Eight House Democrats introduced the Rent and Mortgage Cancellation Act to authorize full rent and mortgage payment forgiveness through the end of the coronavirus shutdown.
Filed by Rep. Ilhan Omar, D-Minnesota, the bill’s cosponsors include Reps. Alexandria Ocasio-Cortez, D-New York, Rashida Tlaib, D-Michigan, Pramila Jayapal, D-Washington, Mark Pocan, D-Wisconsin, Ayanna Pressley, D-Massachusetts, Veronica Escobar, D-Texas, Jesús“Chuy” García, D-Illinois, and Grace Meng, D-New York.
“Congress has a responsibility to step in to stabilize both local communities and the housing market during this time of uncertainty and crisis,” Omar said in a statement. “In 2008, we bailed out Wall Street. This time, it’s time to bail out the American people who are suffering.”
According to its summary, the $1 trillion bill “would constitute a full payment forgiveness, with no accumulation of debt for renters or homeowners and no negative impact on their credit rating or rental history,” and applies to everyone regardless of their income.
The bill proposes using taxpayer money to establish a relief fund through the Department of Housing and Urban Development (HUD) for landlords and mortgage holders to cover losses from the canceled payments. But those who participate would need to agree to several terms.
In order to receive relief money, landlords would have to agree to not increase the rent of their rental properties for five years. They also would be required to give tenants a 10 percent equity stake in their property. Detailed lending data would also be required to be reported to federal housing authorities.
Christian Britschgi at Reason points to the power given to the U.S. Attorney General under the bill to take civil action against property owners and mortgage lenders accused of violating renters’ and homeowners’ rights under the act.
He notes that landlords could be fined $5,000 under the bill for a first offense and $10,000 for a second offense. Landlords who violate the act three or more times could be fined $50,000 and/or their property could be seized.
“That means the government could snatch up a landlord’s rental property just for reporting three tenants who didn’t pay their rent to a credit reporting agency,” Britschgi says.
The federal government would also create an Affordable Housing Acquisition Fund, also administered by HUD. This fund would subsidize nonprofits, public housing authorities, coops, community land trusts, and state and local governments, purchasing private buildings in order to convert them into income-restricted affordable housing.
Anyone agreeing to participate in the fund would be required to provide tenants with free healthcare, childcare, employment and education assistance, and financial literacy education.
“One might ask themselves how exactly free financial literacy classes at federally-funded public housing fits into an emergency response to the COVID-19 pandemic,” Brischgi says. “The answer is it doesn’t.”
A Change.org petition urging Congress to cancel rent and mortgage payments because of massive unemployment due to the coronavirus shutdown has gained nearly 829,000 signatures out of its one million goal.
“Our federal government should act in a similar fashion to Italy’s and mandate the suspension of rent and mortgage payments during the Coronavirus pandemic,” the petition says in part.
According to a National Multifamily Housing Council report, 12 percent fewer renters paid their rent in April than did in March, and many tenant groups have considered organizing rent strikes for May 1.
This article was first published by The Center Square.