News & Politics

Ilhan Omar Wants to Cancel Rent for Coronavirus — and Upend the Entire Housing Market in the Process

Ilhan Omar. (Leopaltik1242 / Wikimedia Commons)

Rep. Ilhan Omar (D-Minn.) and her fellow Democrats in “The Squad” want to capitalize on the Chinese coronavirus crisis to upend the entire housing market. Omar released her bill last week, with the support of Reps. Alexandria Ocasio-Cortez (D-N.Y.), Ayanna Pressley (D-Mass.), Rashida Tlaib (D-Mich.), and others. She would use a temporary cancellation of rent and mortgage payments as a wedge to fundamentally alter the housing industry.

Omar’s “Rent and Mortgage Cancellation Act of 2020” would indeed cancel rent and mortgage payments until a month after the end of the national emergency President Donald Trump declared on March 13. All payments would be canceled across the entire country, “regardless of income or payment level.” Tenants and homeowners would not have to make payments, while landlords and lenders would not be able to use their failure to pay as a cause for eviction or foreclosure. The inability to pay would also have no impact on credit scores.

In other words, tenants and homeowners get a rather substantial “carrot.”

Landlords and lenders get hit with the “stick.” Not only would they be barred from charging rent or mortgage payments, but tenants and homeowners who think they’ve suffered an “adverse action” regarding this order could sue them for damages in federal court. The attorney general could also take civil action against landlords and lenders for violating the rights of tenants and homeowners under the act.

Under Omar’s bill, violators could face a $5,000 fine for the first offense and a $10,000 fine for the second offense. Landlords or lenders who violate the act three or more times could be fined $50,000 — or have their property seized.

As Reason‘s Christian Britschgi explained, “That means the government could snatch up a landlord’s rental property just for reporting three tenants who didn’t pay their rent to a credit reporting agency.”

That’s only half of the bill, however. Canceling rent and mortgage payments doesn’t just help tenants and homeowners make ends meet during the coronavirus crisis — it also removes key income from landlords and lenders. That crisis creates another opportunity for Omar and “The Squad” to upend the market.

The legislation would create two funds to compensate the landlords and lenders stuck with the bill, but this crucial bailout would come with devastating conditions.

As Omar’s office explains in a summary of the bill, landlords who accept the funds would have to pledge not to raise rents for five years. They would also be barred from discriminating against tenants based on their credit score or criminal history during that five-year period. Of course, it gets even worse — landlords would have to give tenants a 10 percent equity stake in their properties.

In order to receive vital funds, mortgage lenders would have to report detailed data to federal housing authorities.

As with any big government boondoggle, the legislation hands tremendous power over to a federal agency, in this case, the Department of Housing and Urban Development (HUD), which will oversee the bailout funds. The bill would also create a new Affordable Housing Acquisition Fund under HUD, which would give money to government entities and nonprofits to buy up private buildings and convert them to income-restricted affordable housing.

In order to empower this new federal housing apparatus, property owners would have to notify HUD every time they intend to sell a rental property and then give low-income housing providers 60 days to make their offer on a building.

In return, anyone purchasing a property through HUD’s affordable housing fund would be forced to provide tenants with free “wrap-around” services, including healthcare, childcare, employment and education assistance, and financial literacy education.

Any such endeavor could not hope to turn a profit, but local and state governments keen on showing support for the little guy would be sure to jump into the program, with federal assistance, of course. In one fell swoop, “The Squad” would have created a partial government takeover of real estate and established a new entitlement program for housing, complete with state funding for healthcare, childcare, and other services.

Meanwhile, landlords and mortgage lenders would be stuck with a tremendous tab or forced to give away the store for five years. This seems to satisfy the Marxist goal of attacking the current owners of property in the name of helping the proletariat — but really just empowering the government.

Naturally, a short moratorium on rent for the duration of the coronavirus crisis is popular, but once again Democrats have shown themselves eager to jam institutional change into a temporary relief measure.

Thankfully, it seems this AOC “Squad” proposal issued by Ilhan Omar is unlikely to win support in the Democrat-majority House of Representatives, much less the Republican-majority Senate. Yet it seems rather reminiscent of House Speaker Nancy Pelosi’s attempt to smuggle Green New Deal standards, voting “reforms,” and a $15/hour minimum wage into the $2 trillion coronavirus relief bill passed last month. Democrats never let a good crisis go to waste.

Tyler O’Neil is the author of Making Hate Pay: The Corruption of the Southern Poverty Law Center. Follow him on Twitter at @Tyler2ONeil.

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