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.

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