Rep. Ilhan Omar (D-Minn.) has introduced a bill that would cancel rents and individual mortgage payments nationwide until one month after the national emergency declaration is lifted.
“The federal government must act now to prevent a complete collapse of the housing market,” said Rep. Omar in a Facebook Live press conference this morning announcing the bill. “In 2008 we had the ability to bail out Wall Street. This time we need to bail out the American people who are suffering.”
HR 6515, The Rent and Mortgage Cancellation Act, would apply to all tenants who have a lease, and all homeowners who have a mortgage on their primary residence. (It would only cancel mortgage payments for that primary residence.) The bill stipulates that payments would not have to be made up, though it leaves open the possibility that people over a certain income threshold might owe taxes on the relief they receive. Omar’s legislative director Kelly Misselwitz said on a call with tenant organizers last night that this decision was made because the first priority is getting relief out as simply as possible.
Under the bill, which if passed would be retroactive to April 1, tenants would not have to apply for rent cancellation. (Any rent paid for April or May before the bill passed would be reimbursed to tenants.) Instead, the bill would establish funds, which would be managed by HUD, to which property owners and lenders could apply for relief based on their lost income. That relief would make up the entire amount of lost payments, but would come with stipulations—for example, property owners accepting the relief must not increase rent for five years, follow just-cause eviction guidelines, and not discriminate against tenants based on their source of income, immigration status, conviction or arrest record, sexuality or gender, or credit score. The bill would prioritize payments to nonprofit owners and small landlords first, and require financial disclosures in order to determine this prioritization.
The bill requires Congress to allocate sufficient funds to cover all eligible payments, a move to sidestep the problem that faced the Paycheck Protection Program, which rapidly ran out of money (though that seems to be in part because larger companies found loopholes that allowed them to apply), and ensure the bill doesn’t face Constitutional challenges.
Tiana Caldwell, a mother from Kansas City, Missouri, spoke during Rep. Omar’s press conference. She was laid off three weeks ago, she said, and her husband was laid off as well. Her family had been homeless for six months last year after her second cancer diagnosis, and she did not want to face that again. “By no fault of our own, we’re being pushed to the brink,” Caldwell said. “No one should be expected to pay anything during this time.”
Another component of Omar’s bill speaks to the lessons of the foreclosure crisis—it would establish an acquisition fund to allow nonprofits, public housing agencies, cooperatives, community land trusts, and local governments to acquire housing that comes up for sale during the economic upheaval surrounding the pandemic, and would require sellers of multifamily properties to give sufficient notice of that sale to enable purchasers working through the fund a chance to buy.
Relief Versus Cancellation
The House Democrats’ proposal in the last stimulus package would have suspended rent and utility payments for federally assisted renters and included $100 billion “to help non-assisted renters who meet certain economic conditions cover their rent and utility payments,” which is sometimes being called universal vouchers. Rep. Maxine Waters (D-CA) and many housing advocates are pushing hard to have this included in the fourth federal relief package. Housing advocates continue to see this as not only the most practical approach, but one that could lay the groundwork for a full-funded universal voucher program in the future, rather than the current system, which only supports one in four eligible households.
The advantages of the approach proposed by Omar over rent relief provided to tenants include the fact that it will cover undocumented residents, and that the burden of applying for funds falls on landlords not tenants, who would see immediate relief. This will also mean fewer total applications to process, as many landlords own hundreds or thousands of units.
Linda Mandolini of Eden Housing, speaking last week about the concept of rent relief in general, not Rep. Omar’s bill, suggested that directing relief through landlords would be more efficient and easier on tenants. “It would be much faster than going one tenant at a time,” she noted.
Landlord relief, however, is not likely to be a politically appealing platform to rally around, whereas canceling rent upfront first already has momentum, especially given the number of people who anticipate not being able to pay May’s rent. Though nationally the National Multifamily Housing Council found that rent collection in April dropped 7 percentage points over last year, May is expected to be worse, and of course those numbers are much higher among lower-income populations. Some nonprofit housing organizations are projecting 20 to 40 percent rent losses.
“We’re going into a depression,” says Diane Yentel, of the National Low Income Housing Coalition. Though NLIHC is focusing on coordinating support from over 100 national advocates, industry groups, and governmental agencies for $100 billion emergency rental assistance through vouchers and similar programs, Yentel sees the calls for rent suspension as a positive thing. “The more people are calling for canceling rent,” she says, ”the more people come to the table and say ‘What’s the middle ground?’ But the middle ground has shifted. . . . Things that were considered radical a month ago are no longer considered radical.”
State and Local Activity
There is action on the state and local levels as well. Tenant organizers in New York City, for example, are launching “Can’t Pay May,” an organizing campaign to call on Gov. Andrew Cuomo for rent cancellation. On a call yesterday, tenants and organizers noted that while they were formally calling it a rent strike, unlike a typical rent strike where rent is withheld or escrowed in order to force repairs or resist rent hikes, this is really just turning a widespread inability to pay into collective action. New York City is one of the locations hardest-hit by COVID-19, and so, “the rent’s not getting paid anyway,” said tenant organizer Cea Weaver.
Donnette, an undocumented New York City resident who runs her own cleaning service, spoke on the New York City call. She is not eligible for any public support, and has never asked for any, but her business has dried up, because no one is inviting people into their homes to clean them at this time. “How are we going to manage to pay three months’ worth of back rent, when nothing is coming in?” she asked. “How are we going to manage present bills and back bills of rent?”
A state bill proposed by New York state Sen. Michael Gianaris (D-Queens) would “waive small business commercial and residential rent for 90 days for tenants that have lost income or been forced to close their place of business as a result of government ordered restrictions in response to COVID-19, and waive certain mortgage payments for 90 days for mortgagors who experience financial hardship due to COVID-19.”
New Jersey has also been hard hit by the pandemic, and legislators are working to provide relief to renters, homeowners, and certain business owners with commercial mortgages or rental properties. Last week, state Assemblywoman Britnee N. Timberlake introduced a bill that would provide rent relief for tenants, and mortgage forbearance for homeowners. The bill has been referred to the Assembly Financial Institutions and Insurance Committee. Although the state already has a moratorium on evictions and foreclosures, and banks have agreed to mortgage forbearance, “some landlords are unfortunately still expecting rent from their struggling tenants and threatening eviction after the pandemic ends … and some banks are offering forbearance but requiring all monies due on the 90th day, which would later deepen the foreclosure crisis,” according to a statement from Timberlake. In the proposed bill, no one who asks their landlord for rent relief will be denied, and renters who request payment suspension would need to come to “reasonable repayment structure with their landlord.”
Under the proposal, homeowners who defer their mortgage payments for three months must be able to put those payments on the back end of their mortgage. Banks would not be allowed to demand the total amount owed after the three-month period concluded, the proposal stipulates. Although the loan would be extended, banks would not be allowed to charge fees or negatively affect a homeowners’ credit report.
During a call with community and state organizations today, Matt Hersh, director of policy and advocacy at the Housing and Community Development Network of New Jersey, said Timberlake’s bill—which reflects feedback from the community development community—has gained a lot of steam in the last week and now has several new sponsors. With additional feedback from organizations, legislators are working to edit the bill to outline additional standards for rent repayment, Hersh says.
It’s not yet clear what Rep. Omar’s bill would cost. Given that Americans paid over $40 billion in rent per month in 2017, just the rental portion would cost at least that. However, supporters note that the cost of not acting could be equally high, as a wave of evictions and homelessness and abandoned properties would absolutely follow. “I wouldn’t call it so much a cost as an investment,” Rep. Omar’s legislative director Misselwitz told housing organizers on the Thursday call. “We’re seeing that level of investment in making sure that corporations and state and local governments are standing and their markets are as safe as possible, and I think we should be doing the same thing for people.”
Omar, who has proposed massive investments in public housing in the past, worked closely with housing justice organizers, including the Homes Guarantee project of People’s Action to craft the bill.
The next step will be getting this proposal into the next stimulus package, which Congress is already working on. On an organizing call Thursday, April 16, Tara Raghuveer with People’s Action noted that they’ve heard loud and clear from their grassroots members that “this cannot be an exercise in ideological purity. This is not something that we’re interested in as an abstraction. We actually need to win rent and mortgage suspension. So the organizing challenge is actually what comes next.”
Additional reporting by Lillian M. Ortiz, Shelterforce’s managing editor.