Pelosi's $3 Trillion Coronavirus Relief Bill Includes $175 Billion in Homeowner, Renter Assistance, and Blanket Ban on Evictions

Democrats' HEROES Act is mostly about messaging. And it sends all the wrong messages on housing.

Democrats' massive 1,900-page, $3 trillion coronavirus relief bill unveiled Tuesday includes a number of far-reaching policies designed to keep people in their homes during COVID-19.

The so-called Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act boosts spending on existing federal housing programs, creates two new ones to provide direct assistance to homeowners and renters, and protects those who can't (or won't) pay their bills with nationwide moratoriums on evictions and foreclosures.

These policies are all in line with what low-income housing advocates and liberal Democrats have been saying is necessary to prevent a full-on housing crisis during the current pandemic, although it falls short of incorporating more radical calls for rent and mortgage cancellation.

????@SpeakerPelosi just released House coronavirus bill. It includes our top 3 priorities!????

✅ Emergency Rental Assistance Act of $100B for #RentReliefNow

✅ $11.5B ESG to protect people experiencing homelessness

✅ A broad, uniform eviction moratorium!

— Diane Yentel (@dianeyentel) May 12, 2020

Free market housing wonks are balking at both the breadth of the bill and its price tag, arguing more temporary, targeted relief would do a better job of preserving the housing market during the current economic downturn.

Past relief bills' provisions of "cash assistance directly to renters is why we haven't faced the kind of crisis that we've feared," says Michael Hendrix of the Manhattan Institute, noting that the number of tenants still paying at least some of their rent is only slightly below where it was at this point last year.

The HEROES Act, he tells Reason, "doesn't build on what we know works from the prior coronavirus relief bills but instead heads into a completely new direction that doubles down on inflexible government support."

That includes the bill's blanket nationwide bans on evictions and foreclosures, which is a major expansion of Coronavirus Aid, Relief, and Economic Security (CARES) Act's tenant and homeowner protections.

That bill, passed in late March, only suspended evictions for 120 days, and only for tenants receiving government housing aid, or living at properties that had a federally-backed mortgage. According to the Congressional Research Service, that covered only about 28 percent of renters. That bill also banned foreclosures of residential properties with federally-backed mortgages for 120 days.

The HEROES Act would extend these protections for a full year. The eviction moratorium would apply to all tenants. The foreclosure moratorium would cover all one- to four-unit residential properties.

"My worry is that it doesn't give flexibility to property owners," says Hendrix of the HEROES Act's expansion of eviction moratorium. "By no means are they all large corporations. Many of them are small property owners or homeowners themselves renting out a basement apartment. This is another regulation they'll have to navigate."

The biggest piece of new housing spending in Democrats' HEROES Act is a $100 billion in emergency assistance to renters, a policy Rep. Maxine Waters (D–Calif.) and Sen. Sherrod Brown (D–Ohio) had introduced earlier in the week.

That money would be funneled through the Department of Housing and Urban Development's (HUD) existing Emergency Solutions Grant program to states and local governments, who would then distribute it to renters directly, or through partnerships with other entities like public housing agencies.

Households making up to 120 percent of an area's median income would be eligible for this aid, although at least 70 percent of it would have to be spent on households making less than 50 percent of area median income. (That's about $56,000 for a family of four in New York City or $41,000 in Atlanta.)

Emily Hamilton, a researcher at George Mason University's Mercatus Center, said earlier this week—in response to Democrats' initial unveiling of their $100 billion renters assistance proposal—that providing direct assistance to tenants was justified during the current pandemic, but that it should be targeted at the lowest income people making 30 percent of area median income.

Instead, the HEROES Act has the potential to spend a lot of money on middle-income renters. Its homeowner assistance is even less well-targeted.

The new $75 billion Homeowners Assistance Fund created by the bill would only have to spend 60 percent of its funding on people earning less than 80 percent of area median income. This fund would be run by the U.S. Treasury Department, which would distribute funding to state financing agencies. These financing agencies would then be responsible for passing on relief to homeowners.

This assistance would be in addition to the $1,200 cash payments individuals would be receiving under the HEROES Act. The bill would also increase spending for existing programs covering rural housing, public housing, and housing vouchers.

It's unlikely that House Democrats' legislation will be enacted as is anytime soon. Senate Majority Leader Mitch McConnell (R–Ky.) has said now is too soon for another coronavirus relief bill.

That makes much of the HEROES Act, including its housing provisions, more of a messaging bill than a realistic policy proposal. Even so, Democrats missed a real opportunity to send a more constructive message, says Hendrix, about the overburdensome regulations on new construction that made housing costs unaffordable even before the crisis.

"There's nothing in the Democrats' bill that screams yes in my backyard," he says, referring to the pro-development YIMBY movement that's been trying to loosen zoning regulations in America's most expensive cities.