By Douglas V. Gibbs
Author, Speaker, Instructor, Radio Host
On April 17, 2020, U.S. Representative Ilhan Omar, a Democrat from Minnesota’s 5th Congressional District, proposed the Rent and Mortgage Cancellation Act of 2020 (H.R. 6515), which is designed to “suspend obligations of residential renters and mortgagors to make payments during the COVID-19 emergency, and for other purposes.” The bill is cosponsored by Reps. Alexandria Ocasio-Cortez (D-NY), Rashida Tlaib (D-MI), Pramila Jayapal (D-WA), Mark Pocan (D-WI), Ayanna Pressley (D-MA), Veronica Escobar (D-TX), Jesús “Chuy” García (D-IL), and Grace Meng (D-NY). The bill establishes a payment holiday for all rent and mortgages in the country, regardless of amount or income level of the payer, and then provides a federal funding system to provide funds for the landlords or lending institutions affected by the law. The law also contains a provision that would create an optional fund to finance the purchase of private rental properties by non-profits, public housing authorities, cooperatives, community land trusts and states or local governments in order to make “affordable housing” available.
The bill has bad written all over it.
It would be one thing if the financial industry decided to get together and postpone payments so that borrowers could be able to miss payments now with no consequences, and simply have them added to the end of the loans to be paid at a later date. But, Omar’s bill is all about the government poking its nose into the free market. First of all, it is unconstitutional. The federal government has no authority to interfere with the free market in this manner. Secondly, it establishes a path towards government funded housing that is Marxist in nature, and would wipe out significant industries of our economic system.
If a renter or banking institution were to seek any action regarding the non-payment of rent or mortgage during the duration that this law (if it were to pass and get signed, which is highly unlikely) such as influencing credit scores, eviction, or credit collection, the first offense if a $5,000 fine. Second offense, a $10,000 fine. Third offense, a $50,000 fine, and forfeiture of the property. Think about that for a moment. The government could confiscate a landlord’s rental property just for reporting three tenants to a credit reporting agency for not paying their rent during the COVID-19 Wonderful World of Hysteria.
A “Landlord Relief Fund” would be established to help the landlords, but it must be petition and hunted for through the Housing and Urban Development department in order to get approval, and in order for the influenced landlords to be provided any funds down the road. The stipulations attached to the Landlord Relief Fund includes: A five year binding agreement with HUD, during which you cannot turn away renters based on their level of income, Section 8 or anything associated with Department of Social Services must be accepted by any landlords in that agreement with HUD, you may only evict if there is a “just cause,” of which the definition of what a “just cause” is will be established by the federal government, a rent freeze will be established disallowing any raises in rent for the five years the landlord is in their binding agreement with HUD (regardless of the fact that the expenses, repair costs, insurance costs, or taxes, may be rising during that time), in the case of vacancies the public housing authority must be notified (likely so that Section 8 or welfare applications may be forwarded prior to the landlord seeking new tenants through other means, the property must meet federally established emission standards, during the agreement with HUD no discrimination of any kind may be applied when considering a tenant (including, but not limited to, race, color, religion, age, sex, income, credit history, immigration status, arrest record, conviction record, gender identity, sexual orientation, etc.). Fail to comply with any of those conditions, and the government would be justified in not giving renters or lenders one red cent. Oh, and by the way, According to a summary of the bill put out by Omar’s office, landlords making use of these relief funds would also have to give tenants a 10 percent equity stake in their properties.
A small, but obvious nudge, towards socialism.
The negative consequences to our banking system, as well as business owners who rely on rent or mortgages to survive, would be devastating. Even worse, a few years ago it was estimated that a half of a trillion dollars in rent alone is paid every year in the United States by renters. That’s an awful lot of money that would be paid by the federal government during a time when our national debt is already spitting out dizzying numbers. The Federal Reserve, to help out, has already promised to backstop mortgage-backed bonds. Meanwhile, rather than bailouts, what we are seeing being pushed here are “Buy Outs”, which would enable the government to purchase distressed properties from landlords and transfer their ownership to public entities. Are we beginning to feel a little like the Soviet Union yet? The goal by the hard left in this country is to destroy the private property market (which is one of the foundational pillars our liberty was established upon), and move us towards their idea of social housing.