsidies, his brilliantly drawn case studies of troubled tenants make clear why eviction is an important tool of social order — as evidenced by tenants who, for instance, are involved in the drug trade and cause a building fire.

When the GSEs buy mortgages to incorporate into bonds with the implicit backing of federal taxpayers, they should care above all that the revenue streams on which owners rely will be steady. That’s their role in financial markets. When they put their financial model at risk by seeking to incorporate nonfinancial goals, they remind taxpayers of the massive bailout that was required when Fannie Mae was forced into bankruptcy in 2008 and became the subject of the largest bailout of the financial crisis.

This is not a good scenario, and we should not take any steps, even small ones, to repeat it.

Editor’s note: This article has been corrected to reflect that FHFA is an independent agency established by Congress in 2008, and not a part of the U.S. Department of Housing and Urban Development.