Evictions, foreclosures halted in Kansas. It’s either ‘extreme overreach’ or ‘necessary’

Gov. Laura Kelly’s order restricting foreclosures and evictions during the coronavirus pandemic could be a financial lifeline for thousands of laid off or furloughed Kansans who owe mortgage or rent payments but are unsure when they’ll work again.

It could also put banks and landlords in a financial bind if they’re forced to pause action against non-paying homeowners and tenants, critics contend.

A day after Kelly signed a sweeping executive order intended to help keep people in their homes as COVID-19 spreads through Kansas, the move was both hailed for providing certainty and condemned as an abuse of authority.

The governor’s directive represents just one in a growing number of temporary housing protections states and cities are offering across the country as COVID-19 exerts a significant drag on the economy. Textron Aviation, one of the largest employers in both Wichita and Kansas, said Wednesday it would furlough 7,000 workers for four weeks.

“Ideally, we’ll see moratoriums like this across the whole country,” Eric Dunn, director of litigation at the National Housing Law Project, said of Kelly’s order. “It’s not only necessary to keep people in their homes because they need housing; it’s also integral to enabling us to do the social distancing that health authorities are recommending to stop the threat of virus.”

“If people are being evicted and put on the streets, we’re not going to be able to respond to this pandemic and then, potentially, there could be others in the future,” he said.

At the federal level, Fannie Mae, Freddie Mac and the Department of Housing and Urban Development are also putting a temporary halt to foreclosures.

Landlords on ‘thin ice?’

Kelly’s order stops banks and credit unions from initiating any mortgage foreclosures and prohibits commercial or residential evictions until May 1. Kelly’s office said the order would support Kansans who miss mortgage or rent payments because of lost wages.

“We understand that this pandemic is creating unprecedented challenges for people across the state,” Kelly said in a statement. “Kansas families need our support, and my administration is committed to doing everything it can to make sure Kansans can stay in their homes and businesses. It’s a necessary step to further protect Kansans’ health and safety.”

But Kevin Kimmel, a 47-year landlord and the past president of the landlord group Partners for Responsible Neighborhoods in Wichita, warned of potential unintended consequences from the governor’s order freezing evictions.

“I think it’s a good thing, if people had been good tenants and had been paying their bills regularly up until the crisis happened,” he said. “The other side of the equation is, and people don’t think about this, sometimes people have been squeaking by and missing quite a few rent payments weeks and weeks and months and months before this happened.”

“They put the landlord on thin ice, because the landlord has to front all the bills for property tax, insurance, maintenance, house payments, repairs, supplies, etc.”

Jerrome Castillo, whose Wichita-based Titan Realty owns or manages about 200 properties, said his attorney is still trying to figure out the legality of Kelly’s order.

“I have mortgages and banks to pay,” Castillo said. “It’s not like I can miss my mortgage payment.”

“I just hope people realize it’s not a rent vacation,” he continued. “They are still gonna owe the money regardless if they don’t pay.”

Sen. Ty Masterson, an Andover Republican, called the order “extreme overreach” and abuse of power, noting landlords and banks will be affected.

He also argued the suspension of evictions and foreclosures doesn’t really have anything to do with health.

“How does that affect someone’s health?” Masterson said.

For its part, the Kansas Bankers Association struck a neutral tone.

CEO Doug Wareham said in a statement that foreclosure “is always the last thing a bank wants in any circumstance because there are no winners.” He said the association recognizes the severity of the pandemic and would work to make sure every bank knows of the governor’s order.

Jane Deterding, chairman of Citizens Bank of Kansas, said Kelly’s order won’t have much impact on the bank, which has 10 locations in the state.

“I’m not surprised, frankly, with all the precautions that they are putting in place … utilities, evictions,” she said. “Foreclosures was just the next logical place to go with that.”

Ryan Farrell, executive of the Apartment Association of Greater Wichita, said his members are in a “wait and see mode” and trying to take the pandemic into consideration. The best-case scenario for everyone, he said, is to work to keep tenants, not evict them.

“It’s kind of the last thing they want because there’s a lot of cost tied to that,” Farrell said.

Pandemic as a ‘moment of clarity’

Missouri Gov. Mike Parson hasn’t issued an order similar to Kelly’s, but tenant advocates said Wednesday it is critical.

“It is a pressing need for residents of the state of Missouri,” said Tara Raghuveer, director of KC Tenants.

Poor residents, working class residents and those who potentially won’t be paid in the coming weeks and months face financial loss, she said. There’s “huge concern” about paying rent at the moment, she said, adding it’s also a public health concern that people would be displaced from their homes.

Jackson County, which includes Kansas City, has delayed landlord-tenant court proceedings. But Raghuveer said she received a report that evictions already adjudicated are going forward.

Raghuveer said housing organizers across the country see the pandemic as a “moment of clarity” that exposes the precariousness of the housing system.

Tenant organizers have been called “crazy and radical” for talking about eviction moratoriums in the past, she said.

“But we are able to see very quickly how these demands can be made real,” Raghuveer said. “And now I think the challenge is to figure out how we can not only win these demands today, but build enough power to sustain the wins, or at least some of the wins, or part of the wins into the future.”

Wichita Eagle reporter Michael Stavola contributed reporting

This story was originally published March 19, 2020 at 5:00 AM.