Monthly Archives: July 2020

A surge in evictions could turn into financial crisis, economist warns

The U.S. economy will face great risk if lawmakers do not step up and stave off a looming, far-reaching eviction crisis, an economist with mortgage aggregator LendingTree told CNBC on Friday.

With eviction moratoriums lifting across the country, landlords could eventually default on mortgages and the coronavirus pandemic could worsen in the country if tens of millions of renters are put out of their homes in the midst of a tough economy, said Tendayi Kapfidze, chief economist at LendingTree.

“This really could be catastrophic, and it extends beyond just the rental industry,” he said in an interview on “The Exchange.” “It could actually affect the single-family housing market and the economy as a whole.”

Nearly 2-in-5 tenants across the country, particularly low-wage workers, are in danger of being served eviction notices, according to analysis from Stout Risius Ross, an investment consulting firm. People of color are especially vulnerable. While half of White renters project that they can cover rent, just more than a quarter of Black renters feel the same, according to the study.

Statewide holds on evictions have expired in more than 30 states and federal protections for renters, passed in March as part of the historic multitrillion-dollar CARES Act, have also lapsed. As unemployment continues to hover at extreme levels, as many as 40 million Americans are thought to be at risk of losing their homes in the middle of the global health crisis. That figure is four times greater than during the Great Recession.

The imminent eviction wave could morph into a financial crisis, bleeding into other industries, Kapfidze said. Given that rent payments serve as income for landlords, those property owners may have less revenue to draw on for their own mortgage payments. Furthermore, kicking a tenant out of an apartment in the eye of an economic downturn will mean landlords may have a tough time finding a replacement, he added.

“That could lead to a decrease in home values, even in the owner-occupied market, and in every state and every city there’s a patchwork of different, you know, kind of laws that people are using. So, really, it’s necessary that we have a federal plan,” the economist said. “We need a federal plan to deal with this rental crisis or it’s going to get worse.”

The eviction crisis could be a boon, however, for eviction services, said Glenn Kelman, chief executive of real estate brokerage Redfin, in an appearance later Friday on “Closing Bell.” He is also hoping society will intervene in what he said could turn into a “social calamity.”

“If you look at the data right now, about 8% of mortgages are in forbearance. That’s the program that lets you defer a mortgage payment for about a year. In January, the delinquency rate was about 3%,” Kelman said. “Clearly, the people in the business of evicting folks out of apartments and houses, of handling delinquencies and foreclosures are anticipating a big 2021 and that’s one of the shoes that we’re really worried could drop next year.”

About 30 million people are believed to be collecting unemployment benefits as the U.S. economy attempts to recover from a recession-inducing lockdown. Meanwhile, the countrywide Covid-19 outbreak shows no signs of ebbing, as virus cases in the U.S. now top 4.5 million and deaths near 153,000, according to data compiled by Johns Hopkins University as of Friday afternoon.

While an extra $600 in weekly jobless benefits, on top of state unemployment insurance, funded by the federal government has helped workers keep their heads above water, the measure has now lapsed. Democratic and Republican lawmakers are at a standoff over whether to replenish those funds, either partially or in full.

The Republican-controlled Senate failed this week to pass a new coronavirus relief package that would have reduced the weekly federal unemployment pay from $600 to $200 and later transition the program to a partial wage replacement system. The chamber has since adjourned for the weekend.

In order to fend off a larger crisis, it is vital that Congress continue paying out additional unemployment benefits and implement a national moratorium on evictions as the economy rebounds, Kapfidze contended.

“It’s really tragic when you look at how well other countries have handled this crisis that the United States has failed so dismally. It’s sad,” he said. “People need a lot of help out there, or we’re all going to be in trouble.”

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Exxon reports second straight quarter of losses

Fuel prices are displayed at an Exxon Mobil Corp. gas station in Arlington, Virginia, U.S., on Wednesday, April 29, 2020.

Andrew Harrer | Bloomberg | Getty Images

Exxon said on Friday that it lost $1.1 billion during the second quarter amid “global oversupply and COVID-related demand impacts.” It was the oil giant’s second straight quarter of losses.

The company lost 70 cents per share on an adjusted basis, while revenue came in at $32.61 billion. In the same quarter a year ago, Exxon earned 73 cents per share, on revenue of $69.09 billion.

Analysts expected the company to report a loss of 61 cents per share for the second quarter, and revenue of $38.157 billion, according to estimates from Refinitiv.

After trading in the red for much of the day, shares of Exxon rallied into the close and finished the session 0.5% higher.

“The global pandemic and oversupply conditions significantly impacted our second quarter financial results with lower prices, margins, and sales volumes,” said Darren Woods, Exxon CEO, in a statement.

“We have increased debt to a level we feel is appropriate to provide liquidity, given market uncertainties. Based on current projections, we do not plan to take on any additional debt,” he added.

Oil-equivalent production fell 7% year-over-year, and the company said average prices for crude oil and natural gas were “significantly lower” than in the same quarter a year earlier.

West Texas Intermediate, the U.S. oil benchmark, is down more than 30% this year, which has forced energy companies to slash spending and in some cases, cut their dividend.

But ahead of its quarterly results, Exxon once again reiterated that it has no plans to cut its dividend. The third quarter dividend will be 87 cents, according to a company statement released Wednesday.

In the first quarter the oil giant lost $610 million due to $2.9 billion in write-downs tied to falling oil prices. Exxon posted a GAAP loss of 14 cents per share, and a non-GAAP profit of 53 cents per share. Revenue fell to $56.16 billion.

Shares of Exxon are down 40% this year.

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What to do if you’re at risk of eviction now that the CARES Act moratorium has ended

Protesters gather at a July 22 rally in Boston in support of legislation to block evictions in Massachusetts for up to a year.

Boston Globe | Boston Globe | Getty Images

If you’re facing eviction during the pandemic, you’re definitely not alone. 

Up to 40 million Americans may lose their homes in this downturn, four times the amount seen during the Great Recession. 

Even as unemployment levels remain at historic highs and cases of the virus show no sign of abating, statewide eviction moratoriums in more than 30 states have now lifted and protections for renters in the CARES Act are gone.

Still, you may be entitled to protections. 

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For example, many courts have moved to remote hearings during the public health crisis. But some courts require that both parties agree to a virtual hearing, and if they don’t, the case won’t be scheduled until the hearings move back to the courtroom, said Emily Benfer, an eviction expert and a visiting professor of law at Wake Forest University.

“This is, in effect, a moratorium, provided tenants know their rights,” Benfer said. 

In some states where the state-wide moratorium on evictions has lapsed, some towns, cities and counties have established their own protections for renters. You can find out what policies apply to you in this database Benfer continues to update. Your landlord might not know of them, or be ignoring them. 

Meanwhile, at, you can search for community resources for people at risk of eviction.

And some states and cities have funds allocated to help people stay in their homes. 

Arizona earmarked $5 million for that purpose. Residents in Delaware can apply for up to $1,500 in rental assistance. Similar relief measures were made available to those in Montana, Ohio, Iowa and New York.

If you’re accepted for the assistance, make sure to let your landlord know right away.

Unfortunately, these funds are limited and go quickly. 

Try to get a lawyer before your hearing. One study in New Orleans found that more than 65% of tenants with no legal representation were evicted, compared to fewer than 15% of those who did have a lawyer. 

Sometimes the paperwork you receive with your hearing date will have the contact information for legal services in your area. If not, you should be able to find your agency online, said Alexis Erkert, a lawyer with Southeast Louisiana Legal Services. 

“The court may also be able to give people contact information,” Erkert said. 

You can find low cost or free legal help with an eviction in your state at

No matter what — and whether it’s telephonic, over video or in-person — try to be present at your hearing, Erkert said. 

“A lot of tenants don’t show up, which means they will get a default judgment against them,” she added. “If they show up, many judges will at least give them extra time to move.” 

Have you applied for a rental assistance program where you live? How did it go? Please email me about your experience at 

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The $600 unemployment boost has ended. What’s next?

Senate Majority Leader Mitch McConnell, R- Ky., walks to the Senate floor at the U.S. Capitol on Thursday, July 30. Democrats and Republicans have given no ground after three days of negotiations on a virus relief package as enhanced unemployment insurance for millions of out-of-work Americans and protections from evictions run out.

Al Drago/Bloomberg via Getty Images

The $600 boost in weekly unemployment checks ends Friday.

With negotiations between Democrats and Republicans at an impasse, millions relying on that aid are in the dark as to what comes next.

Meanwhile, the economic recovery appears to have stalled or reversed, coronavirus infections are surging, eviction protections have expired for many and plans to reopen schools remain in flux, potentially requiring many parents to forgo work for child-care duties.   

“It’s not clear we’re on a very clear trajectory out of this economic downturn,” said Beth Akers, a senior fellow at the Manhattan Institute for Policy Research and a former staff economist on President George W. Bush’s Council of Economic Advisors. “So I’m very concerned for when we take away the $600 from unemployed people.”

‘Can’t make a living’

Americans are guaranteed to lose the weekly subsidy, at least temporarily, after Friday. The Senate adjourned for the weekend without an agreement to extend or replace it after July 31.

Given the scale of the problem, with roughly 30 million Americans collecting unemployment benefits, it’s likely lawmakers will pass some sort of additional aid, according to experts.

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“It’s more a question of how much it will be and how long it will take,” said Till von Wachter, an economics professor at the University of California, Los Angeles and director of the California Policy Lab.

Absent a federal supplement, the average American would get about $321 a week from state unemployment programs — less than half of prior earnings.

It’s hard when you’re already living your life on bare bones.

Artavia Milliam

unemployed worker in New York

That situation would hit low-wage workers — who are already more likely to be living paycheck to paycheck and represent a disproportionate share of the unemployed — particularly hard.

“You can’t make a living as a low-income worker making 50% of your prior earnings,” von Wachter said.

Between $200 and $600

The $600-a-week supplement to unemployment benefits has been a hot-button issue since a federal coronavirus relief law, the CARES Act, enacted the payments in late March.

The tension comes from some recipients being able to collect more from unemployment benefits than they earned from their jobs.

Republicans have unified against the $600 weekly enhancement, believing it to be a disincentive to return to work and therefore a drag on the economic recovery.

Democrats want to extend the payments, saying they pump money into the economy and help American families pay their bills. The House passed legislation in May to extend them through early 2021.

Senate Republicans unveiled a proposal this week to reduce aid to $200 from $600 a week through September. In October, they’d shift to a system where federal and state benefits replace 70% of a person’s lost wages, which would be in place through year-end.

It’s likely lawmakers will meet somewhere in the middle, economists said.

“I think that’s where people have put their stakes in the ground right now,” von Wachter said.

‘Bare bones’

Many families would likely still see financial hardship with a payment of $200. That would give Californians up to $650 a week in total benefits, for example. But $650 is less than the threshold for being considered “very low income” in this country, von Wachter said.

“It’s hard when you’re already living your life on bare bones,” Artavia Milliam, a recipient of unemployment benefits in New York, said during a House Ways and Means Committee press conference on Friday. “We just want to survive until we get through the crisis.”

The $600 supplement reduced food insecurity by 30% and led to a 42% reduction in eating less due to financial constraints, according to a paper published Thursday by academics at Boston University and the University of Pennsylvania.

And prospects of finding a new job are dim. There are about 14 million more unemployed people than job openings right now, according to the Economic Policy Institute.

“I’m not losing sleep over people getting an extra $600 a week right now because I think there are a lot more people looking for jobs in the economy right now than there are jobs available,” Akers said.

Wage replacement

A wage-replacement approach like the one suggested by Republicans is the ideal approach, but is also unlikely to materialize within their timetable, according to labor experts.

At the onset of the pandemic, lawmakers broached the idea of capping a subsidy, at 100% of lost wages. But antiquated state technology made that an impossibility in short order.

Speaker of the House Nancy Pelosi, D-CA., and Senate Minority Leader Chuck Schumer, D-NY., speak to reporters following a meeting with U.S. Treasury Secretary Steven Mnuchin and White House Chief of Staff Mark Meadows on July 30. Congressional leadership and White House officials are continuing negotiations on a new relief package for Americans affected by the coronavirus pandemic and the economic recession it has caused.

Photo by Samuel Corum/Getty Images

The $600 was a compromise: when combined with typical state-paid benefits, the federal subsidy aimed at fully replacing lost wages for the average jobless person (about $976 a week in the first quarter).

It’s unlikely all states would be able to administer such a policy within the next few months, economists said.

One compromise may be a flat amount ($200 to $600) that transitions to a system replacing perhaps 70%-100% of prior wages over a longer time period like early next year, von Wachter said.

Lawmakers can offer states a financial incentive to update their technology. That could take the form of offering extended federal funding to pay benefits for the self-employed, freelancers and others being covered by the Pandemic Unemployment Assistance program, he said.

Another option might be phasing out a flat payment over time as a state’s unemployment rate improves, Akers said. Some Senate Democrats have proposed such an approach.

While some people “on the margin” may be choosing not to return to work because of the $600 checks, there’s also been evidence that payments haven’t had a big impact on the labor market, Akers said.

“Evidence suggests that employers did not experience greater difficulty finding applicants for their [job] vacancies after the CARES Act, despite the large increase in unemployment benefits,” according to a paper published Thursday by economists at the University of Pennsylvania, the Federal Reserve Bank of New York and Glassdoor Inc.

Economists at Yale University also didn’t find evidence that generous benefits offered a disincentive to work “either at the onset of the expansion or as firms looked to return to business over time,” according to a paper published this month.

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