Former FHA Commissioner On Rent And Mortgages During The Pandemic
MICHEL MARTIN, HOST:
This week, with the start of a new month, rent payments came due for millions of Americans just as millions of Americans confronted the loss of jobs and income because of the coronavirus pandemic. Many simply could not pay. Across the country, tenants have been organizing rent strikes or trying to work out payment plans with their landlords. But landlords say they are also in a bind. Without rental income, they can't pay mortgages on their buildings or other bills, like water and trash removal and sewage.
The coronavirus relief bill signed by the president last week included a moratorium on foreclosures to protect homeowners. There is also a moratorium on evictions for some renters. But protections for the nation's 40 million renters have been mostly left to states and city governments to figure out.
Carol Galante served as the federal housing commissioner in the Obama administration when the nation was experiencing a different financial crisis caused by a downturn in the housing market. And she's with us now to talk about some possible ways forward through the crisis we are facing now. Carol Galante, thanks so much for talking with us.
CAROL GALANTE: Happy to be here.
MARTIN: I just have to ask if - you know, when you were serving in the Obama administration, in the housing department, did you ever envision something like this? I know we've been talking to a lot of officials about kind of various scenarios that they may have run through in their time in office. Did you ever envision something like this?
GALANTE: I did not, you know. We experienced what I thought was, you know, the worst possible economic environment since the Great Depression. And, you know, this is something much bigger and scarier.
MARTIN: So I'm sure you've seen some of the proposals that have been made or even implemented around the country, and you've been following that. So I'm going to ask you to take these things in two parts. The first - I'm going to ask you what are some things that you think are going right, and then, of course, I'm going to ask you the other. So, first, what are some things that you think may be going right right now?
GALANTE: The federal response has included what I would call income supports for individuals in the form of, you know, unemployment benefits, for example. So that is a change from what we saw last time around in terms of the response. And the other thing is that, you know, the response has been pretty large. I think that needs to be larger, but it has been significant.
MARTIN: And what do you think could be done better, or are there additional steps that you think need to be taken?
GALANTE: I do think there's more action that needs to be taken and the most important to me is there needs to be some direct rental assistance for people whose income has dropped, dramatically. And assistance that has been approved may not be enough to get them through paying rent and their other bills. And I think we really need to do that.
MARTIN: What would that look like, though?
GALANTE: It would look like, essentially, a voucher. So the difference between what the renter can pay with the income they have coming in, you know, sometimes from other federal assistance and the rent that is due - the difference would come in the form of a voucher that - the landlord would get to pay that difference from the federal government. We have a voucher program in the United States for people who are very low-income that pays the difference between their income and the rent. And so it's making that available on a temporary basis for individuals who are affected by job loss and loss of some income from this current situation.
MARTIN: And can I just ask you the lay of the land here? I think people think of, like, a landlord as a person who goes around collecting envelopes from people. Is that the scenario, though? Are most renters living in properties that are managed by an individual or a small group? Or are most people in situations where, like, the landlord is a corporation, a hedge fund. Do we know what the lay of the land really is in the United States?
GALANTE: Well, I would say it's very diverse. And there is a significant portion of the market that is owned by what you would call mom-and-pop landlords or even individuals - people who own a duplex that is part of their retirement fund, people who rent a house that they used to live in and now live somewhere else and kept that house and rent it out. So, you know, individuals are a significant portion of the market. Then, the larger buildings, you know, tend to be owned by more professional management entities.
But the capital behind all of those owners of property comes also from, again, this interconnected variety of sources. Pension funds, you know, put money into commercial real estate properties, including apartments, including single-family homes as rentals. And so if you disrupt payments to those investors or those lenders, you know, you're also disrupting middle-class people's pensions.
MARTIN: That is Carol Galante. She served in the Obama administration as the FHA's deputy assistant secretary for multifamily housing and later as the federal housing commissioner. She's now a professor of affordable housing and the director of the Terner Center for Housing Innovation at UC Berkeley. Carol Galante, thanks so much for talking to us. I hope we'll talk again.
GALANTE: Thank you.
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