Democratic Reps Seek To Cancel Mortgage, Rent

Rep. Ilhan Omar has proposed legislation in Congress that would cancel rent and mortgage payments for the entirety of the coronavirus pandemic, under the threat of seizing property from landlords who run afoul of the proposed law.

The Rent and Mortgage Cancellation Act of 2020 would suspend all rent and mortgage payments on primary residences, regardless of the tenant’s or mortgage holder’s ability to pay or whether they had suffered any financial hardship.

“We need to cancel rent and mortgages for the duration of the crisis,” Omar said in a Tweet. “We need to provide universal monthly payments to all Americans. And we need to make sure our states and cities don’t go bankrupt. We need to pass a fourth relief package immediately.”

Omar introduced the legislation with fellow Democratic Reps. Alexandria Ocasio-Cortez of New York, Rashida Tlaib of Michigan, Ayanna Pressley of Massachusetts, Pramila Jayapal of Washington, Mark Pocan of Wisconsin, Veronica Escobar of Texas, Jesús “Chuy” García of Illinois and Grace Meng New York. 

If a property owner or mortgage lender does not allow borrowers to suspend all payments, they would be subject to a $5,000 fine for the first violation and $10,000 fine for the second violation. For third and subsequent violations? $50,000 fine or “forfeiture of property.” The legislative summary is not entirely clear on what that means for lenders.

In acknowledgement that lender and landlords still have bills to pay on the properties, the legislation would create a relief fund – money that landlords could only tap into if they agree to the following for five years (among other things):

  • A rent freeze.
  • No source of income discrimination.
  • No discrimination based on criminal history.
  • No discrimination based on credit.
  • Landlords cannot attempt to collect back rent.
  • Landlords cannot report renters who pay to collection agencies.

Mortgage lenders could only access the relief fund if they agree to “a number of fair and inclusive lending terms for a period of 5 years,” including: yearly reporting of detailed lending data delineated by race, ethnicity, zip code, age, credit score, interest rates and other loan pricing features. Lenders would also have to submit yearly detailed data on their office locations, outreach practices, and their referral systems. If the conditions are violated, the federal government can seek to recoup the funding.

Additionally, the legislation would require private rental property owners who use the fund and are seeking to sell their property to notify the U.S. Department of Housing and Urban Development. HUD would than seek to find a purchaser to convert the property into low-income housing.

If no buyer comes forward within 60 days, then – and only then – can the property owner make the sale to whomever they choose.

“We must take bold, urgent action that meets the scale and scope of this crisis, and keeps families whole,” Pressley said. “By cancelling rent and mortgage payments for the duration of this public health emergency, the Rent and Mortgage Cancellation Act affirms that housing is a human right and ensures that no person or family is forced to choose between putting food on the table and keeping a roof over their head during this unprecedented crisis.”