With the decision of the United States Supreme Court that allows the evictions of people who have not paid rent due to the covid-19 pandemic to resume, the processes in court will be reactivated and it is anticipated that hundreds of families could remain homeless.
In turn, Bill 429 of the House of Representatives —that proposed to create the Law for the Protection of Housing during Emergencies to decree moratoriums on mortgage and rent payments – is no longer a possibility for those who cannot pay for a home, since it was vetoed yesterday afternoon by Governor Pedro Pierluisi.
The director and founder of the Puerto Rico Legal Aid entity, Ariadna Godreau, indicated that a significant number of families – especially women heads of families – will be harmed by the court order.
Godreau expressed to THE SPOKESMAN that the island does not collect data on how many people have benefited from the moratorium due to the pandemic during the past months. However, he pointed out that Legal Aid Puerto Rico analyzed the platform Unified Case Management and Administration System (Sumac) of the Judicial Branch, and found that in the past 10 months, 668 lawsuits for eviction of private properties have been filed.
“The Public Housing Administration (AVP) has been filing virtually no eviction lawsuits since March, so most of those cases are private rents. I mean, having a moratorium … look at how we are, imagine if there was no moratorium! And there is this idea that the people who are facing eviction are lazy, that they are supported; but no, there are many professionals who lost their jobs, there is a working class … most of them are women. Almost 60% of the defendants are women who were affected by the COVID crisis, “said Godreau.
The Supreme Court decision was issued Thursday afternoon and allows evictions of people who were unable to pay rent due to the pandemic to resume. The Centers for Disease Control (CDC, for its acronym in English) had recommended keeping the moratoriums active, to prevent families from staying on the street in the middle of the pandemic and thus avoid further infections.
However, the court ruled against the recent recommendation that there be an extension to the moratoriums. The CDC proposed the extension on August 3.
In the United States it is estimated – according to data from the Census Bureau – that around 3.5 million people could become homeless next month, as they cannot pay their rent and do not have the benefit of the moratorium.
“This decision is fatal in the sense that it leaves people deprived. This moratorium benefits almost 7 million tenants who are behind in rent in the United States and has repercussions in Puerto Rico, and at the same time what the decision is saying is the same as the administration (of President Joe) Biden is saying : Now it is up to the States, the jurisdictions, to legislate to protect housing in this moment of emergency ”, he said.
Legislation at island level
At the Puerto Rico level, the issue of moratoriums has generated conflicting positions between those who defend their extension and the landlords and property owners.
Earlier yesterday, popular representative Ángel Fourquet, proponent of House Bill 429 to establish a moratorium of up to 90 days on the payment of mortgage loans and leases, as well as the freezing of foreclosures and evictions while there is an emergency declaration, I was hoping that it would be approved in La Fortaleza.
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– Ariadna Godreau, founder of Legal Help Puerto Rico. > Archive / EL VOCERO
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However, in the afternoon, Governor Pierluisi issued a veto to the substitute for House Bill 429 and Bill 488, and highlighted that “despite its laudable intention, this bill unreasonably alters the rights of mortgage creditors to enforce their credits and could be interpreted as a confiscatory measure for undermining contractual obligations ”.
Fourquet classified the measure as fair and necessary and added that an attempt was made to reach consensus, to favor families at the most vulnerable moment in the face of an emergency. “This includes what the banks have already done, so it is a minimum guarantee. We took suggestions and got almost unanimous votes ”, he assured about the management at the legislative level.
“It was specified that it is not a discharge and that it must be paid with a payment plan with a term that should not exceed six months,” said the representative, adding that to the extent it was established that the debtor requested the available disaster assistance —Particularly those that guarantee the payment of the house— to protect all parties.
Godreau, for his part, indicated that they sent several letters to the governor to sign the bill, which had the endorsement of the five political parties in the legislature. He argued that the measure was balanced, did not violate contracts and protected the small landlord. He stressed that upon being vetoed, “we know that there will no longer be an act of the executive to a moratorium for a future federal disaster that can endure if there is no legislation” and stated that “the Federal Supreme Court is already saying that the laws are the ones that they are needed to protect the home in a time of emergency ”.
The mortgage bank reacts
For representatives of the mortgage bank, House Bill 429 had to be vetoed because they understand that it did not bring relevant changes and they considered it unfavorable to the investment climate.
Pedro “Peter” Torres, president of the Puerto Rico Mortgage Bankers Association (MBA) reported that “we are requesting the veto of the project. The legislative piece constitutes a setback in the emergency moratorium alternatives, complicating the process and requirements. Our clients have had the necessary alternatives available when revenues have been impacted, either through moratoriums or under the loss mitigation process. Given this reality, it is unnecessary “.
Torres stated that the proposed legislation would have had the effect of impacting the current contractual relationships between the financial industry and secondary investors. Consequently, it considers that it would not encourage them to see Puerto Rico as a safe place to invest.
“It should be noted that the mortgage loan portfolios in Puerto Rico are acquired by secondary investors – such as Fannie Mae and Freddie Mac – and that 90% of the mortgage loans go to a secondary market,” said Torres. He added that the proposed legislation imposed “a straitjacket on the investor, regarding determinations related to the loan acquired in portfolio.”
The Fiscal Control Board (JCF) did not favor the project either.
Zoimé Álvarez Rubio, executive vice president of the Puerto Rico Banking Association (ABPR), assured that the banking industry has always responded to the needs of its clients, in compliance with federal entities, guides and regulations of regulators, investors and the Secondary market.
“It is important to clarify that evictions are applicable for people who are renting a property. However, in general, financial institutions do not carry out this process. The Department of Housing is promoting financial aid through the new Rent Assistance Program. It offers help for the late payment of house rent – as well as the payment of water and electricity – with a view to allowing people to stay at home, “said Álvarez, who assured that for situations with the payment of mortgages there are other alternatives.
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