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Eviction Risk of Rental Housing: Does It Matter How Your Landlord Finances the Property?

Author

Listed:
  • Brent W. Ambrose
  • Xudong An
  • Luis Lopez

Abstract

We show, using a stylized model, how the financing choice of landlords can impact eviction decisions in rental markets. Since multifamily loans rely on timely cash flows from tenants, strict underwriting factors can increase the chances that landlords are able to weather income shocks. Lender provided relief may create further leeway for landlords to work out a deal with tenants who default on rental payments. Using comprehensive data on nationwide evictions in the U.S. and performance records on multifamily mortgages, we confirm predictions from our model by documenting a negative relation between evictions and the financing activity by government-sponsored enterprises (GSE) that impose strict underwriting criteria but generally offer borrowers relief during unprecedented income shocks. We also quantify the eviction risks induced by the COVID-19 pandemic for 12 U.S. cities using our empirical model.

Suggested Citation

  • Brent W. Ambrose & Xudong An & Luis Lopez, 2021. "Eviction Risk of Rental Housing: Does It Matter How Your Landlord Finances the Property?," Working Papers 21-05, Federal Reserve Bank of Philadelphia.
    • Handle: RePEc:fip:fedpwp:89863
    DOI: 10.21799/frbp.wp.2021.05
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    More about this item

    Keywords

    Evictions; Rental Housing; Multifamily Mortgages; GSE; COVID-19;
    All these keywords.

    JEL classification:

    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General

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