Financial giant Goldman Sachs recently released a dismal report regarding potential upcoming evictions of American renters. According to Goldman, in the absence of government action, about 750,000 American households are subject to eviction by the end of the year 2021. This group owes their collective landlords about $17 Billion in back rent. Landlords, whether individuals or corporations, are financially dependent on rental income to maintain investment properties. Further, they have contracts with renters promising rent payment.
Along came COVID-19 in 2020, and many renters lost their employment income. As much as I detest government expansion, some problems are so massive that only government is large enough to make the needed difference. Congressional reaction was swift, and assistance for almost every conceivable aspect of the economy began quickly.
Among many bailouts was a provision for renters, allocating nearly $47 Billion to 50 states and Washington, D.C. Local governments were charged with disbursing funds to affected renters, restoring their ability to pay rent. This was designed to circumvent a potential eviction crisis. But it has not worked.
Of the nearly $47 Billion allocated, only about 11% was actually paid to renters. Over $40 Billion remain in the coffers of the states. If governments worked efficiently, that money would be doled out immediately, landlords would get paid, tenants would have a secure a place to live, and the economy would carry on as before. Eviction problem solved. If only government worked like a private business.
Two problems are hindering this process. One is qualification standards set by the Federal Government, under which many renters simply don’t qualify for relief. The second problem is lax renters, who seized the opportunity to stop paying their rent. Together, these problems contribute to a potential human homeless expansion.
What to do about it? That is the dilemma. First, stop the giveaways, as the money is already in the hands of the state governments. Next, at the Federal and State levels execute an independent review, but one that employs objective and qualified consultants. Give them a short deadline and demand results. In other words, act like a successful private organization by changing the Regulations.
Color me doubtful about a timely fix. I want my money back.
Van Wie Financial is fee-only. For a reason.