Comment Detail

Comment

July 31, 2023

The Honorable Sandra Thompson
Federal Housing Finance Agency
Washington, DC

RE: Federal Housing Finance Agency’s Request for Input on Multifamily Tenant Protections

Dear Director Thompson:

Thank you for the opportunity to respond to the Federal Housing Finance Agency’s (“FHFA’s”) Request for Input on Multifamily Tenant Protections. My name is Kendall Lewellen, and I am the Housing Subject Area Manager at the Center for Arkansas Legal Services located in Arkansas. We are a nonprofit law firm with the mission to balance the scales of justice for low-income people and communities.

I understand the need for strong tenant protections based on my experience supervising our housing advocacy across 44 Arkansas counties. In doing so, I have become familiar with the landlord-tenant law in Arkansas, the challenges of enforcement, and the need for a minimum federal floor on tenant protections. Arkansas has the weakest protections for tenants in the nation. This creates unique challenges—and sometimes devastating consequences—for our clients and community.

FHFA has an important opportunity to help establish a minimum federal floor of tenant protections. Arkansas law is uniquely cruel to tenants. Our state law does not give tenants any meaningful opportunity to enforce basic health and safety standards unless a landlord assumes that duty voluntarily. However, those same tenants may commit a crime under state law if they live in their homes after falling behind on their rent. The Arkansas public supports more legal protection for tenants, as shown in the attached 2019 poll. Despite this, the Arkansas General Assembly has not passed meaningful reforms to protect them.

Tenant protections align with FHFA’s statutory mandate to ensure that the GSEs fulfill their mission by operating in a safe and sound manner and to serve as a reliable source of liquidity and funding for the housing finance market. FHFA’s strategic goals are to (1) secure the regulated entities’ safety and soundness, and (2) foster housing finance markets that promote equitable access to affordable and sustainable housing.

Ensuring that tenants in properties with federally-backed mortgages have equitable access to affordable and sustainable housing fits squarely within FHFA’s statutory mandate and strategic goals, and we applaud FHFA for undertaking the RFI process to learn more about the challenges that these tenants face and to consider the role of FHFA and the GSEs in addressing these challenges.

FHFA should consider the following minimum tenant protections:
• Health and safety standards that can be directly enforced by tenants; AND
• A ban on the use of “failure to vacate,” “criminal eviction,” and other uses of the criminal justice system to remove tenants from their homes outside of the civil justice system.

I. Health and Safety Standards

Arkansas lacks any meaningful right to decent, safe, or sanitary housing. The few health and safety standards that exist within Arkansas cannot be effectively enforced by tenants as explained below. This has obvious consequences on the health, stability, and overall wellbeing of the many Arkansas families who rent their homes. Basic health and safety standards would impose some costs on landlords. However, these costs are outweighed by the benefits to tenants.
Arkansas law generally follows the doctrine of “caveat lessee” or “let the lessee beware.” Our state law does not impose any duty on landlords to repair their properties. A landlord may assume this duty some other way, such as a lease provision or requirement from a federal agency that subsidizes the rent. Barring that, there is no recourse for a tenant who is harmed by a landlord’s failure to maintain rental property in Arkansas other than to move at the tenant’s own expense.

Many of our cities have ordinances that require property owners—including landlords—to maintain their properties. However, this system puts tenants at the mercy of city government to resolve habitability issues that those cities may not have the resources or political will to address. Even if a city forces a landlord to repair an unsafe condition in a rental property, that landlord could simply refuse to renew the tenant’s lease in retaliation.

This poses obvious dangers to the health and safety of Arkansas tenants. In 2017, the Little Rock Health Impact of Housing Project conducted a study on the health impacts of housing located in Little Rock, Arkansas (available at https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5120100/). This study found that poor habitability standards for Arkansas tenants had a statistically significant impact on their health. Hispanic respondents and those with less than a high school education were both significantly more likely to report problems with their landlords not making repairs as requested.
This poses other risks to the quality of our housing stock. Poor housing conditions will worsen over time if tenants cannot address them as they arise. Eventually, cities will condemn housing with serious health and safety issues. Owners may consider bankruptcy as tenants move and the owners no longer have the cash flow needed to pay the mortgage and other expenses.

FHFA has an interest in protecting the housing stock that secures federally-backed mortgages. FHFA should consider habitability protections that tenants can directly enforce against the owners of multifamily apartment complexes to compel them to make repairs. This would allow tenants to take their health and safety into their own hands while protecting the investments of mortgage holders.

II. The Role of the Criminal Justice System in Arkansas Evictions

Arkansas is the only state that criminalizes a tenant’s failure to pay rent while remaining in the home through its “failure to vacate” statute. A.C.A. § 18-16-101. It is a crime for a tenant to remain in his or her home after the landlord gives them 10 days’ notice to vacate based on nonpayment of rent. Although this law is commonly called “criminal eviction,” it does not allow a judge to award possession through a criminal case. Instead, it causes tenants to move out under the threat of criminal charges rather than remain to contest an eviction through the civil system. Notably, many of these tenants are entitled to a full 30 days’ notice to vacate under the CARES Act because their homes are funded by the federal government through a mortgage or rental subsidy.

This criminalization of poverty is wrong. Our civil courts provide Arkansas landlords with a lawful alternative to evict tenants when appropriate. The continued use of failure to vacate simply causes unnecessary involvement with the criminal justice system for low-income people and communities.

Most Arkansas prosecutors are unwilling to enforce the failure to vacate law. However, it is enforced on a regular basis in some communities. The Arkansas General Assembly has declined to repeal failure to vacate multiple times despite the law’s uneven application. Our courts have also upheld the law’s constitutionality.

FHFA should take action to end the use of failure to vacate in housing subject to federally-backed mortgages. The U.S. Department of Housing and Urban Development (“HUD”) prohibits the use of failure to vacate in most forms of HUD-subsidized rental housing. Please see the attached memos related to this policy. The FHFA could take similar steps to stop the use of failure to vacate in a large portion of Arkansas’s housing stock.

In conclusion, FHFA has an important opportunity to help set the foundation for a minimum federal floor of tenant protections, and we urge FHFA to act boldly.

Sincerely,

Kendall Lewellen
Housing Subject Area Manager
Center for Arkansas Legal Services

Attachments: “March 2019 Arkansas Poll” by Mason-Dixon Polling & Strategy
HUD Policy Documents Related to Failure to Vacate