“Squad” proposes another government giveaway – free rent and mortgage payments


WASHINGTON, D.C.- Hopefully, you are sitting down for this one. While it sounds like a wonderful idea to some, the devil as always is in the details.

This concerns a piece of proposed legislation called the “Rent and Mortgage Cancellation Act,” which would cancel rent and mortgage payments during the coronavirus pandemic.

It has been proposed by Ilhan Omar (D-Minn.), and is co-sponsored by “The Squad”—Rashida Tlaib (D-Mich.), Alexandria Ocasio-Cortez (D-N.Y.), and Ayanna Pressley (D-Mass.), along with three other progressive Democrats. 

The proposed legislation would cancel rent and mortgage payments during the pandemic and would be a nationwide program. Progressive and left-wing groups have been proposing something similar since the coronavirus pandemic struck the country.

The program, which would apply only to primary residences, would remain effective until one month after the end of the national emergency, which was declared by President Trump on March 13.

According to the proposed legislation, tenants and homeowners would not be required to make payments on either leases or mortgages during that time. It would also prohibit landlords or mortgage lenders to use the failure of lessees or mortgagees to pay as a means to evict or foreclose on them.

Likewise, tenants and homeowners could not be charged late fees or penalties, and they could not have their credit scores downgraded as a result of failure to pay. The law would also provide legal redress against the landlord or mortgage lender if people felt they had suffered a so-called “adverse action” by authorizing lawsuits in federal court for damages.

In addition, the attorney general would be empowered to take civil action against property owners and mortgage lenders under the act for perceived violations of renters and/or homeowners “rights” under the law.

Violators would be hit with a $5,000 fine for a first offense, and a $10,000 fine for a second offense. Any such violations in excess of three occasions would earn a fine of $50,000, or seizure of property.

What this means is that under this act, the government could confiscate someone’s property if they merely reported three tenants who did not pay their rent to a credit reporting agency.

Omar justifies such extreme actions because of the extreme circumstances which the country finds itself in.

“Congress has a responsibility to step in to stabilize both local communities and the housing market during this time of uncertainty and crisis,” said Omar in a press release.

“In 2008 we bailed out Wall Street. This time, it’s time to bail out the American people who are suffering.”

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Of course, by letting renters and homeowners circumvent their responsibilities, these costs are merely passed on to property owners and banks and other lenders, who have bills to pay as well.

One can make the assumption that these losses will be passed on in the form of higher interest rates and higher rents when things return to “normal.”

Under the legislation, there is some redress for landlords or mortgage lenders by the creation of two funds to compensate them for their losses. However, this compensation, as with many government programs, has strings attached to it. And they are pretty heavy strings.

For one, in order to be eligible for relief, landlords would be forbidden from raising rents for five years. They would also be prohibited from “discriminating” against tenants based upon either their credit score or criminal history during that five-year period.

And here is the kicker: Under Omar’s bill, it would require any landlord who takes advantage of the relief funds to give tenants a 10 percent equity stake in the property.

In order to further bloat the federal bureaucracy, the relief fund would be created and placed under the auspices of the Department of Housing and Urban Development, with lenders being required to report detailed lending data to federal authorities.

The proposed legislation would create a new Affordable Housing Acquisition Fund, which would also be administered by HUD; in other words, another government-sponsored welfare program. This fund would provide money to government entities and nonprofits to purchase private buildings and convert them into income-restricted affordable housing, i.e. Section 8 housing.

In order to facilitate these purchases, property owners would be REQUIRED to notify HUD  when they intend to sell a rental property, and then would force property owners to wait 60 days to sell the property in order to allow low-income housing providers the opportunity to make an offer on the building.

If a property were purchased under the HUD affordable housing program, the owner would be required to provide tenants with what is referred to as free “wrap-around” services, including healthcare, childcare, employment and education assistance, and financial literacy education.

It is unclear what any of this has to do with affordable housing, but it is in the bill. It is also unknown what items such as financial literacy classes has to do with the pandemic emergency.

Progressive groups across the country have been pushing for rent cancellation in the midst of government-ordered shutdown which has swelled the unemployment rolls and shut down business across the country for going on two months.

A significant portion of what is included in the “emergency” bill was also included in her $1 trillion public housing legislation that she introduced last November. That particular bill wanted to crate millions of new public housing units which would include free social services included on site.

Omar appears to be trying to leverage the national emergency to the same ends she proposed in the public housing legislation. It appears to be an attempt to twist the arm of landlords in order to achieve the “Squad’s” progressive vision. The bill would severely impact the ability of landlords to earn income from their rental properties and would attach ridiculous conditions to any type of relief.

Conversely, landlords who did not want to participate in the “bailout” conditions do have options—they could sell their properties, however they would still be required to first offer them to low-income housing providers who would be receiving government assistance in order to purchase the units.

The bill Omar is proposing especially where it concerns seizure of property seems to be a clear violation of the Constitution and particularly the “Takings Clause.”

Likewise, just weeks after Congress passed over $3 trillion in assistance money to Americans, adding additional debt would seem to be a recipe for disaster. Having the federal government paying the nation’s rent and mortgage bills, along with getting in the real estate business by marketing rental properties might not be a popular course to go.

Of course, with a Republican majority in the senate, and President Trump in the White House, it is unlikely that Omar’s bill will get much traction. However, with even some Republicans in Congress talking about rent forgiveness in the middle of the national emergency, it may be possible to get something of a watered-down version of the proposed bill.

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