Market Watch: The Looming $21.3 Billion in Debt That Could Cost Americans Their Homes

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By Jillian Berman

The debt that could cost people their homes

Nearly 6.4 million households owe an estimated $21.3 billion in rent debt, putting them at risk of losing their homes when the national eviction moratorium expires on Saturday.

Though owing back rent is a phenomenon that pre-dates the pandemic, COVID-19’s combined health and economic crises likely exacerbated it. Susan Shin, the legal director at the New Economy Project, which hosts a hotline that provides free advice and referrals to low-income New York City residents, said her organization has heard from people struggling to afford rent after they lost their jobs due to the pandemic or had their limited income impacted by COVID-19 in some way.

“We’ve had an uptick in calls from people who are concerned about their growing rent debt and whether they will be able to pay it off,” she said.

The National Equity Atlas, a combined initiative of PolicyLink and University of Southern California’s Equity Research Institute, began tracking rent debt in May, said Sarah Treuhaft, vice president of research at PolicyLink, which does research and advocacy focused on equity. The idea was that by understanding how much rent debt Americans owe and who exactly owes it, the rent debt dashboard could help inform policy.

“Rent debt is one of the key equity issues of the pandemic,” she said. “It’s predominantly low-income renters, people of color, who were negatively impacted by the pandemic’s economic fallout — that’s who is behind on rent.”

Unless these renters are protected by a local eviction moratorium — some states and cities have bans on evictions that last beyond the national freeze, which expires Saturday — they’re at risk of losing their homes. “It will depend on the landlord whether or not they proceed with eviction or help tenants stay in their units by creating payment plans, forgiving some of the rent,” Treuhaft said.

The various coronavirus relief packages have made about $46 billion in funds available for renters to use to cover back rent and make landlords whole. That could mitigate renters’ eviction risk. The problem: The money, which is being distributed through states and localities, is trickling out slowly and may not reach renters or landlords in time. The Consumer Financial Protection Bureau launched a tool this week that renters and landlords can use to find local programs.

“It would be a policy failure if there is mass eviction because of the expiration of the moratorium, given that the resources are there and states and localities are trying to get them to renters and landlords in need,” Treuhaft said.