Ilhan Omar renewed her call to cancel rent and mortgages.
Here’s what you need to know.
Cancel rent and mortgages
Rep. Omar (D-MN) tweeted on Wednesday “Cancel rent and mortgage payments.” Her tweet comes at a time when Coronavirus deaths in the U.S. surpassed 3,000 in a day and when the federal moratorium on evictions expires this month. As many in Congress are focused on second stimulus checks, unemployment benefits, student loans and state and local aid, Omar has been a leading proponent of cancelling rent and mortgage payments in response to the Covid-19 pandemic.
“As many as 40 million Americans could face eviction when the federal moratorium expires this December,” Omar said to Yahoo News. “That’s millions of people without a roof over their head in the middle of winter. Many more will face foreclosure, or be forced to backpay thousands of dollars in rent that they simply can’t afford during a pandemic and economic crisis. This is a devastating and entirely preventable crisis.”
The Rent and Mortgage Cancellation Act
In April, Omar introduced The Rent and Mortgage Cancellation Act, which is congressional legislation that would institute a nationwide cancellation of residential rents and mortgage payments until the end of the Covid-19 pandemic.
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Here’s how the bill would work:
- full payment forgiveness of rent for your primary residence
- full payment forgiveness of mortgage payments for your primary residence
- no accumulation of debt for renters
- no accumulation of mortgage debt for borrowers
- no negative impact on credit rating or rental history for mortgage borrowers or renters
Cancel rent and mortgages: Q&A
Can I get my rent or mortgage forgiven?
No, this is not a plan to cancel your entire mortgage or your full lease. Rather, it is a temporary relief plan for the duration of the Covid-19 pandemic only.
Does the rent or mortgage cancellation apply only to primary residences?
Yes, this is only for a primary residence. If you have a second residence, you cannot receive temporary rent or mortgage cancellation.
What about commercial rent or commercial mortgages?
This legislation applies only to residential rents and mortgages, not commercial.
What about sub leases?
If you are subletting a primary residence or renting a room, for example, you would be eligible to receive rent cancellation under this proposal.
Are there any income limitations?
No, anyone would be eligible to receive rent or mortgage cancellation regardless of income.
Are there any limits based on the amount of your rental payment or mortgage payment?
No, there are no limits based on the dollar amount of your rental payment or mortgage payment.
What if you owe a mortgage and also rent a residence?
You can only choose one or the other: mortgage relief or rent relief, but not both.
When is the effective date?
Congress has not passed this proposed legislation. The original legislation stipulates that suspension of rent and mortgage payments would be retroactive to March 13, 2020 and last for one year. However, that timeline may change if Congress decides to provide any rent or mortgage relief.
How do landlords and lenders get paid?
Even if rents and mortgages are cancelled, landlords still need to make their own mortgage payments and manage the expenses for their properties. This proposed legislation would create a landlord relief fund and lender relief fund so that the federal government can reimburse landlords and lenders for lost rent and mortgage payments. In exchange for this reimbursement, lenders and landlords would need to abide by fair renting and lending practices for five years.
Will this legislation pass?
The potential expiration of the federal moratorium on evictions may have serious repercussions for millions of Americans. That said, many states and cities have their own moratorium on evictions that could provide at least some relief to borrowers and renters in need. However, such relief is not universal, meaning it doesn’t exist in every city so many borrowers could face eviction. At the same time, landlords—many of whom are small business owners and entrepreneurs—are also impacted financially when they can’t collect rent, which means they may be unable to pay their own expenses. In addition to potential eviction, there’s also the question of back payments, as many renters and borrowers may be delinquent on paying rent or their mortgage payments if they’ve lost employment or are otherwise struggling financially. The proposed legislation won’t pass the Senate, given Republican control the prohibitive cost of the measure. Effectively, federal taxpayers would pay for every American’s rent or mortgage payment during the Covid-19 pandemic without any limitations on income or size of rent or mortgage payment. If Democrats gain control of the U.S. Senate in the next congressional term, it’s possible they could consider some form of rent or mortgage relief, including a potential extension of the moratorium on evictions. Currently, however, Congress appears focused on economic relief to small businesses, state and local governments and education funding as top priorities for a next stimulus bill. Second stimulus checks, cancel student loans, and rent and mortgage relief may take a back seat for now.