As Rent and Mortgage Cancelation Act Gains Traction, Should Institutional Investors be Concerned?
Posted on 03/13/2021
With a signed US$ 1.9 trillion COVID-19 bill turned into law, the Democrat party remains in control of the House, Senate, and White House. The party’s socialist wing is gaining clout, pushing through legislation and measures that Republicans have tried to block for years. On March 11, 2021, U.S. Representative Ilhan Omar (D-MN) introduced the Rent and Mortgage Cancellation Act, a bill to institute a nationwide cancellation of rents and home mortgage payments through the duration of the coronavirus pandemic. The bill would constitute a full payment forgiveness, with no accumulation of debt for renters or homeowners and no negative impact on their credit rating or rental history. The bill would permanently cancel all rent and mortgage payments until April 2022.
The law will also have a component to have a relief fund for landlords and mortgage holders to cover losses from the cancelled payments. Landlords who receive relief funds through the HUD program must agree to the following fair renting terms for a period of 5 years which includes are a rent freeze, a provision of 10 percent equity to tenants, just-cause evictions, and other measures.
It will also create an optional buyout fund to fully 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 increase the availability of affordable housing during this downturn.
The bill is cosponsored by Reps. Alan Lowenthal, Jamaal Bowman, Ed.D., Mark Pocan, Barbara Lee, Raúl M. Grijalva, Mondaire Jones, Bonnie Watson Coleman, Jesús G. “Chuy” García, Ayanna Pressley, Pramila Jayapal, Bennie G. Thompson, Eleanor Holmes Norton, Nydia M. Velázquez, Rashida Tlaib, Yvette D. Clarke, Adriano Espaillat, Frederica S. Wilson, Jan Schakowsky, James P. McGovern, Jimmy Gomez, André Carson, Alexandria Ocasio-Cortez, Jerrold Nadler, and Cori Bush.
Part of the bill reads, “if any property owner or mortgagee that takes adverse action against any tenant or owner of real property for exercising their rights under this Act, shall be subject to a judgment for actual damages as well as the following penalties. The Third and Subsequent Violations: $50,000 civil penalty or fine, or forfeiture of property.”