I-Team: Renters, landlords raise concerns about Michigan's eviction diversion program

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Michigan's State Court Administrative Office estimated more than 75,000 evictions could be filed in Michigan at the end of the eviction moratorium. (WWMT/Andrew Feather)

Steps taken by the Michigan government to prevent a housing crisis at the expiration of the state’s eviction moratorium likely don’t go far enough, according to housing experts.

On Friday, June 26, 2020, Gov. Gretchen Whitmer signed an executive order extending Michigan’s eviction moratorium until July 15 and created a new program designed at paying landlords and keeping renters in their homes.

The new program directs $10 million to an eviction diversion program and $50 million in rental assistance.

The $50 million would be used for lump sum payments for COVID-19 pandemic-related unpaid rent if landlords would forgive late fees and waive 10% of the amount due.

Renters would qualify for assistance based on their current income and family size. People and families who earn up to 100% of the region's median income are eligible for the assistance. Debt not covered in the diversion program can be paid back through a year-long payment plan.

Jim Schaafsma, an attorney at the Michigan Poverty Law Program, said the state’s new program was a start, and more substantive than previous extensions of the moratorium. However, he expressed reservations that the funding wasn’t sufficient.

“I’m not trying to begrudge $50 million, it's a lot of money, but in terms of the scale of the looming crisis it's just not going to be enough," Schaafsma said.

Andrew Argo, communications steward for the Greater Kalamazoo Renter’s Union, echoed the sentiment.

“We’re really trying to organize around the prospect of this mass eviction crisis because at this point it really looks like it has just been delayed rather than prevented,” Argo said.

The Greater Kalamazoo Renter's Union formed in response to hardships caused by the COVID-19 pandemic.

State officials said they hope the program could prevent mass evictions when the moratorium expires. Michigan has prevented landlords from evicting tenants behind on rent since March 20.

A statement from Whitmer announcing the executive order said: “This innovative new program will save lives, save money, and save businesses by keeping families in their homes and providing immediate financial relief to landlords for back rent they’re due.”

Before the order was signed, the State Court Administrative Office estimated more than 75,000 evictions could be filed in Michigan at the end of the moratorium.

When broken down by 75,000, $50 million is about $667 per case.

One month of rent in a two bedroom apartment at Michigan’s average fair market rate is $893, and with many tenants unable to pay for months there are worries the money won’t stretch far enough.

Pat Drueke, real estate attorney for Rhoades McKee PC in Grand Rapids, said landlords would likely have some concerns with participating in the program.

“There could be a concern from landlords that this does not provide a great enough financial incentive to take part in what is a voluntary program,” Drueke said.

While the executive order says landlords would receive lump sum payments for 90% of the pandemic-related unpaid rent, it makes no mention of when they can expect to see the money.

Drueke said that would be a huge concern to landlords who have bills stacking up which may not have been paid for months.

Still, he said if there was enough funding, he believes many landlords would take advantage of the program.

“If it's a sufficient amount of funding in the program and the only consideration would be, 'am I going to receive my interest and late fees,' my own guess would be that you’d rather have 90 cents on the dollar as opposed to nothing,” Drueke said.

Argo said he’s happy the state was taking some action to keep people in their homes, but that more needs to be done and the moratorium should be extended again.

“We’ve set up this new bureaucratic process, basically only two weeks for our renters all over the state to learn the ins and outs of it,” he said.

There have been similar rental relief programs elsewhere. Houston, Texas, implemented a similar program last month. Within 90 minutes, all $15 million allocated to rent relief was used up.