Ilhan Omar Proposes Bill to Cancel Rent, Mortgage Payments During Pandemic

A bill announced today by Rep. Ilhan Omar would release tenants and homeowners from housing payments until the national emergency is lifted, and would make up the losses to landlords and lenders through a federal fund.

Rep. Ilhan Omar, who stands at a podium in front of an American flag, has proposed legislation that would cancel rent and individual mortgage payments nationwide to deal with the COVID-19 crisis.
Rep. Ilhan Omar has proposed legislation that would cancel rents and individual mortgage payments nationwide. Photo by Lorie Shaul, via Flickr, CC BY-SA 2.0

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.

Next Steps

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.

25 COMMENTS

  1. I’m sorry but from what I reading this is more let’s ram socialist ideologies down your throat. Allow me to explain simply if you cancel rent mortgage for a year what happens no one will be able to afford the house after that. Where do you think the money comes from, it come from taxpayers and the last bill is going to strain us extremely hard down the road because someone has to pay for it and that’s us. Just throwing money at a problem will not solve it canceling rent and mortgages and throwing more money will cause a collapse that we will not recover from. The problem is Democrats do not care they want to shove socialistic ideologies down your throat and painted with flowers and fanfare in the end it’s the people who shall suffer not the government. If you who have a job chose not to save spend it all not think about the future it’s not the government’s job to hold your hand and say it’s okay. Yes we have a pandemic that doesn’t mean responsibilities go away it’s time for you to realize you have to be an adult. It’s going to be hard for a while I feel the crunch I work in a factory and I ship things and guess what I wonder if I’ll have my job the next week. But I’m not too worried I paid attention I saved what I could I made sure I had a plan so I wouldn’t be in trouble things are going to be tight but I made a plan. In the end I have enough saved for about 6 months that’s not much but I can survive off of it I don’t need to have my rent cancelled. Because guess what happens when the pandemic ends and everything goes back to normal and the small amount of money the government gave to keep you from being evicted is not enough. Guess who’s going to have to pay that rent hike that’s right it’s you not the government.

      • Yes, Sean, it really is sad how the landlords didn’t bother to build in reserves like responsible businesspeople and can’t even handle the reasonable business risk of some of their tenants being unable pay due to circumstances beyond their control. But if they can’t deal with the risks of investments, I guess they should get out of the marketplace!

        • Ok, Miriam…..so would you be willing to apply that same logic to say government bureaucracies such as schools which fund themselves by taxation of property ? If they ‘can’t even handle the reasonable risk of some of their tenants being unable to pay due to circumstances beyond their control’ – should they too get out of the marketplace ? Should such things and schools, security, and road maintenance also be turned over to others in the marketplace, preferably to others in the free marketplace ? I happen to think it’s an excellent suggestion and agree with you wholeheartedly – if indeed you accept the conclusion toward which your own logic tends 🙂

          • Tom, I was more intending to suggest that one can’t call the tenants in this situation irresponsible if one is not calling the landlords that as well. But to answer your question, you kind of have to treat agencies that have a mandate other than generating profit somewhat differently from a private business. They haven’t failed to set aside profits in a reserve because they aren’t turning a profit. So that’s a matter for the folks who fund them (us, the people who have decidedly collectively through our government that these are things that are better not delivered by the marketplace) to provide. Unfortunately, if we don’t provide them things like appropriate capital reserves, they appear to fail and then people can claim the market would do it better. And then along comes a pandemic and every private corporation and business needs a bailout anyway. Huh.

  2. THIS IS A EXTREMELY BAD PROPOSAL BILL FROM OMAR-rent and mortgage cancellation act bill. This DOES NOT HELP THE PEOPLE AT ALL just renters. How do you expect BILLIONS OF PEOPLE to pay utility bills or property tax bills and school tax bills for a year with no income? You WANT the Landlords only to APPLY for the losses in rent, instead of giving them $2000.00 a month FOR A YEAR in automatic payments for everyone in the UNITED STATES. There are homeowners in this world that there ONLY INCOME IS THE RENT THAT THEY RECEIVE and you want to take it away for a year. You will have HUD MAKE A RELIEF FUND FOR THE LANDLORDS BUT TO APPLY AND RECEIVE THAT FUND OR BE APROVED FOR IT . YOU HAVE TO AGREE FOR 5 YEARS TO HAVE HUD IN CONTROLL EVERYTHING EVEN ASKING PERMISSION TO SELL YOUR ONW HOME .FAILURE TO COMPLY FOR THE 5 YEARS .YOU WILL GET NOTHING BUT PENALTY. SO tell me how does this bill help the COVID 19 PANDEMIC OR ECONOMY. THE PEOPLE OF UNITED STATES OF AMERICA NEED MONEY TO PAY THERE RENT WITH THE GOVERNMENTS HELP . I THINK THAT $2000.00 OR $3000.00 A MONTH PLUS THERE RENT ROLL WOULD HELP THE PEOPLE. TAKING AWAY THERE RENT AND THERE RIGHTS AND A 2ND STIMULUS CHECK AWAY WOULD HURT THE ENTIRE WORLD. OMAR IF ALL YOU CARE ABOUT IS THE RENTERS YOUR SELFISH. THERE`S A ENTIRE WORLD THAT NEEDS THE GOVERNMENTS HELP AND THAT HELP IS MONEY FOR ALL THE PEOPLE .COVID 19 TOOK THOUSANDS OF LIVES AND THERE FAMILYS NEED FINANCIAL HELP .

  3. If I was a landlord and lost rent for a year, I would tell my renters I’m gonna sell my house,then change my mind and have it sit EMPTY. If I’m gonna pay thousands of dollars IN taxes and insurance for nothing, why don’t I just live in my rental which is better than what I live in now?

      • You can apply for federal fund with many conditions attached one of which is to give 10% of equity to tenant. This is totally ridiculous!

      • Please elaborate how will the rent loses be made up? I read the bill and in order to qualify the there are some awful stipulations. Have you read the bill? Basically it fucks the landlords over all the while tenants get a free ride. This is such bullshit. Typical left stealing from those who work hard.

        Ps to the editor.. whats undocumented? You mean illegal? As a legal citizen i am appalled and offended that youcall them undocumented. Theyre illegal aliens.

    • I agree. I am a landlord, treat my tenant well, have reasonable rent. The city doubles my property taxes because I rent my old home, I pay premium electric rates because it is a rental, higher property insurance rates and income tax on the rental income. My lease are now month to month meaning they can be terminated by either me or my tenant on 30 days notice.

      I can terminate the lease easily. My rent paying tenant now has a new problem. Where can he go to live? All landlords would love to have him as an exceptional tenant who has never missed a rent payment and pays early more often than not. They have the problem of non-paying tenants, that they cannot evict and if they try Omar fine them first $1000 then $10000 then $50000 or she proposes the government seize the property.

      Omar’s bill goes further. If you, the landlord, decide to avail yourself of the relief provisions as the bill is proposed, then you forever lose control of who you rent to and are now subject to hundreds of hours of government paperwork for the next 5 years. Oh, and lets not forget the 5 year rent freeze. My lease has a provision that the landlord can raise rent if property taxes or other taxes increase to cover them. The rent freeze provision might invalidate it, but even if it doesn’t you lose control of your property.

      If you have no rent, the county will seize the property because you didn’t pay the property taxes.

      Net result: as leases expire (and they do) landlords will not renew them as their terms permit, rental properties will decrease, all property will decline in value, depriving government of both income tax revenue and property tax revenue. Landlords will take property off the market and either sell it or leave it vacant and defer maintenance.

      Brilliant, simply brilliant.

      • And bear in mind the inflation caused by the untold trillions set to be printed up and unleashed on the economy by the Federal Reserve will be staggering. In five years property tax, maintenance costs, electricity costs, sewer and water charges, and insurance costs could easily double. As you point out with rents held constant costs could easily exceed revenues. What you face is a situation eerily reminiscent of what happened in New York’s South Bronx in the 1970s where rent control similarly pushed expenditures above revenues. Economist Walter Block has written about that tragic experience. Two phenomenon arose. Law abiding landlords began selling their apartment buildings to law breaking landlords. The latter would threaten existing tenants: Move out or else, the else being getting beat up until they moved. In this way dangerous criminals displaced the law abiding landlord in the South Bronx. On the other hand less scrupulous landlords understood they could still get full price for their now otherwise worthless buildings if the buildings just so happened to burn down.
        The upshot of this particular government intervention into the housing market was catastrophe: Tens of thousands of families made homeless by either being forced out of their apartments by criminals or the loss of their apartments to fire. The housing stock itself was reduced by tens of thousands of units. Once peaceful prosperous neighborhoods were reduced to rubble and what parts remained standing were taken over by criminals. And of course this worst of all possible outcomes, this hell on earth, was caused by the noblest of intentions, by Progressives who were entirely sincere in their desire to help the less fortunate.

      • Similar to rent control problems. I’m a landlord and do plan and am prepared for times when there’s no rent coming in. My business model allows for a 15_20% loss per year. This 2020 crisis is more like an 80% rent loss. Being a landlord IS my income and just because I have 4 months worth of mortgage payments ($9100/ month) in savings does not insure I will be able to save my business (rental properties) from bankrupcy (forclosure).
        People who have never been landlords have no idea what the overhaed costs and how much higher taxes are for us not to mention, permits, insurances, etc..
        Most mom and pop landlords like me have worked their entire lives for their business. We do not blame tenants or lack empathy for them. We have to run a business. No one is going to curb side pick up at restaurants and asking for free food. We’re all in this s**t fest of a mess. The taxpayers bailed out the big banks after 2008, it’s time for the banks to bail out the taxpayers. God forbid they’d cit profits for a couple years.
        We’ve been cutting profits forever. Peace.

  4. Why didn’t the tenants build in reserves for when something like this happens? One does one need to act responsibly and mot the other?

  5. Miriam is an idiot. If you give the tenants free rent, give the landlord free insurance, free utilities, and free property tax. What happens when the landlord can’t afford repairs because he has no income. Our government is a joke. How about this idea, take care of yourself and don’t rely on the clowns who put us 22 trillion in debt before the civic bailouts. Steve

    • Steve, you must be really unhappy about all the bailouts going to cruise ships, airlines, chain restaurants, oil companies, and Wall Street. Also, if you replace a landlord’s lost income, as is proposed here, how do they not have income? I’m missing your logic there.

      • There is no way I would agree to the provisions set forth in the bill for Landlords. Agreeing to a five year freeze and the possibility of having your property seized? Must agree to Section 8? I’ve rented to section 8 tenants multiple times. Most destroyed the property. Costs thousands to repair. I don’t do section 8 anymore. If you are a slumlord, it’s the perfect gig. But, I’m not. Giving tenants 10 percent equity in your property? I have sixty tenants, but I’d rather they all move and the property sit empty than agree to those terms. My property is paid for. I can wait it out.

  6. Bill, you can’t equate the need for tenants to maintain a reserve with that of a landlord. First, lower income tenants have a very hard time to build a reserve when rent alone takes up a huge chunk of their monthly earnings. Secondly, if the tenant is now unemployed with the possibility that this crisis will drag out for MONTHS, any reserves the tenant holds will go firstly for food and secondly for rent.

  7. Miriam, I want to respectfully suggest that you and your assistant Lillian Ortiz need to take a much deeper look at this Rent and Mortgage Cancellation bill. In section 6(b) it says
    (1) NOTICE TO SECRETARY.—During the 5-
    18 year period beginning upon the date of the enact-
    19 ment of this Act, the owner of a multifamily housing
    20 property may not sell or transfer ownership of such
    21 property unless—
    22 (A) the owner has notified the Secretary, . . .
    Multifamily property is defined as 5 or more units. I see nothing elsewhere in the bill which limits this provision to an owner who has gotten benefits thereunder. Now, maybe HUD regulations will fix this flaw in drafting — because it is impossible that EVERY SINGLE SALE OR TRANSFER of real estate (e.g., mother selling a 5-family to her daughter or son) in the entire country must first be offered to HUD so HUD can maybe find a nonprofit entity buyer.

    Another “totally unreal” provision is the “rent freeze” imposed on any unit for which the landlord has received (sec. 4(c) ) benefits. What about increased real estate taxes or utility expenses which arise during those 5 years? Again, maybe HUD regulations will later fix this but it sure is sloppy drafting.

    I find most articles in Shelterforce pretty good but you need people as contributors who have experience in the private rental market. Because from a landlord’s perspective it makes no sense to have the govt reimburse you for a couple of months lost rent due to the crisis if you then lose money in future years due to the rent freeze.

    • There will be more to look into about the details in the future I’m sure, but I don’t think we misrepresented anything. This was a quick overview, and as with anything this ambitious and complex I’m sure there will be lots of negotiation and discussion about the nuances!

  8. Miriam,
    Fair enough, this was your initial report on this bill and there will be opportunities to analyze it more closely if it actually advances. Somebody needs to report on the great irony that Omar’s bill has huge benefits for the privileged 1%. EVERY owner of a single family residence in the entire country can apply for mortgage relief. Bill Gates likely does not have a mortgage on his $127 million home but if he did have a mortgage of, say, $100 million then six months of cancelled payments would be worth several hundred thousand dollars. That amount would be reimbursed to Bill’s lender by the US Treasury.

    The CARES Act does have income limits on its benefits. Why this bill has none is inexplicable.

    Further inexplicable is why Omar’s relief package is not tied to actual harm caused by Covid-19. There is the moral hazard that people will apply for benefits even if they are not needy. If I have 5 tenants paying $1,000 each for monthly rent and if they all still have jobs (maybe as public service employees) I should tell them, “Don’t pay me until the crisis is over in six months. I’ll simply get your total rent from HUD. And as a nice bonus the rent you already paid me for April will be reimbursed to you directly by HUD.”

  9. I am a small landlord with only one duplex I purchased to help me with my retirement. At this moment I can not evict my tenants until the covid eviction moratorium is over. I have great tenants but when they start to run out of money (probably starting in April) I am going to have to make some kind of repayment agreement or forgiveness agreement with them. This program could same me from having to give this property to the bank. However, as so many others have noted, it is quite unfair to ask me to freeze the rent for five years. I pay the mortgage, heat, water, trash and repairs from the rent I receive. What will I do when the cost of those items go up. This is a new property for me and at the moment I have it budgeted so I have $175 positive cash flow per month. Due to some recent repairs I am presently about $17,000 in the red on the property. As you can see it is going to take some time to make up the cost of those repairs. I am relying on the increasing rents to A, pay for the recent repairs and future repairs and B, support me through my retirement. I don’t have a problem with applying for relief as long as it is better funded than the PPP which ran out of the first round funding and is set to run out of funding in the second round leaving thousands of small businesses in the lurch. I can not ask for the funding with the stipulations Mrs Omar is asking because that would put me in a position of severe loss as inflation kicks in over the next months and years.

  10. We need to open up the economy before it becomes past the point of saving it. Meanwhile, behind the scenes, the current white house is erasing all the climate protection acts, some of them enacted in the Nixon era, funding big banks, buying back shi*y stocks off big banks, and allowing mergers that come precipitously close to being monopolies. (i thought they were illegal and unethical in the USA.)
    Keep printing more money @ the Federal Reserve America and see what happens…history repeats itself..We know this…uhh!

  11. The main problem with Omar’s bill is that it would cancel ALL rent and mortgage payments, regardless of income or whether someone has suffered a job loss. By contrast, HR 6379, the Democrats proposal for CARES (not adopted) provided $100 billion targeted to people whose incomes had dropped (or were before) below 80% of AMI, with half to people below 50% AMI. Omar’s bill does not have a $$ amount, but the cost of cancelling ALL rents, including luxury rents and the majority of renters who are employed and can afford it, would be something like 4 to 5 times the cost–at least $500 billion per year. The money would go to large, corporate landlords, who (backed up by the Fed) would have the capital to snarf up smaller holdings. Targeting the assistance to people who need it the most would be far preferable, and set the stage for Universal Vouchers when the crisis is past

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