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Speaking of the Economy
Speaking of the Economy - Bernie Mazyck and Mark Fessler
Speaking of the Economy
Feb. 26, 2021

Tackling the Eviction Problem During the Pandemic

Audiences: Community Advocates, General Public, Policymakers

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Bernie Mazyck and Mark Fessler discuss the ongoing issues of renters being evicted at high numbers in certain parts of our country, as well as how the COVID-19 pandemic has threatened to make this problem worse. Mazyck is the founder, president and CEO of the South Carolina Association for Community Economic Development and is a member of the Richmond Fed's board of directors. Fessler is an attorney at South Carolina Legal Services who specializes in foreclosure and consumer law.


Bernie Mazyck
Chair of the Board
Charleston, South Carolina


Peter Dolkart: I am Peter Dolkart. I am the Regional Community Development Manager for the Federal Reserve Bank of Richmond. We will be discussing the ongoing issues of renters being evicted at high numbers in certain parts of our country. To address this topic, as well as how the COVID-19 pandemic has threatened to make this problem worse, I am speaking with Bernie Mazyck and Mark Fessler.

Bernie Mazyck is the founder, president and CEO of South Carolina Association for Community Economic Development. As a member of the board of directors of the Richmond Fed, Bernie has helped our Bank better understand the economic development issues in the region.

Mark Fessler is an attorney at South Carolina Legal Services that specializes in foreclosure and consumer law. The firm provides certain legal services to protect the rights and represent the interests of low-income residents in the state.

Gentlemen, let's start by taking a step back. Before the pandemic, what was the rental housing market like in South Carolina? Bernie?

Bernie Mazyck: Well, the rental housing market was already pretty tight and distressed.

The cost burden for those who are needing rental housing was already severe prior to the pandemic. Matter of fact, one quarter of South Carolina renters experienced severe cost burden, and this meant that they spent more than half of their gross income on rent. And that means they had no money for anything else. South Carolina has 46 counties, 41 of the 46 counties had the average renter in a position where they could not afford a two-bedroom apartment without overextending their budget.

Before the pandemic, South Carolina was rated as having the highest eviction rate in the country. We were already in a pretty dire situation prior to the pandemic, and we can talk about reasons for that, but South Carolina is a very expensive housing market. The cost of construction and the availability of capital make South Carolina a pretty tight market to find housing.

Dolkart: I appreciate that, Bernie. So, Mark, what's your perspective on this?

Mark Fessler: Right, so I work for a law firm, South Carolina Legal Services, and we represent individuals who earn less than 200 percent of the federal poverty line. We represent low-income individuals, people whose budgets are overextended. And I think Bernie's analysis is correct on that point. I see a lot of my clients who are paying well more than 30 percent of their gross income towards housing.

There was a report out of the National Low Income Housing Coalition called "Out of Reach," and they do these reports every so often. Their 2020 report basically confirmed what Bernie was talking about.

And it's especially bad in the major metropolitan areas like North Charleston, which is the area that had the highest eviction rates, which is why South Carolina sort of became very prominent in or around 2016 when that data was released. For example, on average, a two-bedroom apartment would cost about $900 a month, whereas the average renter, to be affordable, would be needing to spend no more than $703 a month.

Now, of course that looks at the whole state. But you can see, I mean a $200 difference between what's affordable and what's out there I think illustrates the issue.

Mazyck: And if I can add. One of the key reasons for such high costs of rental housing is the supply. The supply side is also tight — prior to the pandemic we had only 72,000 subsidized apartment units available. And as you can imagine, that's a very tight supply. Of course, you have more market-rate units available, but in order for individuals to afford rental housing, you need to have some level of subsidy.

Dolkart: Yeah, I would agree. Before the pandemic that is a significantly tight supply. I appreciate the overview.

So let's turn to the pandemic. From my perspective, it seems like the impact on the pandemic started at the end of last March or even early April. When did you first start seeing problems with housing security? Mark, why don't you take the lead on that.

Fessler: You know, again, talking about that question from the perspective of seeing tenants who are becoming evicted, I think it's important to note that we are already seeing landlord-tenant evictions on the rise prior to the pandemic.

So when we look at our cases, we separate them out between private landlord-tenants — so that's where you have a tenancy that has no kind of federal subsidy — and then we have federally subsidized landlord-tenants. The private landlord-tenants are by far and away our largest number of cases in any particular year.

But before the pandemic started, we had already seen about 47 percent more cases between January 1 and March 17 of 2020 than we had seen in that same timeframe in 2019. So the numbers were already on the rise.

Then you had all these different state moratoriums that kind of kicked in, a lot of it was generated by various supreme courts. The South Carolina Supreme Court issued a moratorium that ran from March 18 and it expired on May 15.

Predictably, during that period of time, the number of landlord-tenant eviction cases we saw dropped precipitously. They were down 41 percent between where they were in 2019.

But then as soon as that state moratorium lifted, the number of cases we saw in the next two months — so from mid-May to mid-July — was 170 percent more cases than we had had over the same timeframe in 2019. There was all this pent-up demand just waiting for that state moratorium to expire.

The important thing about the state moratorium, of course, is it was a blanket moratorium. It affected access to the court. Essentially, you couldn't file a landlord-tenant eviction, and any evictions that had been filed were sort of halted.

After the state moratorium expired in mid-May, you still had a federal moratorium for federally subsidized housing, or housing that has some sort of federal benefit attached to it like a Fannie Mae or Freddie Mac mortgage, for example. And those cases that involved nonpayment of rent were still put on pause under what's called the CARES Act. But people without any protections really had nothing to fall back on until the CDC issued an eviction moratorium on September 4th that again applied to private and federally subsidized [rental housing].

So that gives an idea of what we've been seeing, both before and sort of in the immediate aftermath of the pandemic.

Dolkart: Well, you mentioned the CARES Act, which was passed by Congress at the end of spring last year. So what was the overall impact on, on the CARES Act in terms of moratoriums, other types of assistance and so on? Mark, can you comment on that?

Fessler: Well, sure. From the standpoint of the cases that we typically see, private landlord-tenant evictions again are, by far and away, the highest number of eviction cases that we see.

As a lawyer, you don't see the cases that go well, you only see the cases that go poorly. So it's hard to judge exactly how extensive the impact from just the CARES Act was. So as far as our law firm's numbers, it didn't have a significant impact. But I'm sure it did help a lot of people who otherwise would have been struggling, you know, through job loss, just loss of income and being unable to pay even a subsidized rate.

Dolkart: Right. So the CARES Act had a firm deadline by which the moratorium would expire, and we were all kind of bracing in my community for that timeline. And then all of a sudden, the Centers for Disease Control, the CDC, stepped in and imposed their new moratorium. What was that impact?

Fessler: That was highly surprising. I remember the week it came out, I don't think anybody was expecting it. And that had a significant impact. Again, it only applies to nonpayment of rent situations, but given the sheer number of people that have lost work due to COVID, due to the pandemic, you know, it really helped a lot of people.

That applied not only to the subsidized housing, but it also applied to private landlord-tenant acts, and it required the tenant to be able to swear to a certain number of things such as that they had a loss in income. Extremely high medical bills as another potential qualifying care category [as well as] that they have been trying to seek government assistance [and] that they are paying whatever they can, any disposable income they can, they're putting that towards the rent, even if it's not the full amount.

But the thing with the CDC moratorium, again, it applied to nonpayment of rent. But now that it's been extended a number of times, you're beginning to see leases that have expired, so maybe somebody's on a month-to-month lease or their lease ended around, say the end of the year. And it seems like courts are not extending that CDC protection where the landlord is evicting because the lease has ended, even if the landlord let's say is refusing to renew the lease because of a nonpayment of rent issue.

So there's kind of a workaround there to that CDC moratorium. But overall it's been especially helpful to the people who qualify for it.

Dolkart: Well, I would agree with you that the CDC moratorium took everybody by surprise. I remember courts suddenly having to scramble just to come up with rules or new regulations just to address that new rule from the CDC.

But you did mention, Mark, that there were cases that were beginning to be filed even independent of the moratorium. So with the cases being filed, the number — actual docket being built — were hearings actually going on the last year?

Fessler: There's been sort of a patchwork of rules governing how hearings were supposed to be conducted.

During the state moratorium there were no hearings, then towards the end of April, our Supreme Court and the Chief Justice issued guidance talking about safety precautions that need to be implemented if you're going to have in-person hearings. So some in-person hearings were permitted at that point, but you didn't have jury trials.

Now, in South Carolina, if there is a contested issue of fact related to an eviction, you can request a jury trial. And, if you request it according to the rules, then you're allowed to have one. And so jury trials have pretty much been on hold for the duration of 2020. There was some attempt to start them back, but then on December 3rd, jury trials got continued. In-person hearings were still being held again on a limited basis. You had to stagger the hearings every 30 minutes or so and you're supposed to clean the courtroom after each hearing.

But, since January 8th, all in-person hearings have been put on hold. So if the court has the capacity to do virtual hearings, they can hold hearings virtually. But some magistrate courts — for example courts in Anderson [and] I believe courts in Pickens County — don't have the capacity to do virtual hearings, so they're just not having eviction hearings at all at this point.

Dolkart: I do have to ask you, Mark, as a follow-up on the virtual hearing, does that require the actual tenant in the case, I guess they would be the defendant, to have to have a certain level of technology in their home, and what does that picture look like?

Fessler: There's no uniform standard for how the magistrate courts are handling the virtual hearings.

Of course, the tenant would have to have the capacity, such as a computer or a telephone, with which to call in to like a Zoom or a Webex kind of hearing. If they don't, some courts might have the tenant come in and they'll set the tenant up in a courtroom or another room by him or herself, and then the judge would be in the other room and maybe the landlord is at the, you know, landlord's home or office.

There may be some patchwork hearings like that, but if the tenant is unable to have the virtual hearing, then the hearing can't go forward. And as long as the tenant has requested a hearing, then they have a constitutional right to have that hearing before an eviction is finalized.

Dolkart: Bernie, let's turn back to the CARES Act. You represent a number of organizations that are directly involved in rental assistance, so related to the CARES Act, what role did rental assistance from the federal government play in combatting evictions?

Mazyck: At the volume and intensity that resources flowed into the state, these units of government weren't able to handle that on their own. And one of the requirements of the CARES Act is that the dollars had to be spent by December 30, so you had a short turnaround time to get the dollars out.

So a number of our members were called upon by units of local government, state government to play a role, and this is still the case that is occurring with the latest allocation in the December omnibus bill that was passed by Congress. Everyone had to adjust in order to meet this demand and meet this need that existed because of the pandemic.

Dolkart: Was there a struggle to meet that deadline? Mark, your perspective on that?

Fessler: That's what I've heard sort of through the grapevine.

Our executive director, Andrea Loney, tries to stay abreast of all the money that's available, because again, solving a lot of the cases that we have involves money and requires tenants coming current on rent, so the faster that money can get into a program, the faster that program can be set up and that that program can be funded and the money can be distributed.

I have heard that it's taken a while for the CARES Act funding to get set up and to start flowing. I believe South Carolina has a program called SC Stay, which just started taking applications on Friday. I saw a news report that 8,600 people applied for that program on Friday, and that money I believe is still old CARES Act money. It's not the money that was allocated in December.

So it's taken a while for those programs to get up and running, for whatever reason.

Mazyck: As the state has set that program up, they basically had to go through a quick process in their outreach to nonprofit partners at the local level to get those nonprofits qualified to operate this program.

They created a central portal at SC Housing for all applicants to request assistance. That's what Mark referenced — the system couldn't handle the rapid onslaught of requests coming. Now, some of our members locally have been able to identify those who need assistance themselves, and then they have to refer them to the, to the central portal.

So the demand is huge. I've heard one of my members say they have been selected to operate a program locally, and they will probably deploy all of their money by the end of March.

You have some municipal governments [and] county governments that's getting dollars directly, and they too are having to turn to nonprofit organizations like some of my members to be able to operate.

One of my members is being provided $6 million for rental assistance, and so my member is having to ramp up for that, additional staff as well as technology so that they can handle the applications, qualifications, and the documentation necessary to assist, for instance.

Dolkart: So your members, a lot of nonprofit organizations who are processing rental assistance, what were the challenges that they were facing?

Mazyck: We still have members that are not operating at 100 percent in their offices, so that's requiring them to work from home, that's requiring them to have the technology at home.

South Carolina is still a relatively rural state and, even though the vast majority of rental assistance is used in urbanized areas, you still have some rural areas that have run the risk of evictions and you don't have access to the technology evenly distributed, and frankly in some urban areas as well. So technology is a challenge.

You have staffing that's a challenge, as far as the capacity and the credentials of staff. Some of our members are having to bring on additional staff, short-term staff, and then thinking about, you know, whether they're going to be able to retain that staff beyond this crisis.

So a number of our members are having to make those kind of decisions and determine how they staff up for this, how they're able to sustain staff and, and find qualified folk to, to handle this program.

Dolkart: Let's move on to another aspect of the pandemic. People facing the possibility of eviction, I can imagine that's keeping them up at night staring at the ceiling, but there's another reality, which is the accumulated unpaid rent. Is there something you are tracking or anything you all are doing to look at what the accumulated rent, whether someone's evicted or not, that debt that people are now are beginning to carry as the result of the pandemic? Mark, your thoughts on that?

Fessler: I know it's a problem. Our office doesn't track, you know, the, the rent accumulated that our, our clients have.

I just know, especially if you're applying for housing from a more corporate landlord, and even maybe some mom-and-pop landlords, they're going to do background checks. The background check industry for housing has exploded over the last five years or so. If you have debt owed to a landlord, that may knock you off landlord A, B or C's list. They may not want to rent to you if you were unable to pay your previous landlord.

In addition to not being able to find housing, people are going to be forced into lesser quality housing, housing that doesn't do those kind of background checks or doesn't have the same standards. And then you're going to run into the problems of is the housing available suitable for these people, especially low-income individuals. You may be forced into a month-to-month lease rather than a 12-month lease. Of course, a month-to-month lease is a much more precarious situation because if you butt heads with the landlord, the landlord can terminate your lease on a 30-day notice.

Dolkart: Yeah, I understand.

So, a question I often get every time I raise eviction with my management is, "Peter, what's the endgame?" Mark, you've mentioned that moratoriums have been extended and extended, but at some point they're going to expire. And then the question is what happens then? Are there going to be large displacements of tenants? Will there be some effort to sort out some type of settlement. Or, is basically tenants going to find themselves on the street?

Fessler: Yeah, it's hard to predict something like that. Again, I only see the cases that come across our desk and, you know, you don't really go to a lawyer if things are going well.

But I am concerned that a large number of landlords and tenants are going to get to this just intractable point where there will be no agreement to be reached, whether or not money is available or not.

So I'm concerned that there are going to be a number of tenants, a large number of tenants that are just going to be out of luck. They don't have a legal defense, they were unable to pay rent and the courts are going to approve those evictions.

I'm also concerned about the fact that there is a housing shortage. A lot of times we get the question, "Well, why doesn't your tenant just leave? If they're so far behind on rent or if the house is in such poor condition, why don't they just leave?" Well, it's hard to just leave. You can't just walk down the street and go find the next place. And with the public availability of eviction records, it makes it much harder for people who've had an eviction filed against them to find other housing.

So I'm concerned that A, there's not going to be enough money to go around to everybody who needs it, and B, there's going be a lot of displacement once these moratoriums do ultimately expire and these cases get back on the docket and we're having in-person trials and jury trials.

Mazyck: With my members, we're really concerned about and interested in meeting the needs of low-wealth, low-income families. And when you have a subsidized housing shortage, that will be exacerbated by just the overall rental crunch which will have probably market-rate renters interested in properties that may have been subsidized. And so that's going to further tighten that inventory.

Until we can get to a point where the supply in South Carolina increases in the area of affordability, we're really going to be challenged with meeting the needs of low-income and low-wealth families to be able to find subsidized, affordable rental units. You already have the resources, the funding that's already pretty tight in producing those affordable units. And where will those units be built? You still have the NIMBY paradigm that exists when members are trying to build affordable rental units.

So we have some challenges ahead, but we hope that this housing crisis will elevate and reveal to policymakers the need to increase resources for more production of affordable rental units.

Dolkart: I appreciate that.

Gentlemen, you've painted a stark reality about this. This is a crisis. Do you anticipate that this crisis, at least in South Carolina, will be met with any changes, in either housing policy or practice?

Bernie, why don't you take that.

Dolkart: Affordable housing, at least up to this point, has not risen to the level of our state legislature the way we would have liked to.

The last tranche of funding coming through Congress, those dollars coming directly to the state for the General Assembly to assign where those dollars will be spent, that amount was $300 million. And so hopefully now the legislature, having seen that information firsthand, will now start thinking, "Okay, we need to really look at the housing situation in our state."

Prior to now, affordable housing issues were relegated to our Housing Finance and Development Agency. And, until that agency was maybe requested to come before them for a hearing, affordable housing was a low-profile issue for our state legislature.

Now, hopefully with the pandemic it has become a more urgent issue. We're talking to them right now. Hopefully, they will take it more seriously and we can begin to talk to them about funding strategies for more affordable housing production in the state.

Dolkart: Okay, gentlemen. Well, you've definitely outlined, from the perspective of your frontline position, significant challenges that residents in the Fifth Federal Reserve District are facing, and I thank you for your time.

Fessler: Thank you.

Mazyck: Thank you.