America’s renters have racked up a whopping $70 billion in unpaid rent during the pandemic-induced economic slump. In one of his first moves as the new leader of the U.S., President Biden extended the nationwide eviction moratorium for renters until March 31, giving some breathing room for millions of Americans who are struggling to pay rent.
The $70 billion figure worries Mike Flood, senior vice president of commercial and multifamily policy at the Mortgage Bankers Association. But so does the eviction moratorium, which will certainly further strain landlords. However, Flood feels optimistic about the potential for Biden’s $1.9 trillion stimulus plan to narrow the divide between overdue rent and eviction notices. The plan would earmark $25 billion for rental assistance.
In a Q&A, WMRE chatted with Flood about Biden’s proposals, as well as about the importance to owners of multifamily properties and other commercial buildings of stamping out the pandemic.
This Q&A has been edited for length, style and clarity.
WMRE: What do you think so far of what you’ve seen from the Biden administration that would affect owners of multifamily properties and other commercial real estate?
Mike Flood: What we are encouraged by on the multifamily side and the commercial side as well is the immediate call by President Biden for more stimulus. The first and most important thing is to roll out vaccines, and we all agree with that. But until we get everyone vaccinated, we’re going to be staying inside and taking care of our health, which means less activity on the commercial side. So, in order to bridge the gap until we are all vaccinated, further stimulus for both apartment renters and the hospitality industry is going to be crucial. As you can imagine, for a group that represents lenders, an eviction moratorium gives us pause. That’s not because we don’t believe that renters shouldn’t have a place to live—they absolutely should. But it’s an unfunded mandate. While we don’t support an eviction moratorium, we do support the fact that that eviction moratorium is now backed up by what is needed, which is money to keep a roof over people’s heads and food in their bellies.
We’re also encouraged by the fact that Mr. Biden understands that those stimulus measures aren’t enough. So, he’s calling for further direct checks of $1,400 and for unemployment benefits of $400 a week until September, and he would extend the eviction moratorium until September. Last year, the unemployment insurance and direct checks really kept people in their apartments. We think having all three—unemployment insurance, direct checks and the eviction moratorium—not only keeps people in their apartments, but it allows them to pay their rent in arrears and keep food in their bellies.
WMRE: What about help for hotels and restaurants?
Mike Flood: Mr. Biden recognizes that restaurants and hotels are suffering, and that there is a need to help them out. The question is how. We would say a program much like the program to help renters is the right way to help small businesses. PPP loans are very helpful, but direct assistance to the hotels and retail establishments will also help them keep a roof over their heads and help their ability to keep their mortgages current while we all wait to get back on the streets and back to the new normal.
We’ve had government-mandated stay-at-home orders, which are great for protecting your health. But in essence, if you’re in hospitality and retail, you are barring potential customers from showing up. And while we all want to protect health, we also have to fund our mandates and make sure that we’re taking care of hospitality and retail, too.
WMRE: What’s your outlook for passage of the stimulus package and other mortgage-related measures by a politically divided Congress?
Mike Flood: One thing that I think many of us should take to heart is that no matter what our politics are, the margins of error for votes in both the House and the Senate are obviously razor thin. So that means that almost any piece of legislation that gets through Congress will have to have some modicum of bipartisan support. I think that’s a positive for not only the industry, but the country as a whole. That means we’re going to have to identify the things that are most important to us as an industry, like helping renters and helping hospitality and retail, but we’re also going to have to find places where we have to give some ground. No one likes to say that, but that’s the reality and that’s what compromise breeds. When you have bipartisan agreement, you have policies that stick.
WMRE: How important is the rollout of COVID-19 vaccines in terms of helping multifamily, retail, lodging and other commercial real estate sectors?
Mike Flood: Let’s get everyone vaccinated, and let’s get back to the new normal. If we do that, we do not have to provide as much stimulus, and we’re creating the capitalist market that we want in lieu of borrowing to pay for the future. The longer we take for the vaccine rollout, the more stimulus we will need.
I think we all recognize that our economy is a service economy. We provide services to the rest of the world. And in a service economy, we need to be out and about, we need to be going to restaurants, we need to be going to the office, we need to be in the sky, traveling to different countries to meet with our clients and provide them the services they need. The only way that anyone is going to feel safe doing that is to feel like we’ve reached a tipping point where we are at herd vaccination by getting shots in arms.