Billions In US Rental Aid Await Distribution To Struggling Tenants

Fears about possible fraud are delaying aid meant to go to renters who have fallen behind in their payments. According to The Wall Street Journal, tenants have been left waiting to get financial assistance from the $25 billion in aid that Congress approved in December. At the same time, many landlords are facing a cash crunch as unpaid rent piles up. Many renters lost their jobs due to the pandemic, as many businesses were either forced to close for a time or saw revenues collapse in the adverse economic climate.

One big roadblock for the aid is that a system did not exist for dispensing huge amounts of rental assistance. Additionally, there is a need to get the money out while keeping fraudsters at bay. Fraud was a problem last year with the more than $520 billion Paycheck Protection Program (PPP) forgivable loans to small businesses. At that point, the focus was on distributing funds quickly as the economy collapsed, but then reports of waste and abuse mushroomed. With that experience in mind, states are now acting more cautiously in setting up the rental aid program.

“Right now it’s just sitting there in most states,” said David Dworkin, president and CEO of the National Housing Conference, a nonprofit group that advocates for affordable housing. “The reality is that these things do take time, and you want to do them well and not make mistakes because you went too fast.”

Undermining the relief effort, many state and local governments have cut staff during the pandemic. That means they’re not fully prepared to build and administer new aid programs, said Brad Gair, senior managing director at the emergency services consulting firm Witt O’Brien’s. “You need the staff to design the programs and to implement them. Case management, call centers — that’s a little more than a lot of (local governments) can handle,” he told the Journal.

Meanwhile, the pandemic has shaken up rental markets, with rents falling 22 percent in San Francisco, 16 percent in New York and 9 percent in Boston. In contrast, suburban rents have gone up.