When her tenants lost their jobs or saw their income plunge early in the pandemic, Karen Arnold had a heart — and a curious mind. She reduced their rents and continued to work with them for the rest of the year. Then she heard about a Colorado assistance program that provided rent payments to landlords and tenants. She researched it and helped them apply.
“One of my tenants was approved on April 26 for rent for four months” of payments, said Arnold, who rents out two townhouses in Denver and Aurora and inherited four more when her mother died last year. “On June 9, I received an email that said ‘Congratulations, you’ll be getting your money in one to two weeks.’”
They’re still waiting — nearly seven weeks later. But Arnold hasn’t given up hounding the state’s Division of Housing for the help it promised.
“I’m retired,” Arnold said. “I feel sorry for the landlords that don’t have the time to do this.”
The state’s Emergency Rental Assistance Program, or ERAP, has seen delays because of potential fraud and efforts to stop it, state housing officials said in an email.
“There are delays in payments due to fraud prevention efforts,” Brett McPherson, a spokesman for the Department of Local Affairs, wrote. The agency, which oversees the state rental assistance program, did not elaborate on the extent of fraud or say when payments for approved accounts might be paid.
The housing division offered more details about the fraud efforts after the story published on July 28. By accepting federal help for its rent-assistance program, Colorado needed to implement better fraud-prevention processes, including verifying identities, validating landlord tax ID information and bank information.
“These important fraud mitigation practices can sometimes delay application approval and payments if applicants are not able to provide documentation or if that documentation cannot be validated,” McPherson said.
The agency also investigates potential fraud if an application looks suspicious or the department gets a tip from the public.
“Some of these investigations have resulted in stoppage of payment or recapture of funds paid, but have not been determined to be fraud. One case was referred to law enforcement,” he said, without sharing further details.
As the Centers for Disease Control and Prevention national eviction moratorium is set to end Saturday, the threat of fraud is just the latest issue causing delays in Colorado’s rent-assistance program, which has been overwhelmed all year.
In January, a record number of applications for aid were submitted as the state’s eviction moratorium came to an end. In February, the state scrapped its popular program for landlords and changed eligibility rules for tenants in order to qualify for additional federal funding. Both contributed heavily to delays. The state then spent $6.5 million to hire a contractor to process applications.
While state housing officials said in early June that the program had reduced the backlog to a two-week wait, the state declined to say how many approved applications have — or have not — been paid. And that’s creating extreme anxiety for renters who sought help from Colorado Legal Services, a nonprofit agency that offers legal help to low-income residents.
“There’s a big difference between an application that’s been approved but not paid and been approved and paid,” staff attorney Jana Happel said, pointing out that some clients have been waiting more than two months.
“When the news came that the moratorium would be extended another 30 days (to July 31), we were all just dying in relief along with our clients,” Happel added. “The problem is that with all these people who’ve been approved, they can get evicted when the moratorium expires (even though) they’ve been waiting for the check to come. That’s a real crisis.”
Eviction moratorium ends July 31
The national moratorium, in effect since last year, prevented landlords from kicking out tenants who officially declared that their income was reduced for COVID-related reasons.
But unlike the state moratorium, the national one didn’t prevent all evictions. Landlords could move forward if the tenant was too disruptive or involved with criminal activity. They could challenge the tenant’s truthfulness on the COVID-income declaration. They could choose to not renew a lease.
According to the Colorado Apartment Association, the number of evictions in June was at 1,900, or about 66% of “normal,” or a non-pandemic June, said Drew Hamrick, the organization’s general counsel.
“We’re not seeing a spike in (eviction) filings,” Hamrick said. “Remember, we have for some time been under a system where there’s a fairly limited number of evictions that are barred by the CDC version of the moratorium. It’s not like there’s this big floodgate of built-up evictions that will roll out.”
He expects evictions in Colorado to return to the normal rate of 3,000 to 4,000 a month after the ban ends.
“If we see eviction filings above 6,000 or 7,000, then, yeah, that’s a spike,” he added. “But (not) so far. And that’s because these government assistance programs like ERAP are there for people to turn to if they’re having trouble paying their rent.”
But renter advocates with the COVID-19 Eviction Defense Project in Denver said that many renters who are seeking help will continue to have problems paying rent for months to come. On Monday, the organization asked Gov. Jared Polis to pause evictions through Sept. 30 for renters seeking assistance.
“If you’ve made a good faith application for rental assistance and you’re waiting for that application to process, the fact that you are still waiting, and the fact that you have applied, should be a full defense to an eviction in court,” said Zach Neumann, executive director of the project, which provides free legal assistance to renters.
Neumann said Polis hasn’t responded yet.
Fraud and other delays
Fraud caused massive payment delays for unemployed Coloradans as the state’s Department of Labor and Employment battled out-of-state fraudsters who were filing claims using stolen identities. In June, labor officials estimated that $22 million in fraudulent unemployment claims had been paid, though anti-fraud efforts prevented more than $500 million from being paid.
But there have been few, if any, reports of fraud in the state’s pandemic housing programs.
Neumann said that delays nationwide to state ERAP programs have increased because of new federal eligibility requirements, including stricter lower-income limits and income verification.
“Around the country, it’s been very challenging to get rental assistance out the door. Congress allocated $46 billion and that seems to track with the U.S. Census Bureau’s number of tenants who are behind,” he said. “It takes an incredible amount of time to process those applications, to gather the required documentation to make payment, and so I think around the country, you’re seeing providers struggle to move quickly on processing and paying applications.”
As of July 27, Colorado’s pandemic housing assistance program had approved $122.5 million in rent payments to more than 33,600 applicants, according to state data. About 5% of the money spent so far came from the two recent federal relief acts that allocated $690 million to the state’s rent assistance programs this year, even as thousands were still waiting for rent checks. The rest came from the state legislature and earlier CARES Act funding.
Hamrick, with the apartment association, said he’s hearing fewer complaints from landlords about payment delays compared to earlier this year. The program requires documentation from two people — the landlord and tenant — so it should be more difficult for fraud to occur.
But he’s not surprised to hear of fraud. He’s heard that some tenants misrepresent their inability to pay rent. And he’s heard of cases where tenants and landlords both apply when only one should have.
Recently, he’s hearing more about confusion on where to apply. The latest round of federal funds went to the state as well as 11 local governments in Colorado. Tenants and landlords in those communities now must apply locally — and not with the state.
“In some places, the state programs are not open to you so you can only go to your local program and some of those local programs aren’t working as well as the state program,” he said. “And with two different programs out there, there’s a lot of opportunity for the left hand not to know what the right hand is doing.”
He just hopes communication improves between the public programs and applicants because that would ease many minds.
“They just do not have enough resources dedicated to those classic man-the-phones customer service … and I think that’s really critical because people can tolerate a much longer delay as long as they have good information about what’s coming down the pike,” he said. “When you both have a delay and a complete mystery about what’s going on, then that’s when people start to panic.”
Arnold, the Denver-area landlord, hasn’t given up on getting the promised payments for the months of February to May. She and her tenant tried again Tuesday only to find out her tenant’s application for June and July were denied because they were deemed a duplicate effort. She has no idea what happened.
“I’m not going to kick out my tenant at this point. We’ve gone on for so long and I trust the system,” she said. “But I don’t know where the system is.”
CLARIFICATION: This story was updated at 4:45 p.m. on Monday, Aug. 2, 2021 to clarify that the Department of Local Affairs said delays in rent assistance program payments were more about fraud prevention work than instances of fraud. A DOLA spokesman said investigations led to at least one case referred to law enforcement.